First Home Guarantee: Buy Your First Home with just a 5% Deposit
The First Home Guarantee helps first home buyers enter the property market faster by allowing you to purchase your first home with a deposit as low as 5% without paying Lenders’ Mortgage Insurance (LMI). In this guide, we’ll explain the scheme, who’s eligible, the benefit, and how to apply.
What is the First Home Guarantee?
The First Home Guarantee is a government incentive that allows eligible first home buyers to secure a home loan with only a 5% deposit. Normally if you borrow more than 80% of a property’s value, you must pay LMI – a one-off insurance payment that protects the lender if you default.
Under the First Home Guarantee, the government acts as a guarantor for your loan, meaning you don’t have to pay LMI, saving you thousands of dollars and reducing your loan interest.
When does the expanded First Home Guarantee begin?
The federal government confirmed that the expanded First Home Guarantee will start on 1 October 2025. From this date:
- All first home buyers can apply, regardless of income or location.
- Higher property price caps apply.
- The separate Regional First Home Guarantee has been merged into this main scheme.
Who is Eligible?
To qualify for the First Home Guarantee, you must meet the following criteria:
- First home buyer: you must not have owned or held interest in property in Australia in the past ten years, including investment or commercial property.
- Age: applicants must be at least 18 years old.
- Citizenship: you must be an Australian citizen or permanent resident at the time you enter the loan.
- Occupancy: you must move into the property within six months of purchase and continue to live there while your loan is guaranteed.
- Joint applications: you can apply individually or with up to one other eligible person – friends, siblings, or family.
Benefits of the Scheme
The First Home Guarantee offers several key advantages:
- Enter the market sooner: Buy a home with only 5% deposit, saving years of saving for a 20% deposit.
- Save on LMI: Normally, LMI can add tens of thousands to your loan. Avoiding this cost saves money upfront and on interest.
- Lower overall costs: Since LMI is not added to your loan, your repayments are smaller. For example, if you purchase an existing property in NSW valued at $600,000 with a 5% deposit ($30,000), you would usually pay LMI. With the First Home Guarantee, the government covers the risk, potentially saving you over $20,000.
How to Apply
You can apply through:
- A participating lender, or
- A mortgage broker who works with the scheme
It’s best to compare lenders and speak with a broker to ensure you choose the option that best suits your circumstances.
Key Changes from 1 October 2025
The expanded First Home Guarantee introduces several changes:
- No location limits: All first home buyers in Australia are eligible.
- No income limits: More buyers can now qualify regardless of earnings.
- Higher property price caps: You can buy more expensive homes with the scheme.
- Merged schemes: The separate Regional First Home Guarantee is now part of the main program.
The First Home Guarantee is a powerful tool for first home buyers to get into the property market sooner and save on costs. With a smaller deposit and no LMI, your dream home could be closer than you think.
Contact the Provide Finance team to check your eligibility and start your application.