First Home Guarantee Scheme: how does it work?
You may be eligible to purchase your first home with as little as 5% deposit via the First Home Guarantee Scheme. Here’s how it works.
First Home Guarantee Scheme: financial support for first home buyers
The First Home Guarantee Scheme is an Australian Government initiative to support eligible first home buyers to buy a home sooner. Under the First Home Guarantee Scheme, the Government will provide a limited loan guarantee of up to 15% of the home value. This may enable you to buy your first home with a deposit of only 5%1 and no lenders mortgage insurance (LMI) will be payable.
In 2024/25, 35,000 home loans are available under the First Home Guarantee Scheme.
Key points of the First Home Guarantee Scheme
- You’ll need to earn less than the income limit and meet other eligibility conditions.
- The purchase price will be capped, depending on the property’s location.
- You need to move into the home as your main residence within certain timeframes.
Who may be eligible for the First Home Guarantee Scheme?
To be eligible for the First Home Guarantee Scheme, you must:
- be an individual or two joint applicants
- be an Australian citizen or Australian permanent resident aged 18 years or older
- earn a taxable income of less than $125,000 p.a. (for individuals) or $200,000 p.a. (for joint applicants combined), based on the last financial year
- be a first home buyer or not have owned Australian real property (including land) in the last 10 years
- intend to be an owner occupier of the purchased property
- be purchasing a home (both newly built and established properties qualify under this scheme).
For more information about the types of properties that may be eligible and important timeframes, see housingaustralia.gov.au.
What types of homes can I buy with the First Home Guarantee Scheme?
Under the scheme, you’re able to purchase an eligible residential property which includes:
- an existing freestanding house, townhouse or apartment
- a house and land package
- land and a separate contract to construct a home
- off the plan townhouse or apartment.
Certain requirements apply depending on the type of property and contract you’re entering into.
What are the property price caps for the First Home Guarantee Scheme?
Caps apply to the purchase price to ensure participation is spread fairly across the country. The capital city price caps will apply to large regional centres with a population over 250,000, namely the Gold Coast, Newcastle and Lake Macquarie, the Sunshine Coast, Illawarra (Wollongong) and Geelong.
| Price caps for 2024/25 | ||
| State/territory | Capital city and regional centres | Rest of state |
| NSW | $900,000 | $750,000 |
| VIC | $800,000 | $650,000 |
| QLD | $700,000 | $550,000 |
| WA | $600,000 | $450,000 |
| SA | $600,000 | $450,000 |
| TAS | $600,000 | $450,000 |
| ACT | $750,000 | |
| NT | $600,000 | |
| Jervis Bay Territory and Norfolk Island | $550,000 | |
| Christmas Island and Cocos (Keeling) Islands | $400,000 | |
What’s the downside of the First Home Guarantee Scheme?
While the First Home Guarantee Scheme may help you buy your first home sooner, you need to keep in mind that a smaller deposit means a bigger loan. And a bigger loan means bigger loan repayments, as well as higher total interest payments over the life of the loan. It may be the case that the additional interest payable outweighs the LMI savings. To find out whether the First Home Guarantee Scheme is right for you, you may want to speak to a financial adviser.
Also, if you move out of your home for an extended period of time and rent your home out, the loan may no longer be guaranteed by the Government. You may need to pay additional fees and charges, as well as LMI, depending on factors such as the value of your home and your outstanding debt at that point.
Which lenders are participating and how do I apply?
Applications can be made directly via one of the approved lenders or their authorised representative (such as a mortgage broker). Housing Australia has authorised a specific panel of participating lenders to offer the Home Guarantee Scheme to home buyers.
What lending rules apply to the First Home Guarantee Scheme?
You’ll need to meet your lender’s normal credit criteria to ensure you can service a loan of up to 95% and provide evidence you’ve saved the 5% deposit. Loans must be principle and interest (not interest only) and terms can be up to 30 years.
What other assistance programs are available?
The First Home Guarantee scheme complements (but doesn’t directly interact with) other Government assistance programs. These may include the:
- First Home Super Saver Scheme, where you could save for the deposit on your first home in the concessionally taxed superannuation system.
- First Home Owner Grant, which offsets the effect of Goods and Services Tax on buying or building a home.
- State and Territory based stamp duty concessions.
1 Individual lenders may require a larger deposit, based upon lending criteria and your personal circumstances.
Source: MLC
