First Home Guarantee: The 5% Deposit Scheme Explained

Most people still call it the First Home Guarantee, but the scheme now runs as the Australian Government 5% Deposit Scheme. It was formerly called the Home Guarantee Scheme, and Housing Australia says it has helped over 320,000 Australians since it started in 2020. This guide sets out who can use it, the property price caps and how applying works, as listed on the official pages when we checked them on 3 November 2026.

HomeLoansCalculator.au is a general information site run by Dominet BV. This page is general information only and is not financial advice. It does not consider your circumstances. We are not a lender or a mortgage broker and we can't tell you whether you qualify. Check eligibility with the scheme administrator, your state revenue office, the lender or a licensed professional before you act. Figures were checked on 3 November 2026. Read our general information notice.

What is the First Home Guarantee?

It's a government guarantee that lets eligible buyers get a home loan with a small deposit and no Lenders Mortgage Insurance (LMI).

Under the Australian Government 5% Deposit Scheme, first home buyers need a minimum 5% deposit. Eligible single parents and single legal guardians need a minimum 2% deposit.

The government provides a guarantee to your lender. You remain responsible for all costs and repayments. Housing Australia administers the scheme, but applications go through a Participating Lender.

From 1 October 2025, there are no income caps, no waitlists and no LMI under the scheme. The lender still assesses your application against its credit policy.

LMI is insurance that protects the lender, not you, if a borrower can't repay. Our lenders mortgage insurance guide explains how it normally works, and the LMI calculator shows what the scheme helps you avoid.

Who is eligible?

You need to meet both the scheme's eligibility rules and the Participating Lender's credit policy.

For the first home buyer option, the listed requirements include:

• Be an Australian citizen or permanent resident aged at least 18.
• Have saved a minimum 5% deposit.
• Be a first home buyer, or have not owned property or land in Australia in the last 10 years.
• Buy a home in Australia at or below the location's price cap.
• Plan to live there as an owner-occupier, with no investment properties allowed.
• Apply for an owner-occupier loan with principal and interest repayments through a Participating Lender.
• Have a loan term of up to 30 years, plus up to three years to build a new home.
• Apply alone or jointly with one other person, such as a partner, friend or family member.

Eligible home types include houses, townhouses, apartments, house and land packages, off-the-plan homes and building on vacant land. Price caps still apply to each option.

Being eligible doesn't tell you how much you can borrow. Read the borrowing power guide before you treat a price cap as your budget.

Single parents and legal guardians: the 2% deposit option

Eligible single parents and single legal guardians of one or more dependent children can buy with a minimum 2% deposit.

You must be an Australian citizen or permanent resident aged at least 18 and apply on your own. Joint applications are not allowed for this option. You cannot have any other property interest once the new home settles.

"Single" means you have no spouse or de facto partner. If you are separated but not divorced, the scheme does not consider you single. You also need documents proving that you are a single parent or single legal guardian.

The home must meet the price cap and be your owner-occupied home. The loan must have principal and interest repayments through a Participating Lender, for up to 30 years, plus up to three years to build. There are no income caps, waitlists or LMI. Moneysmart refers to this support as the Family Home Guarantee.

Property price caps

Both the purchase price and the value assessed by the lender must be at or below the applicable cap.

These are the caps as listed on 3 November 2026.

The listed regional centres are Central Coast, Coffs Harbour Grafton, Illawarra, Mid North Coast, Richmond Tweed, Newcastle and Lake Macquarie in NSW; Geelong in Victoria; and Gold Coast and Sunshine Coast in Queensland.

For building on vacant land under separate contracts, the land price plus build costs must be under the cap. Some suburbs have more than one postcode, which may mean different caps. You are responsible for checking the correct one. Confirm it with the lender using the official property price cap information.

How applying works

You apply through a Participating Lender as part of your home loan application, not directly to Housing Australia.

1. Check eligibility. Use the scheme's online eligibility tool to check the requirements against your situation.
2. Contact a Participating Lender. The lender assesses eligibility and submits the application. Documents include your full name, date of birth, Medicare number (or PMKey if relevant), proof of citizenship or residency and a completed Home Buyer Declaration form. Single parents and legal guardians also need proof of that status.
3. Find a home after pre-approval. You have 90 days after pre-approval to find a home and sign a contract of sale. The price cap tool is only a guide, so confirm the cap with your lender.
4. Complete final approvals and settlement. After you sign the contract, the lender manages final approvals. Settlement follows.

Think of scheme eligibility and loan approval as two separate tests. A big enough deposit and a home under the cap won't get you past the lender's credit assessment on their own.

Ongoing obligations and risks

You must meet ongoing obligations, including living in the property as an owner-occupier, to keep the guarantee.

If those obligations are not met, the guarantee may no longer apply. Your lender may then require you to pay LMI or other additional costs. So no LMI at the start doesn't mean no LMI ever.

A smaller deposit means borrowing more for the same purchase price. The guarantee does not pay your repayments or other costs. Read the home loan repayments guide as part of considering what the loan would mean for your budget.

Worked examples

For the same example purchase price, a 2% deposit leaves a larger loan than a 5% deposit.

These are simple deposit and loan examples only. The example prices are below the NSW capital city cap listed above. They do not show approval, interest, repayments or other purchase costs.

• On an example $600,000 home, a 5% deposit is $30,000 and the loan is $570,000.
• On an example $600,000 home, a 2% deposit is $12,000 and the loan is $588,000.
• On an example $900,000 home, a 5% deposit is $45,000 and the loan is $855,000.
• On an example $900,000 home, a 2% deposit is $18,000 and the loan is $882,000.

Each loan amount is the example price less the deposit. Eligibility for the relevant deposit option still matters.

Other costs the scheme does not cover

You remain responsible for purchase costs, and transfer duty, also called stamp duty, may be payable.

Depending on where you live, a stamp duty concession or exemption may apply. Check the stamp duty guide by state and your state revenue office before deciding how much cash you need. The stamp duty calculator can also help with planning.

Other state support is separate from this scheme. Our first home buyer schemes by state guide is a starting point for checking those options.

What this means for you

Check your eligibility, the property's cap and the lender's assessment before relying on a small deposit plan.

Treat the minimum deposit as one part of the purchase. You still need cash for buying costs and room in your budget for repayments, and a home being under the cap doesn't mean the loan suits you.

A family guarantor is a different option: they use part of their own property as security for your loan. The government scheme instead provides a guarantee to the lender.

Frequently asked questions

Is the First Home Guarantee still available?

Yes, under a new name. It's now called the Australian Government 5% Deposit Scheme and was formerly known as the Home Guarantee Scheme, and people still use First Home Guarantee when searching for it.

Are there income caps or limited spots?

From 1 October 2025, there are no income caps or waitlists. The first home buyer option has unlimited spots. Other eligibility requirements and the lender's credit policy still apply.

Can I apply with a friend?

For the first home buyer option, you can apply jointly with one other person, including a friend. The single parent or single legal guardian option requires you to apply alone.

Does the guarantee mean my loan will be approved?

No. You must meet the Participating Lender's credit policy as well as scheme eligibility rules. Being eligible for the scheme does not mean you will get a loan.

Can I buy an investment property?

No. You must plan to live in the home as an owner-occupier. Ongoing obligations apply, and failing to meet them may end the guarantee and lead to LMI or other additional costs.