The First Home Guarantee Explained: Who Qualifies and How to Apply
26 May 2026
What the First Home Guarantee Actually Does
The First Home Guarantee (FHBG) is a federal government scheme administered by Housing Australia. Under the scheme, the government acts as a guarantor for up to 15% of the purchase price, allowing the buyer to proceed with a 5% deposit without triggering Lenders Mortgage Insurance. The government is not lending you money — it is guaranteeing a portion of the loan so the lender accepts the lower deposit without requiring LMI.
LMI is typically required when a borrower has less than a 20% deposit. It protects the lender, not the borrower, and can cost anywhere from $8,000 to $35,000 depending on the loan size and deposit amount — often added to the loan balance and repaid with interest over the full loan term. The guarantee removes this cost entirely for eligible buyers.
35,000 places are available each financial year under the standard First Home Guarantee. Places are allocated on a first-come, first-served basis through participating lenders. Once the annual allocation is exhausted, no further applications are accepted until the new financial year begins on 1 July.
Who Is Eligible?
Eligibility criteria apply to both the buyer and the property. The scheme is designed for Australian citizens and permanent residents who have not previously owned or had an ownership interest in residential property in Australia.
| Criterion | Requirement |
|---|---|
| Citizenship | Australian citizen or permanent resident |
| Prior ownership | Must not have previously owned property in Australia |
| Income (individual) | Taxable income of $125,000 or less (prior financial year) |
| Income (couple) | Combined taxable income of $200,000 or less (prior financial year) |
| Deposit | Minimum 5%, maximum 19.99% of purchase price |
| Occupancy | Must intend to live in the property as principal place of residence |
| Property type | Residential: existing homes, new builds, townhouses, apartments, land and build |
The income thresholds apply to the prior financial year's taxable income — for applications made in the 2025–26 financial year, the relevant income year is 2024–25. If a couple's combined income exceeds $200,000 but one partner earns under $125,000, they do not qualify under the couple threshold — the combined figure applies.
Property Price Caps by Location
The scheme applies price caps that vary by state and whether the property is in a capital city or a regional area. Purchasing above the cap disqualifies the property from the scheme, regardless of the buyer's eligibility.
VIC (capital / major cities): $800,000. VIC (regional): $650,000.
QLD (capital / major cities): $700,000. QLD (regional): $550,000.
WA (capital / major cities): $600,000. WA (regional): $450,000.
SA, TAS, ACT, NT: various. Check the Housing Australia website for current figures before assuming eligibility.
Price caps are reviewed periodically and can change between financial years. The figures above are indicative of recent settings but should be verified directly with Housing Australia or through a participating lender before relying on them for a purchase decision.
How to Apply: The Process
Applications for the First Home Guarantee are made through a participating lender — not directly through Housing Australia. A list of approved lenders is published on the Housing Australia website and includes major banks, regional banks, credit unions, and non-bank lenders. Not every lender participates, and the loan products available under the scheme vary between lenders, so comparison is still worthwhile.
When you apply for a home loan with a participating lender and declare that you want to use the FHBG, the lender assesses your eligibility as part of the loan application. If eligible, the lender reserves a place on your behalf. The place is held during the loan approval and settlement process. You cannot reserve a place independently without a lender application.
A mortgage broker can submit to participating lenders on your behalf, which can speed up the process of finding an eligible lender that also offers a competitive loan product. Since places are limited and popular in the early months of each financial year, early application is worth considering.
What the Guarantee Does Not Cover
The guarantee covers the lender's risk exposure on the portion of the loan between your deposit and 20%. It does not cover your repayments if you default — that remains your responsibility. It does not replace the need for genuine savings or a solid application: lenders still assess income, expenses, credit history, and loan serviceability in full. Meeting the scheme criteria is not the same as having a loan approved.
The scheme also does not cover stamp duty, conveyancing costs, building inspections, or other purchase costs. A 5% deposit on a $700,000 property is $35,000, but total purchase costs including stamp duty (which varies by state and may have concessions for first home buyers), legal fees, and building inspections can add $20,000 to $40,000 on top of that figure depending on the state.
Key Takeaways
- The First Home Guarantee allows eligible buyers to purchase with a 5% deposit and no LMI — the government guarantees up to 15% of the loan value.
- 35,000 places are available per financial year, allocated on a first-come basis through participating lenders only.
- Income caps are $125,000 for individuals and $200,000 for couples, based on the prior financial year's taxable income.
- Property price caps vary by state and city vs regional location — check current limits on the Housing Australia website before proceeding.
- Applications go through participating lenders, not directly through Housing Australia. A broker can help identify eligible lenders with competitive products.
- The guarantee removes LMI but does not cover stamp duty, legal fees, or other purchase costs — factor these into your total savings target.
