If you’re saving for a first home, the maths used to be brutal: a 20% deposit on a typical Sydney property meant finding well over $150,000 — or paying tens of thousands in lenders mortgage insurance (LMI) to buy with less. The Home Guarantee Scheme (HGS) changes that equation. Under the First Home Guarantee, you can buy with as little as a 5% deposit, and the Commonwealth guarantees up to 15% of the loan so the lender doesn’t charge LMI at all.
What changed when the scheme expanded
From 1 October 2025 the First Home Guarantee was expanded significantly:
- No income caps. The old $125,000 (single) / $200,000 (couple) limits are gone.
- No place limits. Previously a set number of spots each year; now every eligible buyer can access it.
- Higher property price caps — lifted to better match real prices (see the table below).
In short: if you’re an eligible first home buyer purchasing under your city’s price cap, the 5%-deposit, no-LMI route is now open to almost everyone.
How big is the saving?
LMI on a 95% loan is not small change. On an $800,000 purchase with a 5% deposit, LMI would typically run somewhere in the $20,000–$40,000 range depending on the lender — usually capitalised onto your loan so you pay interest on it for decades. Under the scheme, that cost simply doesn’t exist. You also get to market years sooner: saving 5% instead of 20% on an $800,000 home means roughly $40,000 instead of $160,000 before purchase costs.
2026 property price caps (capital cities)
- NSW (Sydney & major regional centres): $1,500,000
- VIC (Melbourne & major regional centres): $950,000
- QLD (Brisbane & major regional centres): $1,000,000
- WA (Perth): $850,000
- SA (Adelaide): $900,000
Regional and rest-of-state caps are lower — if you’re buying outside a capital, check your postcode with me before you set your budget.
Who’s eligible
- Australian citizens and permanent residents, 18 or over.
- First home buyers — or previous owners who haven’t held property in Australia in the last ten years.
- You must live in the property (owner-occupiers only — it’s not for investment purchases).
- You need at least 5% genuine deposit, and you borrow through one of the scheme’s participating lenders.
The bit most people miss: the scheme stacks with your state’s first home buyer help. In NSW that can mean $0 stamp duty up to $800,000 and the $10,000 First Home Owner Grant on a new build and a 5% deposit with no LMI — all on the same purchase. I’ve broken down each state in my guides for NSW, VIC, QLD, WA and SA.
The trade-offs (honest version)
- You borrow more. A 95% loan means higher repayments and more interest over time than a 20%-deposit loan. Run your numbers on the repayments calculator.
- Not every lender participates, and pricing differs between those that do — the cheapest scheme lender for your situation is rarely the one you bank with.
- Price caps are hard limits. One dollar over and the guarantee doesn’t apply.
- If you later turn the home into a rental, scheme conditions apply while the guarantee is in place — worth a conversation first.
How to actually use it
There’s no separate government application — your lender (or broker) reserves your place in the scheme as part of the loan application. That’s where I come in: I check your eligibility, pick the participating lender whose servicing and pricing suit you, reserve the guarantee, and line it up with any state grants you qualify for. The whole thing rides along with a normal pre-approval.