First Home Guarantee: The Official Rules, in Plain English
The First Home Guarantee lets eligible first home buyers purchase with a 5% deposit and no Lenders Mortgage Insurance, because the government guarantees the gap between your deposit and 20%. It's administered by Housing Australia, and you apply through a participating lender rather than through the government.
The two changes that matter most: from 1 October 2025, income caps were removed and the property price caps were updated. What's left to get wrong is the price cap for your specific postcode, and the fact that the guarantee doesn't make a lender approve you.
The scheme is administered by Housing Australia and its rules, price caps and participating lender list change. Confirm your exact postcode cap and current eligibility with Housing Australia or a participating lender before you sign a contract. Nothing on this page is financial advice.
The rules in one table
| Rule | What applies | Notes |
|---|---|---|
| Minimum deposit | 5% of the property price | The government guarantees the gap to 20% |
| Lenders Mortgage Insurance | Not payable | Typically saves $15,000 to $40,000 |
| Income caps | None from 1 October 2025 | Removed as part of the scheme changes |
| First home buyer status | You must not have previously owned property in Australia | Applies to every buyer on the application |
| Residency | At least one applicant must be an Australian citizen or permanent resident | Confirm current requirements with Housing Australia |
| Property use | Owner-occupier only | No investment properties |
| Loan type | Principal and interest | Interest-only is not eligible |
| Property price caps | Postcode-based, set by Housing Australia | The most common reason applications fail |
| Where you apply | Through a participating lender | Not directly to the government |
Rules current as at the last update of this page. Verify with Housing Australia before acting.
Property price caps
This is where most applications come unstuck. The caps are set by region and are postcode-based, so a suburb on one side of a boundary can have a different cap to the suburb next door.
| Region | Approximate cap guide | Confirm the exact postcode cap |
|---|---|---|
| NSW, capital city and regional centres | Around $1,500,000 | Yes |
| Victoria, capital city and Geelong | Around $950,000 | Yes |
| Queensland, capital city and Gold Coast / Sunshine Coast | Around $1,000,000 | Yes |
| South Australia, capital city | Around $900,000 | Yes |
| Western Australia, capital city | Around $850,000 | Yes |
| ACT | Around $1,000,000 | Yes |
| Northern Territory | Around $600,000 | Yes |
| Other regional areas | Generally $500,000 to $800,000 depending on the state | Yes |
Indicative ranges only. Caps are postcode-based and change. Confirm the exact cap with Housing Australia or a participating lender before signing a contract.
Treat those as orientation only. The number that decides your purchase is the cap for the exact postcode, and only Housing Australia's own tool or a participating lender can confirm it.
The five things people get wrong
1. Thinking the guarantee means approval
It doesn't. The lender still assesses serviceability the normal way: income, expenses, existing debts, credit card limits, HECS, and the APRA stress test that adds 3 percentage points to the assessment rate. Plenty of people who are eligible for the scheme are still knocked back on serviceability.
Work out your borrowing capacity before you get attached to a suburb.
2. Ignoring the postcode cap
Buying above the cap disqualifies the purchase, not just reduces the benefit. Confirm the cap before you bid, not after.
3. Forgetting it doesn't cover the other costs
The guarantee removes LMI. It doesn't touch stamp duty, conveyancing, building and pest inspections, transfer and registration fees, moving costs, or the first year of rates and insurance. Budget for all of it separately.
4. Assuming every lender does it the same way
Only participating lenders offer the scheme, and their processes, turnaround times and serviceability policies differ. So does the number of scheme places any given lender has available at a point in time.
5. Underestimating what a 95% loan means
You're borrowing 95% of the property value. That means a bigger loan, higher repayments, more total interest across the life of the loan, and a thin equity buffer if prices fall. Avoiding LMI is a real saving and it's still a highly geared position. Both things are true.
What the scheme is worth in dollars
LMI on a low-deposit purchase commonly runs somewhere between $15,000 and $40,000 depending on the property price and the loan-to-value ratio. That's the saving, and it's paid nothing extra for the guarantee.
The bigger effect is the deposit. On a $650,000 property, a 20% deposit is $130,000 and a 5% deposit is $32,500. Getting in with $97,500 less saved is the change that actually moves people's timelines by years.
Use the LMI Calculator to see what LMI would have cost you at your deposit level.
It stacks with state concessions
The First Home Guarantee is a Commonwealth scheme. State and territory first home buyer stamp duty concessions and grants are separate, and you can generally use both.
Stamp duty thresholds and concessions differ substantially by state and change in most budgets, so check your own:
Related federal schemes, which are not the same thing
- Regional First Home Buyer Guarantee. Similar structure, aimed at regional buyers, with its own caps and eligibility.
- Family Home Guarantee. For eligible single parents and some other applicants, with a lower minimum deposit.
- Help to Buy. A shared equity scheme where the government takes an ownership stake. Completely different mechanism, and not the same as the guarantee.
People conflate these constantly. If someone tells you the government will "own part of your house" under the First Home Guarantee, they're describing Help to Buy, not this.
How to actually apply
- Check your borrowing capacity and your genuine savings position first.
- Confirm eligibility against the current Housing Australia rules, including the owner-occupier requirement.
- Look up the price cap for the postcodes you're searching.
- Choose a participating lender, or use a broker who knows which participating lenders suit your income type.
- Get pre-approval and tell the lender you want to use the First Home Guarantee. They handle the Housing Australia side.
- Buy under the cap. In a hot market this is the hardest step by a distance.
Run your own numbers
- Borrowing Capacity Calculator to see what a lender is likely to offer
- Can I Afford to Buy Calculator for the full upfront picture including deposit and stamp duty
- Mortgage Repayment Calculator for what the repayments look like on a 95% loan
- LMI Calculator for what you'd have paid without the guarantee
- Stamp Duty Calculator for the state-based cost
A broker can search 30+ lenders to find the one with the strongest assessment for your situation, for free.
Related reading
- First Home Guarantee: Buy a House With Just 5% Deposit
- How to Increase Your Borrowing Capacity
- Can I Buy With a 5% Deposit?
Frequently asked questions
What is the First Home Guarantee?
A Commonwealth scheme administered by Housing Australia that lets eligible first home buyers purchase with a 5% deposit without paying Lenders Mortgage Insurance. The government guarantees the gap between your deposit and 20%, which typically saves between $15,000 and $40,000.
Are there income caps for the First Home Guarantee?
No. Income caps were removed from 1 October 2025. You still need to meet the first home buyer, residency, owner-occupier and property price cap requirements, and the lender still has to approve the loan on serviceability.
What are the property price caps?
Caps are postcode-based and set by Housing Australia. As a rough guide they range from around $500,000 in some lower-priced areas up to around $1,500,000 in Sydney. Buying above the cap disqualifies the purchase entirely, so confirm the exact postcode cap before you bid.
Does the First Home Guarantee mean I am approved for a loan?
No. The lender still assesses serviceability the normal way, including income, living expenses, credit card limits, HECS and the APRA requirement to stress test at the loan rate plus 3 percentage points. Plenty of eligible applicants are still declined on serviceability.
Can I use the First Home Guarantee with state stamp duty concessions?
Generally yes. The guarantee is a Commonwealth scheme and state or territory first home buyer stamp duty concessions and grants are separate. Thresholds differ by state and change regularly, so check your own state's current rules.
Is the First Home Guarantee the same as Help to Buy?
No. Help to Buy is a shared equity scheme where the government takes an ownership stake in the property. The First Home Guarantee is a guarantee only, and you own 100% of the home.