The First Home Guarantee (FHBG), previously known as the First Home Loan Deposit Scheme, is an Australian Government initiative administered by Housing Australia that allows eligible first home buyers to purchase a property with a deposit as low as 5% (or 2-3% for regional buyers under the Regional First Home Buyer Guarantee) without paying Lenders Mortgage Insurance (LMI). Under the scheme, the government guarantees up to 15% of the property value to participating lenders, effectively making up the difference between the buyer's 5% deposit and the standard 20% threshold that lenders use to avoid requiring LMI. This can save buyers tens of thousands of dollars in LMI premiums that would otherwise be charged for high loan-to-value-ratio lending. To be eligible, applicants must be Australian citizens aged 18 or over, must not have previously owned a property in Australia, must earn no more than $125,000 per year as a single applicant or $200,000 combined as a couple or two individuals buying together, and must intend to be an owner-occupier of the purchased property. Price caps apply by location — for example, in NSW major cities the cap is $900,000, while regional areas have lower caps. There are a limited number of guarantee places available each financial year, distributed among a panel of participating lenders including major banks and regional lenders. The guarantee does not involve a cash payment to the buyer or the lender but is a government-backed contingent liability that allows the lender to proceed without requiring LMI. First home buyers should also investigate state-based grants and stamp duty concessions which may be available simultaneously.
Minimum Deposit = Property Price × 5% (standard) or × 2% (regional); LMI Saving = LMI Premium that would otherwise apply at 5-10% deposit; Government Guarantee = Property Price × 15%
- 1Check eligibility: Australian citizen, aged 18+, income under $125,000 single or $200,000 couple, no previous property ownership, intend to live in the property.
- 2Confirm the property price is within the price cap for your state and area — caps differ between capital cities, large regional centres, and other regional areas.
- 3Apply through a participating lender that is part of the Housing Australia panel — not all lenders participate.
- 4The participating lender assesses your home loan application as normal, including serviceability and credit checks.
- 5If approved, Housing Australia guarantees up to 15% of the property value, allowing the lender to provide a loan at 95% LVR without requiring LMI.
- 6Settlement proceeds normally — the guarantee is a backstop for the lender and involves no cash payment to the buyer.
- 7Continue making mortgage repayments; once the LVR drops below 80% through repayments and/or capital growth, the guarantee can be released.
LMI saving is approximate; actual LMI varies by lender and loan size
Deposit $750,000 × 5% = $37,500. Without guarantee, LMI on 95% LVR would typically cost $15,000–$22,000.
Regional First Home Buyer Guarantee allows 2% deposit for eligible regional areas
Deposit $450,000 × 2% = $9,000. Government guarantees 18% of property value, allowing 98% LVR without LMI.
Melbourne price cap for FHBG is $800,000 (2024-25); income test uses base taxable income
$190,000 < $200,000 couple limit. $680,000 < $800,000 Melbourne cap. Both tests pass.
LMI protects the lender, not the buyer — the guarantee removes this cost entirely
LMI at ~3% on a 95% LVR $570,000 loan = ~$17,100 saved. Guarantee covers lender risk instead.
A first home buyer calculating whether their savings and income qualify for the scheme before approaching a lender.. This application is commonly used by professionals who need precise quantitative analysis to support decision-making, budgeting, and strategic planning in their respective fields
A couple checking whether their combined income is under the $200,000 threshold to access the guarantee.. Industry practitioners rely on this calculation to benchmark performance, compare alternatives, and ensure compliance with established standards and regulatory requirements
A buyer comparing the cost of entering the market now with the FHBG versus waiting to save a full 20% deposit.. Academic researchers and students use this computation to validate theoretical models, complete coursework assignments, and develop deeper understanding of the underlying mathematical principles
A mortgage broker advising clients on which participating lenders have remaining FHBG places for the current financial year.. Financial analysts and planners incorporate this calculation into their workflow to produce accurate forecasts, evaluate risk scenarios, and present data-driven recommendations to stakeholders
A regional buyer determining whether their town qualifies as a regional area for the Regional First Home Buyer Guarantee's lower 2% deposit.. This application is commonly used by professionals who need precise quantitative analysis to support decision-making, budgeting, and strategic planning in their respective fields
Regional First Home Buyer Guarantee
{'title': 'Regional First Home Buyer Guarantee', 'body': 'The Regional First Home Buyer Guarantee (RFHBG) allows eligible buyers in regional Australia to purchase with a 2–3% deposit. Regional is defined as an area outside of the eight capital cities and major regional centres. This variant has a separate annual allocation of 10,000 places.'}
Family Home Guarantee
{'title': 'Family Home Guarantee', 'body': 'The Family Home Guarantee targets single parents or single legal guardians with dependents. A 2% deposit is required, and the government guarantees up to 18% of the property value. This scheme has 5,000 annual places and is not restricted to first home buyers.'} This edge case frequently arises in professional applications of australia first home guarantee where boundary conditions or extreme values are involved. Practitioners should document when this situation occurs and consider whether alternative calculation methods or adjustment factors are more appropriate for their specific use case.
Off-the-Plan Purchases
{'title': 'Off-the-Plan Purchases', 'body': 'Buyers purchasing off-the-plan properties can reserve a place under the FHBG before the property is completed, subject to the contract being dated within the financial year in which the place is reserved. This requires careful coordination with the lender and Housing Australia.'} In the context of australia first home guarantee, this special case requires careful interpretation because standard assumptions may not hold. Users should cross-reference results with domain expertise and consider consulting additional references or tools to validate the output under these atypical conditions.
First Home Super Saver Scheme Combination
{'title': 'First Home Super Saver Scheme Combination', 'body': 'The FHSS scheme allows first home buyers to save a deposit inside superannuation at the concessional tax rate of 15%. This can be combined with the FHBG: FHSS funds released from super can form part of the 5% deposit, allowing buyers to use the lower-taxed savings environment for deposit accumulation.'}
| State | Capital City / Large Regional Cap | Other Regional Cap |
|---|---|---|
| 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 |
| ACT | $750,000 | N/A |
| TAS | $600,000 | $450,000 |
| NT | $600,000 | $550,000 |
How many FHBG places are available?
There are 35,000 First Home Guarantee places available per financial year. Places are distributed among participating lenders and allocated on a first-come, first-served basis. Regional First Home Buyer Guarantee and Family Home Guarantee have separate allocations. The process involves applying the underlying formula systematically to the given inputs. Each variable in the calculation contributes to the final result, and understanding their individual roles helps ensure accurate application.
Does the guarantee reduce my loan amount or interest rate?
No. The guarantee is a risk mitigation tool for the lender, not a subsidy for the buyer. It allows you to borrow with a smaller deposit without paying LMI, but you still borrow and repay the full loan amount at standard interest rates. This is an important consideration when working with australia first home guarantee calculations in practical applications. The answer depends on the specific input values and the context in which the calculation is being applied.
Can I use the FHBG and the First Home Owner Grant together?
Yes, in most cases. The FHBG is a federal guarantee scheme, while the First Home Owner Grant is a state-based cash grant. Both can be used simultaneously if you meet the individual eligibility criteria for each program. This is an important consideration when working with australia first home guarantee calculations in practical applications. The answer depends on the specific input values and the context in which the calculation is being applied.
What happens if I sell the property before LVR drops below 80%?
If you sell while the guarantee is still in place, the guarantee is released on settlement. The government does not receive any share of the proceeds — it simply provided a guarantee to the lender, which is no longer needed once the loan is repaid. This is an important consideration when working with australia first home guarantee calculations in practical applications.
Are investment properties eligible for the FHBG?
No. You must intend to be an owner-occupier of the property. Investment properties are not eligible. If you move out and start renting the property, you should notify your lender, and the guarantee terms may be affected. This is an important consideration when working with australia first home guarantee calculations in practical applications. The answer depends on the specific input values and the context in which the calculation is being applied.
What types of property can I buy with the FHBG?
Eligible properties include new and existing houses, townhouses, apartments, and land with a contract to build. House and land packages are also eligible. The property must be a residential property within the price cap for your location. This is an important consideration when working with australia first home guarantee calculations in practical applications. The answer depends on the specific input values and the context in which the calculation is being applied.
Which lenders participate in the scheme?
Housing Australia maintains a panel of participating lenders including major banks such as Commonwealth Bank, NAB, ANZ, and Westpac, as well as many smaller banks and non-bank lenders. The full list is published on the Housing Australia website. This is an important consideration when working with australia first home guarantee calculations in practical applications. The answer depends on the specific input values and the context in which the calculation is being applied.
What is the Family Home Guarantee and is it different?
The Family Home Guarantee is a related scheme for single parents or single legal guardians with at least one dependent child. It allows purchase with as little as 2% deposit with a government guarantee, regardless of whether the applicant is a first home buyer. In practice, this concept is central to australia first home guarantee because it determines the core relationship between the input variables.
Pro Tip
Book a pre-approval through a participating lender as early as possible in the new financial year (from 1 July). The most popular lenders can exhaust their FHBG allocation within weeks, leaving later applicants to seek places through smaller participating lenders.
Did you know?
Since the scheme launched in January 2020, over 100,000 Australians have purchased homes through it. Housing Australia estimates the average LMI saving for scheme participants has been approximately $10,000 to $30,000 depending on the property value and location.