First Home Guarantee – 5% Deposit for First Home Buyers

Pay only a 5% Deposit on your Home Loan with the Government's First Home Guarantee (previously FHLDS). Here we explore the different expansions of this scheme, it’s eligibility and how to apply.

Page updated 21 March 2024

Previously known as the First Home Deposit Scheme, the First Home Guarantee is a federal government scheme helping a limited number of first home buyers purchase a property with as little as a 5% deposit without paying LMI.

The scheme is part of the federal government's suite of Home Guarantees which also includes the Family Home Guarantee for single parents, the Regional First Home Buyer Guarantee and previously included the New Home Guarantee.

What is the First Home Guarantee and how does it work?

The First Home Guarantee is a Government incentive that allows first home buyers to purchase their first home with a deposit as low as 5%, without the need to pay Lenders’ Mortgage Insurance (LMI).

LMI is a one-insurance payment that protects the lender in the event that you default on your home loan repayments. It is usually applicable when borrowing over 80% of the value on the property, however, with the First Home Guarantee, the Government will underwrite your home loan and act as a guarantor to ensure you don’t have to pay LMI.

Eligibility for the First Home Guarantee

Income test

Singles with a taxable income less than $125,000, couples less than $200,000 for the previous financial year. Please note when applying for a place in this scheme, you will need to provide the relevant Notice of Assessment from the ATO for the previous financial year.
Joint applications

Any two eligible people may apply together, including friends, siblings or other family members.
Prior Ownership

You must provide proof you have not owned or held interest in property in Australia in the past ten years. This includes commercial property, investment or company title properties.
Citizenship

The scheme is available to eligible borrowers who are Australian Permanent Residents.
Owner Occupied

You need to move into the property within six months of owning your home and continue to live in that property for so long as your home loan has a guarantee under the Scheme.

Property Price caps FY 2023-24

State/Territory	Capital city/regional centre	Rest of state
NSW	$900,000	$750,000
VIC	$800,000	$650,000
QLD	$700,000	$550,000
WA	$600,000	$450,000
SA	$600,000	$450,000
TAS	$600,000	$450,000
ACT	$750,000	N/A
NT	$600,000	N/A
Jervis Bay Territory & Norfolk Island	$550,000	N/A
Christmas Island & Cocos (Keeling) Island	$400,000	N/A

Source: Housing Australia Property Price Caps - For previous financial years' price caps visit NHFIC here.

What are the benefits of the scheme?

The main benefit of the First Home Guarantee to any eligible first home buyers is providing quicker access to the property market through the removal of barriers. As this scheme allows you to buy a house with a lower deposit, you can benefit by saving time on saving up a 20% deposit and have the opportunity to purchase your first home quicker.

As well as entering the property earlier, with the First Home Guarantee you can save thousands by not paying LMI at settlement. And, as an added bonus, as LMI is usually added to your loan amount, you’ll be saving even more money on the interest you would may on LMI while it’s a part of your loan balance.

Example of the First Home Guarantee works

If you’re looking to purchase and existing property in NSW valued at $600,000, however only have a 5% deposit of $30,000, you would likely need to pay LMI. However, if you successfully receive one of the 35,000 places available in the First Home Guarantee, the Government would essentially step in to provide a guarantee to cover your loan amount in the case of a default. In this example you would be saving thousands due to the First Home Guarantee, by avoiding the LMI payment.

How to apply for the First Home Guarantee

To apply for the First Home Guarantee, you will need to send your application directly with one of the Scheme’s participating lenders or through a mortgage broker.

Contact your local Mortgage Choice broker today to find out if you’re eligible – and to find out which lenders are involved in the scheme.

Who are the participating lenders for the First Home Guarantee

There are currently 27 participating lenders across Australia offering places under this scheme, a number of which are included in Mortgage Choice’s lender panel.

Get in contact with your broker to find out which lenders are involved in the scheme and if any are right for you.