Saving a 20% deposit while paying rent has never been easy. For many Australians, that finish line keeps moving. Often by the time you’ve saved enough, prices have risen again.
The First Home Guarantee exists to break that cycle. It’s a federal government scheme that lets eligible first home buyers purchase with as little as a 5% deposit, with no Lenders Mortgage Insurance (LMI) to pay. And from 1 October 2025, it got significantly better: no income caps, no place limits, and higher property price caps across the country.
Here’s everything you need to know.
What is the First Home Guarantee?
The First Home Guarantee (formerly known as the First Home Loan Deposit Scheme, or FHLDS) is an Australian Government initiative administered by Housing Australia. It allows eligible first home buyers to purchase a property with a deposit of as little as 5%, without needing to pay Lenders Mortgage Insurance.
Here’s the key thing to understand: the government isn’t giving you money. They’re acting as a guarantor to the lender – essentially promising to cover the gap between your 5% deposit and the 20% threshold that normally triggers LMI. You still borrow 95% of the property’s value and repay it in full. The benefit is simply that you skip LMI, which can save you anywhere from $10,000 to $35,000+ depending on your loan size.
What changed in October 2025?
The October 2025 expansion was significant. Here’s what’s different now compared to previous years:
| Feature | Before October 2025 | From October 2025 |
|---|---|---|
| Income cap (singles) | $125,000 | No cap |
| Income cap (couples) | $200,000 | No cap |
| Annual places | 35,000 (often exhausted) | Unlimited |
| NSW metro price cap | $900,000 | $1,500,000 |
| Regional First Home Buyer Guarantee | Separate scheme | Merged into First Home Guarantee |
The removal of income caps and the unlimited places are the two biggest changes in practical terms. In previous financial years, the annual allocation would run out – sometimes within months of opening. That problem no longer exists.
Who is eligible?
To qualify for the First Home Guarantee in 2026, you need to meet the following criteria:
You must:
- Be an Australian citizen or permanent resident aged 18 or over
- Be a genuine first home buyer – meaning you have never owned property in Australia, or you haven’t owned property in the past 10 years (re-entry buyers)
- Purchase the property as your primary place of residence (investment properties are not eligible)
- Have a minimum 5% genuine savings deposit
- Purchase a property within the price cap for your area (see below)
- Apply through a participating lender
There is no longer an income test. From 1 October 2025, the previous $125,000 (single) and $200,000 (couple) income limits were removed entirely.
Joint applications: You can apply with another person – a partner, sibling, or friend. Both applicants must meet the eligibility criteria. Couples in a de facto or married relationship, as well as friends and family members buying together, can all apply jointly.
Property price caps by state (2025–26)
The property you buy must fall within the price cap for your region. These caps were increased significantly from 1 October 2025:
| State / Territory | Capital city & major regional centres* | Rest of state |
|---|---|---|
| NSW | $1,500,000 | $800,000 |
| VIC | $950,000 | $650,000 |
| QLD | $1,000,000 | $700,000 |
| WA | $850,000 | $600,000 |
| SA | $900,000 | $500,000 |
| TAS | $700,000 | $550,000 |
| ACT | $1,000,000 | 1,000,000 |
| NT | $750,000 (Darwin) | $600,000 |
* In NSW, “major regional centres” includes the Illawarra, Newcastle and Lake Macquarie. In VIC, it includes Geelong. In QLD, it includes the Gold Coast and Sunshine Coast.
For buyers in Sydney’s Sutherland Shire – or anywhere in metro Sydney – the $1,500,000 cap means a very large proportion of the market is now within reach of the scheme. That’s a material change from the old $900,000 cap.
Important: Always verify the current price caps for your specific suburb using the postcode search tool at housingaustralia.gov.au before making an offer as this list isn’t exhaustive. Caps can be updated and your specific postcode may differ from the general metropolitan figure.
What types of property can I buy?
The scheme covers a broad range of residential property types, provided the purchase price is within your region’s cap:
- Established homes (houses, townhouses, apartments, units)
- New builds
- House-and-land packages
- Off-the-plan purchases
- Vacant land with a signed building contract
The one firm requirement is that it must become your primary residence. You must move in within a reasonable timeframe after settlement (typically within six months).
How much does LMI actually cost – and what do you save?
LMI is what you’d normally pay when borrowing more than 80% of a property’s value. The cost scales with your loan size and deposit percentage. To give you a concrete sense of the savings:
| Purchase price | Deposit (5%) | LMI cost (approx. without scheme) | Saving with scheme |
|---|---|---|---|
| $600,000 | $30,000 | ~$18,000 | ~$18,000 |
| $800,000 | $40,000 | ~$28,000 | ~$28,000 |
| $1,000,000 | $50,000 | ~$35,000 | ~$35,000 |
| $1,200,000 | $60,000 | ~$46,000 | ~$46,000 |
LMI figures are indicative estimates only. Your actual LMI cost depends on your lender, loan size, and LVR. A participating lender will provide an exact figure.
That saving doesn’t disappear – it either stays in your pocket, reduces your loan, or gives you more to put towards upfront costs like stamp duty, legal fees, and inspections.
Can I use the First Home Guarantee with other schemes?
Yes – and combining schemes is often where the real savings stack up. The First Home Guarantee operates at the federal level and generally works alongside state-level grants and concessions. Here’s how it interacts with the most common schemes:
First Home Owner Grant (FHOG): Available in most states for eligible new builds. In NSW, that’s $10,000 for new homes under $600,000. You can use both the FHOG and the First Home Guarantee on the same purchase.
Stamp duty exemptions: NSW first home buyers purchasing under $800,000 pay no stamp duty at all. Purchasing between $800,000 and $1,000,000 attracts a reduced rate. The First Home Guarantee doesn’t affect this eligibility.
First Home Super Saver Scheme (FHSS): Allows you to save for your deposit inside your super fund and withdraw up to $50,000 per person (indexed). The money withdrawn counts toward your 5% deposit requirement for the guarantee.
Using the FHSS plus the First Home Guarantee together, a couple could potentially release up to $100,000 in super savings, use that as their 5% deposit on a $1,000,000–$1,500,000 purchase, and avoid LMI entirely – while also benefiting from the tax advantages of saving through super. These combinations are worth working through with a broker before you assume they apply to your situation.
How does the application process work?
You don’t apply to Housing Australia directly. Here’s how it actually works:
- Check your eligibility – use the eligibility tool at housingaustralia.gov.au, or talk to a broker who can assess this as part of your initial consultation.
- Choose a participating lender – the scheme is only available through approved participating lenders. There are currently over 30, including major banks and a wide range of smaller lenders. A mortgage broker is your best bet here to ensure matching with the right lender.
- Get pre-approval – the lender assesses your finances and submits an application to Housing Australia on your behalf. If approved, you receive a conditional approval that’s typically valid for 90 days.
- Find a property – within the price cap for your area, and within your pre-approval period.
- Exchange and settle – the lender finalises the guarantee and settles your loan. The process from here is the same as any other home loan.
Working with a broker at this stage has a practical advantage: not every participating lender offers the best rates or most flexible terms. A broker can identify which participating lenders suit your financial situation and negotiate accordingly, rather than defaulting to whoever offers the scheme at the biggest bank.
Frequently Asked Questions
No. Your repayments are based on your full loan amount at the interest rate you negotiate with the lender. The guarantee itself doesn’t cost you anything and doesn’t change your rate.
If you sell the property or stop living in it as your primary residence, you exit the guarantee. LMI doesn’t become retrospectively payable – but you need to understand that you’ll be a standard borrower from that point, with whatever equity you’ve built up. If your equity is still below 20%, future refinancing could trigger LMI. A broker can help you plan for this.
In some cases, yes. The scheme includes provisions for “re-entry buyers” – Australians who previously owned property but haven’t owned any in the past 10 years. The same eligibility rules apply in terms of deposit, price cap, and owner-occupier requirement.
No. The Family Home Guarantee is a related but separate scheme, designed specifically for single parents and eligible single legal guardians. It allows eligible applicants to purchase with as little as a 2% deposit, with the government guaranteeing up to 18%. Income caps also apply to the Family Home Guarantee. Ask your broker which scheme is relevant to your situation.
If your co-applicant currently owns property or has owned property in the past 10 years, you are generally not eligible as a joint applicant. Your eligibility as a solo applicant would depend on whether you have separately owned property. This is worth confirming directly with a broker before you assume either way.
A word of caution
The First Home Guarantee makes it easier to get into the market with a smaller deposit — and for many buyers, that’s genuinely life-changing. But it’s worth being clear about what it doesn’t do.
It doesn’t reduce the amount you borrow. A 5% deposit on a $900,000 purchase still means a $855,000 loan at current interest rates. Your repayments will reflect that. With the RBA having raised rates three times in 2026, serviceability is more important than ever – not just whether you can afford repayments today, but whether you could absorb a further rate movement.
The eligibility tool and the scheme criteria tell you whether you qualify. They don’t tell you whether buying right now at a 5% deposit is the right decision for your specific financial situation. That’s a conversation worth having.
How a mortgage broker can help
Navigating the First Home Guarantee alongside your loan application – and combining it with state grants, super savings, and stamp duty concessions – involves more moving parts than most first home buyers expect.
At Ingram Financial, we help first home buyers across Australia work out:
- Whether they qualify for the First Home Guarantee (and the Family Home Guarantee, if relevant)
- Which participating lenders offer the most competitive rates alongside the scheme
- How to combine federal and state schemes for maximum benefit
- What their genuine borrowing power looks like – not just whether they qualify for a loan, but what they can comfortably afford
We work with clients across Australia – from Sydney’s Sutherland Shire to regional NSW and beyond – entirely remotely if needed.
There’s no cost to you. Like all mortgage brokers, we’re paid by the lender when your loan settles. We’re legally required to act in your best interests.
Need some help?
Not sure where to start? That’s exactly what we’re here for. Drop us a message and we will get back to you within one business day with clear, honest advice tailored to your situation.
