Key takeaways
- The First Home Guarantee lets eligible buyers purchase with a 5% deposit and no LMI.
- The government acts as guarantor for part of the loan — it doesn’t give you cash or pay your deposit.
- Since 1 October 2025 there are no income caps and no limit on places. Property price caps still apply, and you must buy to live in the home.
- It can often be combined with state first-home grants and stamp duty concessions.
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The hardest part of a first purchase is rarely the repayments — it’s saving a 20% deposit while rents keep rising. The First Home Guarantee is designed for exactly that trap: it lets you buy sooner with a smaller deposit, without the LMI bill that normally comes with it. Used well, it’s one of the most powerful levers a first-home buyer has.
How does the First Home Guarantee work?
Normally, if your deposit is under 20% of the price, the lender requires Lenders Mortgage Insurance to protect itself against the shortfall. Under the First Home Guarantee, the government guarantees that gap instead — so a lender will accept a deposit as low as 5% and waive LMI. You still borrow the money and repay it in full; the government simply stands behind part of the loan. The guarantee generally stays in place until your loan balance falls below 80% of the property's value at purchase, or you refinance or sell.
Smaller deposit means a bigger loan and higher repayments — and buying at 95% means less equity buffer if prices dip. The Guarantee is a genuine accelerator, but it works best when your borrowing power and budget comfortably support the larger loan.
Who is eligible for the First Home Guarantee?
Eligibility hinges on a handful of tests, all of which change from time to time:
- First-home status. Generally you must not currently own property; some streams extend to buyers who haven’t owned for a set period.
- Residency. Australian citizens and, in most cases, permanent residents.
- No income test. The income caps were removed from 1 October 2025.
- Price cap. The property must fall within the cap for its city or region — these vary a lot by location.
- Owner-occupier. You must move in within the required timeframe; it’s not for investment purchases.
How do you apply for the First Home Guarantee?
You don’t apply to the government directly — you apply through a participating lender, which applies to Housing Australia on your behalf. Since 1 October 2025 there's no annual limit on places, so you no longer need to wait for a release. Lender choice still matters: participating lenders differ on pricing, turnaround and policy, and you still need to meet the lender's normal lending criteria. A broker can match you to a participating lender whose policy suits you.
Can you combine it with other first home buyer help?
The Guarantee often combines with your state’s First Home Owner Grant and stamp duty concessions, and it sits alongside the broader first-home journey covered in our first home buyer guide. If family can help, it’s also worth comparing against a guarantor loan, which achieves a similar deposit-free result a different way.
Broker Insight. The scheme changed significantly on 1 October 2025, so older articles about income caps and limited places are out of date. We check your eligibility against Housing Australia's current rules before you rely on it.
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Frequently asked questions
What is the First Home Guarantee?
It’s a federal government scheme where the government guarantees part of your loan so you can buy with as little as a 5% deposit without paying Lenders Mortgage Insurance. The government doesn’t give you money or pay your deposit — it acts as guarantor for the gap a lender would normally require LMI to cover. Since 1 October 2025 there are no income caps or limits on places; property price caps still apply. You apply through a participating lender.
Do I still avoid LMI with only 5% deposit?
Yes — that’s the core benefit. Normally a deposit under 20% triggers LMI, which can cost thousands to tens of thousands. Under the Guarantee the government’s backing replaces the need for LMI, so an eligible buyer with a 5% deposit pays none. You still need to service the larger loan, so borrowing capacity still matters.
What are the eligibility requirements?
Broadly: you must be an eligible first home buyer (some categories extend to previous owners after a set period), an Australian citizen or permanent resident, and buying an owner-occupied home within your area’s property price cap. There has been no income test since 1 October 2025. You also need to move in within a set time and hold at least the minimum genuine deposit. The exact caps and thresholds change, so we check your eligibility against the current rules before you rely on it.
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This guide is general information only and does not take your personal circumstances into account. It is not financial, credit, tax or legal advice. Examples are illustrative only. Government schemes, lender policies, rates and tax rules change over time and eligibility criteria apply. Speak with us for advice tailored to your situation. LendQuest Pty Ltd is a credit representative (555514) of BLSSA Pty Ltd, Australian Credit Licence 391237.