First Home Guarantee Explained, Do You Qualify?
Quick answer. The First Home Guarantee helps eligible first home buyers purchase with a deposit as low as 5% and no Lenders Mortgage Insurance. The scheme was formerly known as the Home Guarantee Scheme and is now officially called the Australian Government 5% Deposit Scheme. Since 1 October 2025, places are uncapped, income caps have been removed and property price caps are higher.
What is the First Home Guarantee?
Home buyers usually need a 20% deposit, and those with a smaller deposit may need to pay Lenders Mortgage Insurance (LMI). Under the scheme, Housing Australia provides a guarantee to the lender so you only need a minimum 5% deposit. The guarantee lets you borrow up to 95% of the property value.
The guarantee covers up to 15% of the property value, and it protects the lender, not you. It is not a cash payment or a deposit, and you will not receive any funds. You remain responsible for all home loan costs and repayments, including stamp duty, bank fees and legal costs.
What changed in October 2025?
If you ruled yourself out a few years ago, it is worth another look. On 1 October 2025 the scheme was expanded so all first home buyers can buy with a 5% deposit. The number of places is now uncapped, income caps have been removed and property price caps have increased under all streams. There are no waiting lists, so you can apply when you are ready.
The scheme is well established. The Australian Government reports it has helped over 320,000 Australians since it began in 2020.
5% Deposit Scheme eligibility, who qualifies?
To be eligible you generally need to meet all of the following.
• You are an Australian citizen or permanent resident, aged 18 or over
• You have saved a minimum deposit of 5%
• You are a first home buyer, or have not owned property or land in Australia in the last 10 years
• The home is priced at or below the price cap for its location
• You plan to live in the home as an owner occupier, so investment properties are excluded
• You take an owner occupier loan with principal and interest repayments from a participating lender, for up to 30 years
• You apply on your own or jointly with one other person, such as a partner, friend or family member
The scheme is for buyers with a deposit of at least 5% and less than 20%. If you have 20% or more saved after covering other purchase costs such as stamp duty and legal fees, your loan will not be eligible.
Being eligible for the scheme is not the same as being approved for a loan. You must also meet your participating lender's credit policy and loan approval criteria.
First Home Guarantee price caps by state
Both the purchase price and the home's value, as assessed by your lender, must be at or below the cap for the area.
| State | Capital city and regional centres | Other areas |
|---|---|---|
| New South Wales | $1,500,000 | $800,000 |
| Victoria | $950,000 | $650,000 |
| Queensland | $1,000,000 | $700,000 |
| Western Australia | $850,000 | $600,000 |
| South Australia | $900,000 | $500,000 |
| Tasmania | $700,000 | $550,000 |
| ACT (all areas) | $1,000,000 | $1,000,000 |
Source, Australian Government First Home Buyers website.
For Hunter buyers, Newcastle and Lake Macquarie are classed as regional centres, along with the Central Coast, Coffs Harbour and Grafton, Illawarra, the Mid North Coast and Richmond Tweed. That means the higher $1,500,000 cap applies across much of the region. Caps are set by postcode, and some suburbs have more than one postcode with different caps, so always check the exact location before you make an offer.
How much deposit do you need?
The government's own example uses an $800,000 property. The usual 20% deposit would be $160,000, while a 5% deposit is $40,000, and saving the extra $120,000 could take several more years.
A smaller deposit comes with trade offs. Borrowing a larger share of the property's value means you may pay more interest over the life of the loan, be more affected if rates rise and start with less equity in your home. Budget separately for stamp duty (unless you qualify for relief), conveyancing, inspections and moving costs.
What type of property can you buy?
Eligible property types include new or existing houses, townhouses, apartments, house and land packages, off the plan purchases and vacant land with a building contract, all within the location price cap. If you are building on vacant land under separate contracts, the land price plus build costs together must come in under the cap.
How to apply for the First Home Guarantee
1. Check your eligibility. Confirm you meet the criteria above.
2. Talk to a broker or participating lender. You cannot apply directly to Housing Australia. Applications only go through a participating lender as part of a home loan application, and participating lenders may offer loans directly or through representatives such as brokers.
3. Provide your documents. These include proof of identity, your Medicare number, proof of citizenship or residency and a completed Home Buyer Declaration form.
4. Find your home. Once your place is approved, you have 90 days to find a home and sign a contract of sale.
5. Settle and move in. When buying an existing home, you must move in within 6 months of your home loan settlement date.
Keep the rules after you move in. To keep the guarantee you must keep living in the property as an owner occupier. If you do not, the guarantee may no longer apply and your lender may require you to pay LMI or other costs.
First home buyer grants and stamp duty relief in NSW
Many people searching for a first home buyer scheme or first home buyers grant in NSW are looking for state support. These programs are separate from the federal guarantee. Receiving the guarantee does not prevent you from accessing other housing support programs from the Australian or state and territory governments.
First Home Buyers Assistance Scheme (stamp duty relief). This NSW scheme gives a full transfer duty exemption on new or existing homes valued up to $800,000, and a concessional rate for homes over $800,000 and under $1,000,000. For vacant land you intend to build on, the exemption applies up to $350,000, with a concession between $350,000 and $450,000.
First Home Owner (New Homes) Grant. This is a $10,000 grant for buying or building your first new home, and it is not available for established homes. A newly built home must not exceed $600,000. If you buy vacant land and build, the combined cost must not exceed $750,000.
One combination does not work. The 5% Deposit Scheme and the Help to Buy Scheme cannot be used together.
If you are buying outside NSW, grant and stamp duty rules differ by state. We can work through the options with you.
Lenders we work with on the scheme
We currently work with these participating lenders on the scheme. ANZ, Newcastle Permanent, Teachers Mutual Bank, St George, Westpac, CBA, Gateway Bank, NAB and MyState Bank.
How a mortgage broker helps with the First Home Guarantee
Participating lenders differ on rates, fees, features and credit policy. A broker checks your eligibility before you start house hunting, compares the participating lenders against your situation, and manages the application and paperwork through to settlement.
Brokers also carry a legal obligation to you. Since 1 January 2021, mortgage brokers have been required to act in the best interests of consumers and to prioritise consumers' interests when providing credit assistance.
Frequently asked questions
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No. Income caps have been removed. You still need to show you can afford the loan.
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No, not while the guarantee applies. Housing Australia provides a guarantee to the lender so you only need a minimum 5% deposit. If you stop meeting the ongoing rules, your lender may require you to pay LMI.
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No. The property must remain owner occupied, and converting it into a rental is not allowed.
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Yes. Joint applications of two people are allowed, including partners, friends or family members.
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Yes. Single parents or legal guardians may be able to buy with a minimum 2% deposit.
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Newcastle and Lake Macquarie are regional centres, so the NSW cap of $1,500,000 applies. Check the exact postcode before you buy.
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Yes. The Australian Government 5% Deposit Scheme was formerly known as the Home Guarantee Scheme.
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Possibly. You may be able to refinance with another participating lender and keep the benefit, but you cannot increase the loan amount or extend the term. Refinancing to a lender that is not a participating lender ends the guarantee.
Talk to Neo Finance Group
Speak with our team in Newcastle to check your eligibility against the current rules. We work with first home buyers across Australia.
Sources
• Australian Government 5% Deposit Scheme, First Home Buyers website
• Australian Government 5% Deposit Scheme Information Guide, Housing Australia, 1 July 2026
• Property Price Caps, First Home Buyers website
• Supporting people into home ownership, Treasury
• First Home Buyers Assistance Scheme, Revenue NSW
• First Home Owner (New Homes) Grant, Revenue NSW
• RG 273 Mortgage brokers, Best interests duty, ASIC
This article is general information only and does not take into account your objectives, financial situation or needs. Eligibility rules, price caps and lender criteria can change, so confirm current details before acting. Connective Credit Services Pty Ltd, Australian Credit Licence Number 389328.
