First Home Guarantee 2026: Buy With a 5% Deposit, No LMI

A 5% deposit gets you started; it doesn’t decide the price. Buy comfortably under the price cap so there’s room to negotiate, because one dollar over and the guarantee is gone.

What the First Home Guarantee is

The First Home Guarantee is a federal scheme run through Housing Australia. It lets eligible first home buyers purchase with as little as a 5% deposit, with the government guaranteeing the rest so you avoid Lenders Mortgage Insurance.

On 1 October 2025 the scheme was expanded and renamed the Australian Government 5% Deposit Scheme. The expansion removed the income test and the annual limit on places, and lifted the property price caps, so it is now open to all eligible first home buyers rather than a set number each year.

The scheme does not hand you cash and it does not lend you anything. It stands behind your home loan as a guarantee for the portion of the deposit you don’t have. That guarantee is what lets a lender approve you at a 5% deposit without charging LMI. It can be used on new and established homes, which sets it apart from most state grants.

How the 5% deposit and no LMI works

Normally a lender wants a 20% deposit. Put down less and they charge Lenders Mortgage Insurance, a one-off premium that protects the lender (not you) if the loan goes bad. On a typical purchase that premium runs into the thousands or tens of thousands of dollars, and it’s usually added to the loan. Our guide to how LMI works breaks down what it costs and why.

Under the First Home Guarantee, the government guarantees the part of the loan above 80% of the property’s value: up to 15% with a 5% deposit. The lender treats you as if you had the larger deposit, so the LMI premium is waived. You still take out a normal principal and interest home loan of up to 30 years, still pass the lender’s serviceability checks, and still repay the full amount you borrow. The guarantee ends once the loan falls to 80% of the property’s value.

Because you only need a 5% deposit, you can buy years sooner than if you waited to save 20%. The trade-off is a larger loan and larger repayments, so make sure the numbers work for your budget, not just for getting in the door. Our deposit guide and the borrowing power calculator help you sense-check both sides.

How many buyers use the scheme

The late-2025 expansion was designed to open the guarantee to every eligible first home buyer, not a fixed annual allocation. On 1 October 2026, Housing Australia data cited by the federal government showed 102,594 first home buyers had purchased through the expanded 5% Deposit Scheme in its first year (the period with no income test, no cap on places and higher property price limits). More than 280,000 buyers have been supported since 2022 across the life of the Home Guarantee Scheme, and the government estimates expanded-scheme users avoided more than $1.4 billion in lenders mortgage insurance in that first year alone.

Uptake is highest in Victoria, New South Wales and Queensland, which reflects where most first home buyer activity already occurs rather than any restriction on the scheme. Housing Australia reports that 99% of scheme borrowers are ahead or on track with repayments, with only 13 claims paid since launch and most participants refinancing off the guarantee after about 2.5 years.

100,000 homes for first home buyers

Deposit support is demand-side; the Commonwealth is also funding supply reserved for first home buyers. The election commitment to help deliver up to 100,000 homes for first home buyers is being implemented through state and territory deals. South Australia announced the first agreement in 30 January 2026, unlocking about 17,000 homes including nearly 6,877 reserved for first home buyers. The ACT (20 April 2026) and Tasmania (21 April 2026) have since signed on, reserving more than 1,700 and up to 2,101 homes respectively within wider housing pipelines. First homes from these projects are expected from 2027–28.

Those projects do not replace the 5% Deposit Scheme (you can still use the guarantee on an eligible purchase), but they are meant to add new stock where first home buyers are not only competing on established listings. See the national first home buyer guide for how supply and deposit schemes fit together.

Eligibility and price caps

There is no income test, so the main things that decide whether you can use the scheme are who you are and how much the property costs.

• No income test: The income caps were removed on 1 October 2025, so eligibility no longer depends on how much you earn.
• Who qualifies: Australian citizens or permanent residents aged 18 or over who haven’t owned property in Australia in the last 10 years. That includes a freehold home or land, a lease of land and company title. You can apply alone or with one other person: a partner, friend or family member, who must also qualify.
• Owner-occupier only: You must move in within 6 months of settlement and keep living there while the guarantee is in place. The scheme is not for investment purchases.
• At least a 5% deposit: You bring a deposit of 5% or more and the government guarantees the shortfall, which is what removes the LMI.
• Property price caps: These still apply and depend on where the home is. Both the price and the lender’s valuation must be at or under the cap. For a house and land package or a build on vacant land, the land and the build together count.

Regional centres that take the capital-city cap: New South Wales: Central Coast, Coffs Harbour–Grafton, Illawarra, Mid North Coast, Newcastle and Lake Macquarie, Richmond–Tweed. Victoria: Geelong. Queensland: Gold Coast, Sunshine Coast. Both the purchase price and the lender’s valuation must be at or under the cap. Darwin’s cap rose from $600,000 on 1 July 2026; the other caps have applied since 1 October 2025. Source: Housing Australia and the Investment Mandate Direction, s29F, checked 7 October 2026. Check an exact address with Housing Australia’s postcode tool.

Regional and Family Home Guarantees

Two related schemes sat alongside the First Home Guarantee. One closed in the 2025 expansion; the other is now part of the 5% Deposit Scheme.

Regional First Home Buyer Guarantee

Closed. Housing Australia hasn’t issued a new regional guarantee since 1 October 2025. Because the First Home Guarantee is now open to all eligible first home buyers with no income test and no limit on places, there is no separate regional allocation to compete for. Regional buyers use the same scheme, at the price cap for their area.

Family Home Guarantee

Built for single parents and single legal guardians with at least one dependent child, and now marketed as the 5% Deposit Scheme for single parents. It allows a purchase with a 2% deposit and no LMI, with no income test, no limit on places, and the same price caps. You don’t have to be a first home buyer: if you own a home now, you can still use it as long as you sell that home within 4 weeks of settling, or you’re buying out a co-owner of the home you’re in. You apply on your own, with no joint applications.

There is also the Help to Buy shared equity scheme, where the government contributes part of the price to shrink the mortgage you need. It is a different mechanism to the guarantees, and you can’t use both: the Help to Buy rules exclude anyone using the Home Guarantee Scheme. Compare the two on your own numbers in the Help to Buy calculator, which shows the same home under each.

Stacking with the FHOG and stamp duty

The First Home Guarantee is most powerful when combined with other first home buyer support, because each one tackles a different cost.

• First Home Owner Grant (FHOG): A state cash grant that generally applies to new homes only. Where you qualify for both, the FHOG stacks on top of the guarantee. Amounts and price caps vary by state, so check your state revenue office.
• Stamp duty concessions: Most states offer first home buyers a full exemption or reduced rate on stamp duty up to a threshold. This often saves more than the grant itself.
• The guarantee: On top of those, the guarantee removes the LMI premium and lets you buy with a 5% deposit.

Stacked together, an eligible buyer can save a substantial sum on a typical purchase. The exact figure depends on your state, the property and your eligibility. Our national First Home Buyer Guide sets out the FHOG by state, the stamp duty thresholds, and how the schemes interact, with the figures kept current.

How to apply for the First Home Guarantee

You apply through a participating lender, not directly with the government. The guarantee is assessed as part of your normal home loan application, so there is no separate government form for it.

1. Check your eligibility against the first home buyer rules and the price cap for your location with Housing Australia’s postcode tool. There is no income test.
2. Choose a participating lender, or use a mortgage broker who can compare lenders and structure the loan to use the guarantee.
3. Get pre-approval that specifies you’re using the 5% Deposit Scheme. Once you’re pre-approved, you have 90 days to find a home and sign a contract.
4. Buy under the price cap and confirm any state grant and stamp duty concession with your conveyancer before settlement.
5. Settle and move in within 6 months. The guarantee sits behind the loan; you repay your lender the way any borrower does.

Places are unlimited, so you don’t need to race to secure one early in the financial year. Worth knowing too: because the scheme is now demand-side and open to all eligible first home buyers, it has been linked to upward pressure on first home buyer prices, so buy on the fundamentals rather than stretching to the cap. For the full picture across every scheme, grant and concession, read the national First Home Buyer Guide.