Buying your first home often seems impossible, especially when needing to save a substantial deposit. That’s where the First Home Guarantee Scheme (FHGS) can help. This government scheme aims to simplify entry for first-home buyers by reducing the deposit required.
In this article, we’ll explain everything you need to know about the scheme, covering how it works, who’s eligible, the key benefits, and real examples to help you understand how it could work for you.
What is the First Home Guarantee Scheme?
The First Home Guarantee Scheme is a government initiative that helps eligible Australians buy their first home with just a 5% deposit and no Lenders Mortgage Insurance (LMI). It’s administered by Housing Australia, which guarantees up to 15% of a home loan through participating lenders, allowing buyers to enter the property market sooner.
Typically, buyers require a 20% deposit to avoid LMI; however, with this guarantee, the government covers part of the loan, increasing lenders’ confidence and helping first-home buyers enter the property market faster.
How the Scheme Works: Real-Life Example
Emma wants to buy a home and has been saving for a deposit. She finds a property she loves but isn’t sure how the First Home Guarantee Scheme could help.
- Property value: $750,000
- Usual deposit (20%): $150,000
- Emma’s deposit (5%): $37,500
Normally, Emma would need a 20% deposit to qualify for a home loan. With only $37,500 saved, it could take her years to reach the full amount.
Since Emma meets the eligibility criteria, she can apply for the scheme through a participating lender. This means she only needs a 5% deposit, which in her case is $37,500, instead of the usual $150,000. The government guarantees the remaining 15% of the deposit, helping her secure a home loan sooner, avoid paying LMI, and save thousands upfront.
Key Benefits of the First Home Guarantee Scheme
The First Home Guarantee gives eligible buyers a head start in purchasing their first property. It reduces the deposit amount and eliminates the LMI fee. This means you can secure a home loan sooner, without the pressure of saving for years. It’s a practical way to make owning your first home more achievable.
Eligibility Criteria: Who Can Apply?
To qualify for the First Home Guarantee, you’ll need to meet a few basic criteria:
- Citizenship: You must be an Australian citizen or permanent resident.
- Deposit: You need at least a 5% deposit saved.
- First-home status: You must be a first-home buyer or haven’t owned property in Australia in the past 10 years.
- Owner-occupier: The property must be your main residence (not an investment).
- Age: You must be at least 18 years old.
The property must also meet certain conditions – it needs to be residential, within the local price cap, and the loan must be from a participating lender with principal and interest repayments over a maximum 30-year term.
STATE | CAPITAL CITY & REGIONAL CENTRES | REST OF STATE |
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 |
TERRITORY | ALL AREAS |
Australian Capital Territory | $1,000,000 |
Northern Territory | $600,000 |
Jervis Bay Territory & Norfolk Island | $550,000 |
Christmas Island & Cocos (Keeling) Islands | $400,000 |
Pros and Cons of the First Home Guarantee Scheme
The First Home Guarantee offers several benefits for first-home buyers but also has some important limitations to consider.
Pros:
- Unlimited places – no more waiting lists, so more buyers can access the scheme.
- No income limits & higher property price caps – more people can qualify, and the scheme reflects today’s market.
Cons:
- Smaller deposit means a larger loan – borrowing more can lead to higher repayments and interest over time.
- Eligibility restrictions – not all properties qualify due to price caps, and the scheme is for owner-occupiers only, so investment properties aren’t allowed.
The scheme is a valuable way to enter the property market sooner, but buyers should consider loan size, repayments, and property eligibility before applying. Our mortgage calculators can help you estimate repayments and understand how different deposit sizes impact your loan.
How Can You Use the First Home Guarantee Scheme with Other Schemes?
You can combine the First Home Guarantee with other government schemes to maximise savings:
- First Home Super Saver (FHSS): Save your deposit inside your super and receive tax benefits.
- First Home Owner Grant (FHOG): Get $10,000 when buying or building a new home.
- First Home Buyers Assistance Scheme (FHBAS): Pay less or no stamp duty.
By stacking these schemes, first-home buyers can reduce upfront costs, lower their mortgage burden, and enter the property market sooner. To learn how these programs work together and what’s available in your state, read our full guide on first home buyer assistance in Sydney.
Expert Tips for Making the Most of the First Home Guarantee Scheme
- Combine schemes where possible – pair the FHBG with programs like FHOG or FHBAS for extra savings.
- Work with an experienced mortgage broker – they’ll guide you through eligibility, documents, and lender options. You can book a free 15 minute consultation with an AFMS mortgage broker to discuss your goals and get tailored advice for your first home purchase.
- Plan for ongoing costs – even with a smaller deposit, remember to budget for rates, insurance, and maintenance.
You’ll also benefit from competitive interest rates similar to those offered on 80% Loan-to-Value Ratio (LVR) loans, rather than the higher rates typically charged for 90–95% LVR loans. This strengthens your borrowing capacity under the scheme.
Author: Andrew Hadjidemetri
Founder and Principal Broker of AFMS Group, Andrew Hadjidemetri is an award-winning expert with over a decade of mortgage experience.
