Key takeaways:
- Eligible buyers can purchase or build a new home with a deposit of as little as 5% without the need for lenders’ mortgage insurance.
- For FY2024-25, 35,000 places are available.
- Any Guarantee of a home loan is for up to a maximum amount of 15% of the value of the property (as assessed by the Participating Lender). This Guarantee is not a cash payment or a deposit for a home loan. Eligibility criteria apply.
First Home Guarantee Scheme: financial support for first home buyers
The First Home Guarantee Scheme is an Australian Government initiative to support eligible first home buyers to buy a home sooner. Under the First Home Guarantee Scheme, the Government will provide a limited loan guarantee of up to 15% of the home value. This may enable you to buy your first home with a deposit of only 5%1 and no lenders’ mortgage insurance (LMI) will be payable.
In 2024/25, 35,000 home loans are available under the First Home Guarantee Scheme.
What are the key points?
- You’ll need to earn less than the income limit and meet other eligibility conditions.
- The purchase price will be capped, depending on the property’s location.
- You need to move into the home as your main residence within certain timeframes.
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Who may be eligible?
To be eligible for the First Home Guarantee Scheme, you must:
- be an individual or two joint applicants
- be an Australian citizen or Australian permanent resident aged 18 years or older
- earn a taxable income of less than $125,000 pa (for individuals) or $200,000 pa (for joint applicants combined),
- based on the last financial year
- be a first home buyer or not have owned Australian real property (including land) in the last 10 years
- intend to be an owner-occupier of the purchased property, and
- be purchasing a home (both newly built and established properties qualify under this scheme).
For more information about the types of properties that may be eligible and important timeframes, see housingaustralia.gov.au.
What types of homes can I buy?
Under the scheme, you’re able to purchase an eligible residential property which includes:
- an existing freestanding house, townhouse or apartment
- a house and land package
- land and a separate contract to construct a home, or
- off-the-plan townhouse or apartment.
Certain requirements apply depending on the type of property and contract you’re entering into.
What are the property price caps?
Caps apply to the purchase price to ensure participation is spread fairly across the country. The capital city price caps will apply to large regional centres with a population over 250,000, namely the Gold Coast, Newcastle and Lake Macquarie, the Sunshine Coast, Illawarra (Wollongong) and Geelong.
| Price caps for 2024/25 | ||
|---|---|---|
| State/territory |
Capital city and regional centres |
Rest of state |
| NSW |
$900,000 |
$750,000 |
| VIC |
$800,000 |
$650,000 |
| QLD |
$700,000 |
$550,000 |
| WA | $600,000 | $450,00 |
| SA | $600,000 | $450,000 |
| TAS | $600,000 | $450,000 |
| ACT | $750,000 | |
| NT | $600,000 | |
| Jervis Bay Territory and Norfolk Island | $550,000 | |
| Christmas Island and Cocos (Keeling) Islands |
$400,000 | |
What’s the downside?
While the First Home Guarantee Scheme may help you buy your first home sooner, you need to keep in mind that a smaller deposit means a bigger loan. And a bigger loan means bigger loan repayments, as well as higher total interest payments over the life of the loan. It may be the case that the additional interest payable outweighs the LMI savings. To find out whether the First Home Guarantee Scheme is right for you, you may want to speak to a financial adviser.
Also, if you move out of your home for an extended period of time and rent your home out, the loan may no longer be guaranteed by the Government. You may need to pay additional fees and charges, as well as LMI, depending on factors such as the value of your home and your outstanding debt at that point.
Which lenders are participating and how do I apply?
Applications can be made directly via one of the approved lenders or their authorised representative (such as a mortgage broker). Housing Australia has authorised a specific panel of participating lenders to offer the Home Guarantee Scheme to home buyers.
What lending rules apply?
You’ll need to meet your lender’s normal credit criteria to ensure you can service a loan of up to 95% and provide evidence you’ve saved the 5% deposit. Loans must be principal and interest (not interest only) and terms can be up to 30 years.
What other assistance programs are available?
The First Home Guarantee scheme complements (but doesn’t directly interact with) other Government assistance programs. These may include the:
- First Home Super Saver Scheme, where you could save for the deposit on your first home in the concessionally taxed superannuation system
- First Home Owner Grant, which offsets the effect of Goods and Services Tax on buying or building a home, and
- State and Territory based stamp duty concessions.
What next?
To find out more about the First Home Guarantee and ways to fund the purchase of your first home, we recommend you seek financial advice. You can also find out more at housingaustralia.gov.au.
1 Individual lenders may require a larger deposit, based upon lending criteria and your personal circumstances.
Important information and disclaimer
The information in this article is current as at September 2024 and may be subject to change. The information in this article is factual in nature only and does not and is not intended to imply any recommendation or opinion about a financial product. You should obtain appropriate advice before making any decisions based on the information in this article.
