The First Home Guarantee (FHG), administered by Housing Australia on behalf of the federal government, is a scheme that allows eligible first home buyers to purchase a property with as little as a 5% deposit — without paying Lenders Mortgage Insurance. The government guarantees up to 15% of the loan value, bridging the gap between your deposit and the 20% threshold lenders typically require to waive LMI. As of 2026, up to 35,000 places are available per financial year.
How the First Home Guarantee Actually Works
The First Home Guarantee does not provide you with money. Instead, the federal government acts as a guarantor for part of your loan — specifically, the amount between your deposit and 20% of the property value. This means the lender treats your loan as if you had a 20% deposit (even though you only have 5%), which eliminates the LMI requirement and potentially qualifies you for better interest rates.
For example: purchasing a $700,000 property with 5% deposit ($35,000). Without the FHG, LMI on a 95% LVR loan would cost approximately $22,000–$28,000. With the FHG, the government guarantees 15% ($105,000) of the loan — you borrow 95% but the lender's risk is covered to 80% LVR, so no LMI is required. You save the full LMI cost.
The Guarantee Is Not a Grant
The First Home Guarantee does not give you money — it is a risk guarantee provided to the lender. If you default on your loan, the government covers the lender's loss between your deposit and 20%. You are still fully liable for the loan. The guarantee reduces your upfront cost, not your loan balance.
Who Is Eligible for the First Home Guarantee?
To access the First Home Guarantee you must: be an Australian citizen or permanent resident; be a genuine first home buyer (never previously owned residential property in Australia, including as a joint owner or trust beneficiary); earn under $125,000 per year as an individual, or under $200,000 per year combined as a couple; intend to live in the purchased property as your principal place of residence; and purchase a property within the price caps for your location.
Property price caps as of 2026: Sydney and NSW capital cities $900,000; other NSW $750,000; Melbourne and VIC capital cities $800,000; other VIC $650,000; Brisbane and QLD capital cities $700,000; other QLD $550,000; WA $600,000; SA $600,000; TAS $500,000; ACT $750,000; NT $600,000. You must also use a participating lender — not all lenders are accredited for the scheme.
- ✓Australian citizen or permanent resident
- ✓Genuine first home buyer — no previous property ownership in Australia
- ✓Individual income under $125,000 p.a. or couple income under $200,000 p.a.
- ✓Intend to occupy the property as principal place of residence
- ✓Property within price caps for your state/territory and postcode
- ✓Apply through a Housing Australia participating lender
Frequently Asked Questions
About the Author
Sakib Manzoor
Senior Finance Wellness Expert
Sakib Manzoor is the founder of Secure Finance and brings extensive experience in Australian mortgage broking and financial wellness. Specialising in helping clients achieve their property finance goals through personalised strategies and expert guidance, Sakib is FBAA accredited and committed to providing clear, actionable advice. All content is written to meet Australian regulatory standards and is regularly updated to reflect current market conditions.