First Home Guarantee (Formerly First Home Loan Deposit Scheme)

How does the First Home Guarantee work?

Typically, when you buy your first property you will need a home loan. For this, you will need at least 20% of the property price as a deposit. There are home loans that allow you to borrow with less, but you will need to pay lender's mortgage insurance (LMI). This protects the lender and comes at a cost of thousands or tens of thousands of dollars.

The First Home Guarantee Scheme is a federal government initiative which allows a first time buyer to borrow with as little as a 5% deposit. That means they would borrow 95% of the property price.

Here's what else you need to know:

• There are 35,000 places per year under the scheme
• Borrowers must be buying property to live in the home, not renting it out
• Borrowers must be earning less than $125,000 for individuals or $200,000 for joint applicants.
• There are property price caps dependent on state and city/region.

This scheme is designed to make low deposit home loans cheaper and is administered through Housing Australia, in partnership with a range of lenders.

You can take a quick quiz on Housing Australia's website to see if you're eligible for the scheme.

Finder survey: Did Australians use any government grants or schemes to take out their first home loan?

Am I eligible for the First Home Guarantee Scheme?

To apply for the First Home Guarantee Scheme you must meet the following criteria.

You must be:

• First home buyers or previous homeowners who haven't held an interest in real property in Australia in the past 10 years.
• An Australian citizen or permanent resident.
• At least 18 years of age.
• Earning up to $125,000 (individual buyer) or $200,000 (combined joint buyers).
• Intending to be owner occupiers of the property (to live in the home).

Eligible property types:

• An existing house, townhouse or apartment.
• A house and land package.
• Land and a separate contract to build a home.
• An off-the-plan apartment or townhouse.

Property value caps

To be eligible for the scheme you must be purchasing a property valued at or below the following thresholds:

*A regional centre is defined as a city with a population above 250,000, such as Newcastle, Wollongong or Geelong.

Our expert says: Shop around thoroughly

"Although there's a wide range of lenders participating for the First Home Guarantee, it's still important to shop around and compare elsewhere. You don't want to take out a home loan that doesn't suit you just because the lender participates in the scheme.

You should make sure that the interest rate you're getting is still competitive and keeps your costs down. There are several online lenders with great rates that aren't in the scheme. If you do the calculations, you might find that paying LMI with a lower interest rate costs you less than paying no LMI with a higher rate.

You can use Finder's mortgage repayment calculator to work out the difference."

Rebecca Pike

Senior Money Writer

What are the benefits of the First Home Guarantee?

The scheme allows you to get a home loan sooner because you only have to save a 5% deposit.

5% deposit home loans already exist, but you need to pay LMI when borrowing more than 80% of a property's value. LMI can cost thousands of dollars, so being able to use a 5% deposit without that cost is a key benefit.

Here's an example of a 5% deposit on a $500,000 home loan, with and without LMI.

You would pay about $100 more per month over the course of 30 years.

But primarily, the benefit of the scheme is that it saves you time and lets you start building equity sooner. It will cost you more money over the long-term than if you had saved a higher deposit.

How do I apply for the First Home Guarantee?

You can apply directly with any lender participating in the scheme (see the full list of lenders below). There are 35,000 places available in the 2024/25 financial year.

Which lenders are taking part in the scheme?

According to Housing Australia, the following lenders participate in the scheme:

Need help saving a house deposit? Check out our guide

Are there other government schemes to help home buyers?

At the state and territory level most governments offer:

• First home owner grants. This is a grant of money that can be used towards your purchase and is often reserved for first home buyers purchasing newly built properties.
• Stamp duty concessions. Many governments waive or discount stamp duty for first home buyers, removing one of the bigger property costs.
• The Family Home Guarantee allows eligible single parents to buy homes with 2% deposits and avoid LMI costs while borrowing the remaining 98%.
• The Regional Home Guarantee lets you buy or build a new home in regional Australia with a 5% deposit while avoiding LMI costs.

Federally, there is another government scheme called the First Home Super Saver Scheme. This scheme allows you to make extra contributions to your super and then withdraw them to use for a home loan deposit, with tax minimisation benefits for doing so.

Frequently Asked Questions

• What is a low deposit?

  A low deposit typically refers to a down payment of less than 20% of the property's purchase price. In Australia, it can be as low as 5%, depending on the lender and loan type. These loans generally will require LMI if the deposit is below 20%, unless you qualify for a waiver.

• How much is LMI on a 10% deposit?

  Lenders Mortgage Insurance (LMI) on a 10% deposit varies based on the value of the property. The higher the value of the property the more you pay in LMI.

• What's the lowest deposit for a house?

  The lowest deposit for a house in Australia can 5% of the purchase price, depending on the loan and lender. Some government schemes may allow even lower deposits for eligible buyers.

• Is a 40% deposit good?

  A 40% deposit is excellent as it significantly reduces the loan amount, often eliminates the need for LMI, and can provide better loan terms and interest rates.

Written by

Richard Whitten

Money Editor

Richard Whitten is Finder’s Money Editor, with over seven years of experience in home loans, property and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Graduate Certificate in Communications from Deakin University. See full bio

Richard's expertise

Richard has written 638 Finder guides across topics including:

• Home loans
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