Key Takeaway

The First Home Guarantee (formerly the First Home Loan Deposit Scheme or FHLDS) is an Australian Government scheme that helps eligible first home buyers purchase a property with a deposit as low as 5 percent, without paying lenders mortgage insurance (LMI). The government guarantees up to 15 percent of the loan value, allowing participating lenders to offer home loans at higher loan-to-value ratios than they would normally accept without LMI.

What Is the First Home Guarantee?

The First Home Guarantee is administered by the National Housing Finance and Investment Corporation (NHFIC) and operates on a capped number of places each financial year. According to the NHFIC, the scheme allows eligible first home buyers to secure a home loan with as little as a 5 percent deposit, provided they meet income caps and property price limits (NHFIC, 2026).

Without this scheme, most lenders require at least a 20 percent deposit to avoid LMI, which can add thousands of dollars to your upfront costs. By guaranteeing part of the loan, the government effectively reduces the lender’s risk, which eliminates the LMI requirement.

Who Is Eligible?

To qualify for the First Home Guarantee in Australia, you must:

  • Be an Australian citizen aged 18 or over
  • Be a first home buyer (you and any co-applicants must not have previously owned property in Australia)
  • Meet income caps: A$125,000 per year for individuals or A$200,000 combined for couples (as of 2026, verify current limits)
  • Buy a property within the scheme’s price caps, which vary by location (for example, A$800,000 in Sydney and Melbourne, lower in regional areas)
  • Intend to occupy the property as your principal place of residence within 12 months of settlement and for at least six months of the first year

Single parents and single legal guardians may have higher income caps under certain conditions. Eligibility and limits change, so confirm with a participating lender or the NHFIC before applying.

How It Works

You apply through a participating lender (major banks and many smaller lenders are part of the scheme). The lender assesses your serviceability and the property as they would for any home loan. If you qualify and a guarantee place is available, the lender arranges the government guarantee on your behalf.

The guarantee covers up to 15 percent of the property value. If you provide a 5 percent deposit, your loan-to-value ratio (LVR) is 95 percent, but the lender’s exposure is reduced by the guarantee. You repay the loan in full to the lender; the guarantee is not a grant or a subsidy, and you do not receive any cash directly.

What You Save

The main saving is avoiding LMI, which typically costs between A$5,000 and A$30,000 depending on your deposit size and loan amount. A smaller deposit also means you can buy sooner, rather than waiting years to save the traditional 20 percent.

Read also: Understanding Lenders Mortgage Insurance (LMI) in Australia: How to Avoid or Reduce the Cost

Interest rates and loan features are set by the lender and are comparable to standard home loans, as the scheme does not subsidise the interest rate itself. According to ASIC MoneySmart, first home buyers should compare offers from multiple participating lenders to secure the best rate and product features for their circumstances (MoneySmart, 2026).

What to Know Before Applying

Places in the scheme are limited each financial year and are allocated on a first-come, first-served basis. Once the cap is reached, no new guarantees are issued until the next financial year (July 1), so apply early if you are ready.

The property price caps and income limits vary by state and territory and may be updated annually. Confirm you meet all eligibility criteria before committing to a purchase.

Stamp duty concessions and grants for first home buyers (such as the First Home Owner Grant) are separate and administered by state and territory governments. You may be able to combine the First Home Guarantee with a state-level grant or stamp duty exemption, depending on your location and the property type.

Next Step

If you are a first home buyer ready to enter the market, check your eligibility and contact a participating lender to discuss your options under the First Home Guarantee. Confirm current income caps, property price limits, and the availability of guarantee places before making an offer.

General Advice Warning: This information is general in nature and does not consider your objectives, financial situation, or needs. Before acting on it, consider obtaining personal advice from a licensed mortgage broker or financial adviser. This article is not personalised financial, lending, or legal advice.

Eligibility, income caps, property price limits, and the number of available guarantee places vary by financial year and location. The First Home Guarantee is subject to change by the Australian Government. Confirm current terms with the NHFIC or a participating lender before proceeding.