First Home Guarantee Scheme
Families and individuals working towards saving up for a deposit need all the help they can get, as costs in homeownership continue to rise. One of several government initiatives is the First Home Guarantee Scheme, which aims to help prospective home buyers enter the housing market with just 5% of deposit.
Let’s look at what key advantages the First Home Guarantee Scheme offers new home buyers, and if it’s a helpful initiative for Aussies who may have difficulty saving a substantial deposit.
How does First Home Guarantee Scheme work?
Under this provision, first home buyers can pay just 5% of the property value when buying a home.
While that is allowed in standard home loans, paying only 5% also means having to shoulder Lenders’ Mortgage Insurance (LMI). LMI is a one-off premium that protects the lender in case you default on mortgage repayments and adds thousands of dollars to your loan.
The First Home Guarantee Scheme allows you to avoid the expense – meaning you can purchase a property with a minimum deposit of 5%, waiving the LMI. Essentially, a buyer can borrow up to 95% of the property value with government assistance for approximately 15% of that value.
The federal scheme offers 35,000 slots for Australians across the country each year up to 30 June 2025.
What type of property can I buy?
Eligible properties under the First Home Guarantee include an existing house, townhouse, or apartment. You could also buy a house and land package, a land and a separate contract to construct the home, and an off-the-plan apartment.
Who is eligible for the First Home Guarantee?
To qualify for the First Home Guarantee, take note of these conditions:
- This is meant for first time home buyers who have not previously owned or co-owned a property.
- Applicants must be owner occupiers, or home buyers who intend to reside in the property as a permanent dwelling.
- You must be an Australian citizen, at least 18 years of age, and a holder of Medicare card. Permanent residents are not eligible.
- You have a minimum of 5% deposit for the home loan, and lenders require that this be from genuine savings.
- Single individual applicant should have an income of up to $125,000 a year. As for couples, the income should be up to $200,000 a year.
- Couples who are spouses or in a de facto relationship can apply. Siblings, parent and child or friends applying for the scheme, will not be eligible.
Property price caps
The First Home Guarantee Scheme applies price caps on the value of properties that can be purchased under the scheme. These caps vary depending on the location of the property to ensure that the scheme is accessible for buyers in different areas. The price caps aim to assist first home buyers in both metropolitan areas and regional centers.
Major cities and their surrounding regions have higher property caps at around $600,000 to $900,000. Meanwhile, regional areas that include towns, smaller cities, and rural locations tend to have lower price caps.
Property Price Caps FY 2022-2023
| State/Territory | Cities / Regional Centres | The Rest of the State / Territory |
| New South Wales (NSW) | Sydney + Regional Centres = $900,000 | $750,000 |
| Victoria (VIC) | Melbourne + Regional Centres = $800,000 | $650,000 |
| Queensland (QLD) | Brisbane, Gold Coast, The Sunshine Coast = $700,000 | $550,000 |
| Western Australia (WA) | Perth = $600,000 | $450,000 |
| South Australia (SA) | Adelaide = $600,000 | $450,000 |
| Tasmania (TAS) | Hobart = $600,000 | $450,000 |
| Australian Capital Territory (ACT) | $750,000 | N/A |
| Northern Territory (NT) | $600,000 | N/A |
| Jervis Bay Territory and Norfolk Island | $550,000 | N/A |
| Christmas Island and Cocos Islands | $400,000 | N/A |
What should I expect when applying for First Home Guarantee?
Though the scheme is a big help in cutting down on upfront mortgage costs, there are a lot of caveats to being eligible for the scheme.
For instance, there is a chance that saving up for a 20% deposit would prove to be more financially sound than getting the First Home Guarantee. Considering that the interest rate is high right now, even without shouldering the LMI, the total repayments for having a small deposit would amount to hundreds of thousands of dollars.
The First Home Guarantee Scheme is super helpful, but it won’t automatically mean that mortgage repayments will become easy over the life of your loan. If possible, try ramping up the deposit up to 10% to pay less interest in the long term.
First Home Guarantee Lenders in Australia
A panel of 32 participating lenders offers the First Home Guarantee to prospective home buyers. If you are considering this option, remember that applications can only be made through a participating lender or their authorized representative, like our brokers here at Intellichoice.
We are your trusted financial advisors who can assess whether a specific home loan or property aligns with the scheme and checks your financial and personal objectives. Our decades’ worth of experience, along with an extensive network of lenders, result in a more careful, thorough home loan consideration.
Contact your Intellichoice broker today – we’ll find out if you are eligible and facilitate your First Home Guarantee Scheme application immediately.
