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.
- Places are limited, income and price caps apply, and you must buy to live in the home.
- It can often be combined with state first-home grants and stamp duty concessions.
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 it works
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. If you never miss a beat, the guarantee quietly does its job in the background and is released as your equity grows.
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’s eligible
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.
- Income cap. Your taxable income must sit under the threshold for singles or couples.
- 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 to apply, and why places matter
You don’t apply to the government directly — you apply through a participating lender, and a limited number of places are released each period. When they run out, you wait for the next release. That makes timing and lender choice important: some participating lenders move faster or price the loan better than others. A broker can match you to a participating lender whose policy suits you and get your application in while places are available.
Stacking it with other 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. Scheme places, price caps and eligibility change regularly. We keep across which lenders are offering it right now, so you’re working with current rules rather than last year’s.
Find out if the Guarantee fits — in one conversation
We’ll check your eligibility against the current caps, match you to a participating lender with places available, and manage the application end to end. Free, no obligation.
Book your free game plan callFrequently 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. Places are limited and released periodically, and 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, buying an owner-occupied home within your area’s property price cap, and under the income threshold. 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.
This guide is general information only and does not take your personal circumstances into account. It is not financial or credit advice. Government schemes, lender policies, rates and tax rules change over time and eligibility criteria apply. Speak with us for advice tailored to your situation.