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

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.

In late 2025 the scheme was expanded and renamed the Australian Government 5% Deposit Scheme. The expansion removed the income caps 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 difference between your 5% deposit and the 20% the lender would otherwise want. The lender treats you as if you had the larger deposit, so the LMI premium is waived. You still take out a normal home loan, still pass the lender’s serviceability checks, and still repay the full amount you borrow. The guarantee simply removes the insurance cost.

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.

Eligibility and price caps

Since the late-2025 expansion 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 when the scheme was expanded, so eligibility no longer depends on how much you earn.
• Who qualifies: Australian citizens or permanent residents aged 18 or over who have not previously owned, or held an interest in, real property in Australia.
• Owner-occupier only: You must move in and live in the property. 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 were increased in the expansion. In NSW capital cities and regional centres the cap rose to $1.5 million. Caps differ by state and region, so check the cap for your exact location on the Housing Australia website before you make an offer.

Regional and Family Home Guarantees

Two related schemes sit alongside the First Home Guarantee, though the regional pathway changed in the 2025 expansion.

Regional First Home Buyer Guarantee

The separate regional guarantee was effectively absorbed into the expanded, uncapped scheme. 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 longer a separate regional allocation to compete for. Regional buyers use the same scheme, with the property price cap that applies to their location.

Family Home Guarantee

Built for eligible single parents and single legal guardians with at least one dependent child. It allows a purchase with a 2% deposit and no LMI. The key difference is that you do not have to be a first home buyer. You can use it even if you have owned property before, as long as you do not currently own a home. Eligibility and price cap detail can change, so verify the current rules with Housing Australia.

There is also the Help to Buy shared equity scheme, where the government co-invests in the property to shrink the mortgage you need. It is a different mechanism to the guarantees and worth comparing if a smaller loan matters more to you than full ownership from day one.

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 FHBG. 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 FHBG 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 on the Housing Australia website. There is no income test since the 2025 expansion.
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-approvalthat specifies you’re using the First Home Guarantee, so the lender structures the loan correctly from the start.
4. Buy under the price cap and confirm any state grant and stamp duty concession with your conveyancer before settlement.
5. Settle as normal. The guarantee sits behind the loan; you repay your lender the way any borrower does.

Places are now uncapped, so you no longer 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.