Breaking into the Australian property market feels impossible when you face a 20% deposit requirement. On a $700,000 home, that’s $140,000 you need to save before you can even think about ownership. For most first home buyers, sadly, that barrier keeps getting further away.
Fortunately, the First Home Guarantee Scheme (FHGS) changes that equation entirely. In October 2025, moreover, it got significantly more powerful.
Since its launch, hundreds of thousands of Australians have used this initiative to enter the property market. They’ve done so with just a 5% deposit and no Lenders Mortgage Insurance (LMI). From 1 October 2025, the scheme expanded dramatically. As a result, income caps were removed. The annual limit on places was scrapped. Price caps were also lifted to better reflect what homes cost today.
If you’re a first home buyer trying to enter the market, this guide breaks down everything you need to know. We cover who qualifies, how it works, what’s changed, and how to apply.
What Is the First Home Guarantee Scheme?
In short, the First Home Guarantee Scheme is a federal government initiative. It helps first home buyers purchase property with as little as a 5% deposit. Better still, you don’t have to pay Lenders Mortgage Insurance. Specifically, the Australian Government guarantees up to 15% of the property’s value. As a result, the LMI requirement that usually applies above 80% LVR is removed.
Three Scheme Variants
The Home Guarantee Scheme includes three separate programs:
First Home Guarantee (FHBG): This is the main scheme for first home buyers. It applies to a first property anywhere in Australia. Notably, from 1 October 2025, it has no income caps and no limit on places.
Family Home Guarantee: Eligible single parents or single legal guardians with at least one dependent child can use this program. In fact, it allows purchase with as little as a 2% deposit. In this case, the government guarantees up to 18%. Notably, it is also open to previous homeowners who no longer own property. As a result, it’s particularly useful for people coming out of a separation.
Regional First Home Buyer Guarantee: Now absorbed into the expanded First Home Guarantee. As of 1 October 2025, the regional scheme no longer runs separately. Instead, the main FHBG covers regional areas under the same updated rules and price caps.
Why It Matters
Traditionally, borrowing more than 80% of a property’s value meant paying LMI. This is an insurance policy that protects the lender (not you) if you default. Depending on your loan size, LMI costs anywhere from $15,000 to $65,000.
However, the FHGS removes this cost. The government guarantees a portion of your loan instead. In practice, this means:
- You can buy with just a 5% deposit instead of 20%
- Tens of thousands in LMI premiums are avoided
- Market entry happens years earlier, while prices are still within reach
- Equity starts building straight away, instead of paying rent
Importantly, the scheme doesn’t give you a cash grant. You still borrow 95% of the property value. You also remain fully responsible for your repayments. Rather, it removes the LMI hurdle that would otherwise cost you dearly.
What Changed in October 2025?
The October 2025 expansion brought the most significant update since launch. Here’s what changed:
No income caps. Previously, singles earning over $125,000 couldn’t access the scheme. The same applied to couples earning over $200,000 combined. Now, those limits are gone. As a result, regardless of what you earn, you can use the FHGS if you meet the other criteria.
No limit on places. Specifically, the scheme used to cap guarantees at 35,000 per financial year. This meant places could run out if you applied late in the year. As of October 2025, however, that cap is gone. Now, every eligible applicant can access a guarantee.
Higher property price caps. Furthermore, the government lifted maximum property values to better reflect current conditions. See the full breakdown below.
Regional scheme consolidated. Additionally, the separate Regional First Home Buyer Guarantee is now part of the main FHBG. This simplifies access for buyers outside capital cities.
Who Is Eligible for the First Home Guarantee in 2026?
Citizenship and Residency
To qualify, you must be an Australian citizen or permanent resident aged 18 or over. By contrast, temporary visa holders do not qualify.
First Home Buyer Status
Generally, you must not have previously owned residential property in Australia. However, there is one exception. Namely, the “Fresh Start” rule may apply. It allows people who haven’t owned property in Australia for the last 10 years to potentially qualify. If this applies to you, confirm with a participating lender.
Joint Applications
Applicants can apply solo or jointly. Since October 2025, moreover, joint applications have been open to two or more eligible first home buyers. This includes friends or siblings purchasing together, not just couples. Even so, both applicants must meet all eligibility criteria.
Property Occupancy
Additionally, you must intend to occupy the property as your main place of residence. In particular, you need to move in within six months of settlement. For new builds, this means within six months of the occupancy certificate. Importantly, the FHGS cannot be used for investment purchases.
Deposit
Genuine savings of at least 5% of the purchase price are required. Note: if you’ve managed to save more than 20%, you may not be eligible. That’s because the scheme is designed for buyers who haven’t yet reached the traditional deposit threshold. Therefore, factor this in if you’re also holding cash for stamp duty or other costs.
Property Price Caps in 2026
The price caps below took effect from 1 October 2025. They represent a significant increase on previous limits. Always confirm the current caps at Housing Australia before signing a contract. After all, the government reviews caps periodically.
| Location | New Cap (from Oct 2025) | Previous Cap |
|---|---|---|
| Sydney + NSW regional centres (Illawarra, Newcastle, Lake Macquarie) | $1,500,000 | $900,000 |
| Brisbane + QLD regional centres (Gold Coast, Sunshine Coast) | $1,000,000 | $700,000 |
| Melbourne + Geelong | $950,000 | $800,000 |
| Perth | $850,000 | $600,000 |
| Adelaide | $900,000 | $600,000 |
| Canberra (ACT) | (refer to Housing Australia) | $750,000 |
| Darwin | $750,000 | $600,000 |
| Other regional areas | Lower caps — check by postcode | Varies |
For Queensland buyers, the $1,000,000 cap covers Brisbane, the Gold Coast, and the Sunshine Coast. As a result, it opens up a much wider range of homes. In fact, many of these were previously out of reach.
Eligible Property Types
- Established houses and apartments
- Newly constructed properties
- Off-the-plan purchases
- House and land packages
- Units and townhouses (residential use, within price caps)
What Doesn’t Qualify
- Investment properties (you must occupy the home)
- Properties purchased via a company, trust, or SMSF
- Properties above the price cap for your location
- Commercial or mixed-use properties
How Does the 5% Deposit Scheme Actually Work?
When you apply for a home loan under the FHGS, the government guarantees up to 15% of the price. As a result, the lender’s risk drops to an effective 80% LVR. Therefore, they don’t require LMI.
Example:
- Property price: $800,000
- Your 5% deposit: $40,000
- Your loan amount: $760,000 (95% LVR)
- Government guarantee: $120,000 (15% of property value)
- LMI saving: approximately $30,000–$40,000
Importantly, the guarantee is not a cash payment. If you default and the sale price is less than the loan, the government covers up to the guaranteed amount. Even so, you remain fully liable for any shortfall beyond that.
Participating Lenders
Over 30 participating lenders offer the FHGS. The list includes major banks, credit unions, and non-bank lenders. However, you cannot apply directly through Housing Australia. Instead, you apply through a participating lender. They then apply for the guarantee on your behalf.
Therefore, working with a mortgage broker gives you access to the full panel. By contrast, going to one bank limits you to its offering.
Interest Rates
Notably, FHGS loans are not officially subsidised on interest rates. In other words, you pay the standard rate for your loan amount and LVR however in some instances an 80% LVR will apply due to the guarantee, this is lender dependent. Therefore, comparing lenders is worth doing. After all, rates and loan features vary across the panel.
How to Apply
1. Get pre-approval. First, speak with a participating lender or mortgage broker. They’ll assess your income, expenses, credit history, and serviceability. Then, they confirm your eligibility for the scheme. Be sure to flag upfront that you want to use the FHGS.
2. Find a property within the price cap. Next, with pre-approval in hand, search within the relevant cap for your area. Because your guarantee reservation is time-limited, have a clear search strategy ready.
3. Make an offer and proceed to full approval. Then, once you’re under contract, your lender secures your FHGS place with Housing Australia. They also order a valuation and complete the final credit check.
4. Settlement. Finally, settlement typically occurs 30 to 60 days after full loan approval. The exact timing depends on contract terms. At that point, the lender issues the guarantee and you proceed to ownership.
Stacking Schemes: What Queensland Buyers Can Access in 2026
You can combine the FHGS with other state and federal initiatives. In fact, Queensland has one of the most generous stacks available. Here’s what’s on the table:
$30,000 First Home Owner Grant (FHOG) — Act Before 30 June 2026
Queensland’s First Home Owner Grant is currently $30,000 for new homes. To qualify, contracts must be signed between 20 November 2023 and 30 June 2026. After that date, it’s expected to revert to $15,000. Specifically, the grant applies to new homes valued under $750,000. This includes land and variations. It is paid at settlement.
If you’re buying a new home in Queensland, this is a major time-limited incentive. In other words, the clock is ticking.
However, the FHOG does not apply to established homes. Even so, if you’re buying established, you may still access stamp duty concessions (see below).
Zero Stamp Duty on New Homes
From 1 May 2025, eligible first home buyers in Queensland pay zero transfer (stamp) duty. This applies to new homes and vacant residential land, with no price cap. In other words, it’s a full exemption regardless of what the new build costs.
For established homes, by contrast, the concession structure works like this:
- Under $700,000: effectively zero (full $17,350 concession applied)
- $700,001–$800,000: partial concession on a sliding scale
- Over $800,000: standard duty applies, no first home concession
First Home Super Saver Scheme (FHSSS)
Additionally, the First Home Super Saver Scheme lets you contribute to super and withdraw those funds (plus earnings) for a first home deposit. Notably, the ATO taxes contributions at 15% rather than your marginal rate. As a result, you get a tax saving on your savings. Better still, you can use it alongside the FHGS and FHOG.
What a QLD First Home Buyer Could Stack on a New $700,000 Home
| Benefit | Saving |
|---|---|
| No LMI via FHGS | ~$25,000–$30,000 |
| First Home Owner Grant | $30,000 |
| Zero stamp duty (new home) | ~$20,000+ |
| Total potential saving | ~$75,000–$80,000 |
In short, that’s a material difference in your finances on day one of ownership.
Key Considerations
You’re borrowing more, so you pay more interest. A smaller deposit means a larger loan. It also means more interest over time. Therefore, run the numbers with your broker to see your full picture.
The scheme doesn’t solve supply. More buyers with smaller deposits can push prices up in popular suburbs. As a result, work with a broker who knows the local market. After all, being eligible doesn’t mean any property at any price makes sense.
FHOG deadline is real. Remember, the $30,000 Queensland grant requires contracts signed by 30 June 2026. Therefore, if you’re considering a new build, don’t leave it too late. Factor in construction timelines and lender processing.
Get pre-approval early. Finally, there’s no longer a race for scheme places. Even so, lender turnaround times still apply. Above all, knowing your borrowing capacity saves time and avoids disappointment.
Ready to Find Out Where You Stand?
Ultimately, the First Home Guarantee has never been more accessible. There are no income limits, no cap on places, and price thresholds that reflect the real market. Whether you’re buying established or new, in Brisbane or regional Queensland, a broker who knows the scheme can help. They can map out exactly what you qualify for and how to stack your benefits.