A broker's plain-English guide
The First Home Guarantee, explained
The rules changed in late 2025, and it's now the most useful leg-up first home buyers have had in years. Here's how it works, who can use it, and what it could save you.
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If you've been saving for a home and watching the 20% deposit drift further out of reach, the First Home Guarantee is worth a proper look. It lets eligible first home buyers get in with a 5% deposit and skip lenders mortgage insurance entirely, and as of late 2025, far more people qualify than before.
It's a federal scheme run by Housing Australia and delivered through participating lenders. The idea is simple: instead of you paying an insurer to cover the gap between your small deposit and the usual 20%, the government guarantees that portion. The lender is comfortable, you're in the door sooner, and you keep the money LMI would have cost.
What changed in October 2025
This is the part that's caught a lot of people off guard. On 1 October 2025, two of the biggest hurdles were removed:
- No more income caps.The old limits, $125,000 for a single, $200,000 for a couple, are gone. Your income no longer rules you out of the scheme.
- No annual place limit.The scheme used to run out of spots each year. That cap has been scrapped, so eligible buyers aren't racing a queue.
Higher property price caps came in at the same time, which matters a lot in Melbourne where prices had outgrown the old limits.
What it actually saves you
You need a deposit of at least 5% of the purchase price. The government guarantees up to 15% of the property's value, and that guarantee is what removes the need for LMI. On a typical Melbourne purchase, avoiding lenders mortgage insurance commonly saves somewhere between $15,000 and $35,000. Money that stays in your pocket rather than going to an insurer.
Property price caps (from 1 October 2025)
There's a cap on how much the home can cost, and it varies by location. The headline figures:
| Location | Price cap |
|---|---|
| Melbourne & Geelong | $950,000 |
| Sydney & NSW regional centres | $1,500,000 |
| Brisbane, Gold Coast & Sunshine Coast | $1,000,000 |
| Perth | $850,000 |
| Adelaide, Hobart, Canberra & other regions | Set by postcode, ask us |
Caps are set by Housing Australia and can change, and regional areas have their own figures. Before you fall in love with a place, it's worth checking the current cap for that exact suburb, something we'll do with you in a couple of minutes.
Who can use it
- You're a first home buyer (or you haven't owned Australian property in the last ten years, under the scheme's rules).
- You're an Australian citizen or permanent resident, and at least 18.
- You'll live in the home. It has to be your main residence. You generally need to move in within six months of settlement. So it's for owner-occupiers, not investors.
- You have a genuine 5% deposit saved, and the home is within the price cap for its location.
- Couples apply as a couple. Joint applicants need to be married or in a de facto relationship.
There are a few finer points and the rules do get updated, so treat this as a plain-English overview rather than the final word. The quickest way to know where you stand is a five-minute chat.
Don't forget the Victorian stamp duty saving
The First Home Guarantee is a federal scheme, but Victoria has its own first home buyer break that can stack on top. If you're buying in Victoria, you pay no stamp duty on a first home under $600,000, with a sliding concession up to $750,000, a saving that can reach around $31,000. Used together, the deposit help, the LMI saving and the stamp duty exemption can bring the day you buy years closer.
The scheme is generous, but the lender still has to say yes
The First Home Guarantee removes the deposit and LMI hurdle. It doesn't change how a lender assesses your borrowing power, and not every lender offers it. That's where a broker earns their keep: matching you to a participating lender whose policy suits your income, checking the price cap for your suburb, and lining up the scheme, your borrowing power and the stamp duty concession so nothing falls through the cracks. It's free to you, and it's what we do every week.
Want to map out your own numbers first? Our calculators will give you a ballpark on repayments and borrowing power, and the first home buyer guide walks through the whole journey from deposit to keys.
Good questions
First Home Guarantee, answered
No. From 1 October 2025 the income limits were removed, so there's no longer an individual or couple income cap. The old annual limit on the number of places was scrapped too, so every eligible first home buyer can access it.
At least 5% of the purchase price, made up of genuine savings. The government guarantees up to 15% of the property's value, and that's what removes the need for lenders mortgage insurance.
Yes. Because the government guarantees the slice a lender would normally insure, eligible buyers can borrow up to 95% of the value without paying LMI, commonly a $15,000 to $35,000 saving.
$950,000 for Melbourne and Geelong. Other areas have their own caps set by Housing Australia, and caps can change, so it's worth confirming the current figure for your exact suburb, we'll check it for you.
Often, yes, they're separate schemes. In Victoria, eligible first home buyers pay no stamp duty under $600,000, with a concession up to $750,000, which can sit alongside the First Home Guarantee.
See if you qualify, in five minutes
Not sure if you're eligible? Take the first home buyer eligibility quiz, it's five questions and takes about a minute. Or book a free, no-obligation chat: Shaheera will check your eligibility, the price cap for your suburb, and line up the right participating lender, and tell you honestly what's achievable.