Who is eligible for the Home Guarantee Scheme?

Previously known as the First Home Loan Deposit Scheme (FHLDS), the Home Guarantee Scheme covers several initiatives to help Australians purchase a home sooner, without needing to save up as high a deposit and/or pay Lender’s Mortgage Insurance (LMI).

The scheme consists of three parts:

• First Home Guarantee (FHBG): Lets eligible home buyers buy a home with a deposit as low as 5%.
• Regional First Home Buyer Guarantee (RFHBG): Lets eligible regional home buyers buy a home in a regional area with a deposit as low as 5%.
• Family Home Guarantee (FHG): Lets eligible single parents and eligible single legal guardians of at least one dependent to buy a home with a deposit as low as 2%.

A fourth guarantee – the New Home Guarantee (NHG) – was previously available, but is no longer offered.

These three guarantees work broadly in the same way:  Australians who meet the eligibility criteria can apply for a loan through a participating lender and pay a much smaller deposit than would normally be required. The government will guarantee the loan, so LMI will not be required.

There are 35,000 places available in the First Home Guarantee (FHBG) each financial year.

To be eligible for the FHBG, you will need to be:

• applying as an individual or 2 joint applicants an Australian citizen(s) or permanent resident(s) at the time they enter the loan
• at least 18 years of age
• earning up to $125,000 for individuals or $200,000 for joint applicants, as shown on the Notice of Assessment (issued by the Australian Taxation Office)
• intending to be owner-occupiers of the purchased property
• First home buyers or previous homeowners who haven't owned a property in Australia in the past ten years.

Additionally, property price caps will apply.

places available in the Regional First Home Buyer Guarantee (RFHBG) each financial year.

To apply for the RFHBG, home buyers must be:

• applying as an individual or joint applicants an Australian citizen(s) or permanent resident(s) at the time they enter the loan
• at least 18 years of ageearning up to $125,000 for individuals or $200,000 for joint applicants, as shown on the Notice of Assessment (issued by the Australian Taxation Office)
• intending to be owner-occupiers of the purchased property
• home buyers who have not previously owned, or had an interest in, a property in Australia or in the ten years prior to the date they execute their home loan.
• First home buyers or previous homeowners who haven't owned a property in Australia in the past ten years.

Additionally, property price caps will apply, and you must be buying property located in a regional area.

According to the RFHBG, a regional area is defined as:

• the Statistical Area Level 4 (ASGS SA4 2016) areas in a State or the Northern Territory that are not a capital city of that State or Territory; and
• Norfolk Island; or the Territories of Jervis Bay, Christmas Island or Cocos (Keeling) Islands; as defined in the version published by The Australian Bureau of Statistics (ABS) in July 2016.
• The greater capital city areas of each state and the Northern Territory; and the entire Australian Capital Territory are excluded from the RFHBG. Home buyers in these areas may be eligible for the First Home Guarantee or Family Home Guarantee.

There are 5000 places available in the Family Home Guarantee (FHG) each financial year. 

To apply for the FHG, home buyers must be: 

• applying as an individual
• a single parent or single legal guardian of at least one dependent
• an Australian citizen or permanent resident at the time they enter the loan
• at least 18 years of age 
• earning no more than $125,000 per year 
• intending to be the owner-occupier of the purchased property 
• NOT currently owning property, or upon settlement of the guaranteed property they’re buying, not intending to own a separate property.

Additionally, property price caps will apply.

To apply for the FHG, home buyers must: 

• be single. A person is considered single if they don’t have a spouse and/or a de facto partner. Note: a person who is separated but not divorced is not considered single
• have at least one dependent. To have a dependent, they must be the natural parent or adoptive parent or legal guardian of:
• a “dependent child” within the meaning of subsections (2), (3), (4), (5), (6) and (7) of section 5 of the Social Security Act 1991; or  
• a person in receipt of a disability support pension within the meaning of the Social Security Act 1991 who lives with you. 
• they must show that they are legally responsible (whether alone or jointly with another person) for the day-to-day care, welfare and development of the dependent and the dependent is in their care.

FHG applicants can be either first home buyers or previous homeowners who do not intend to own a separate property upon settlement of the guaranteed property they’re buying.

All of these guarantee schemes have maximum purchase prices that apply in different areas.

First Home Guarantee and Family Home Guarantee Property Price Caps

* Regional centres are Newcastle and Lake Macquarie, Illawarra, Geelong, Gold Coast and Sunshine Coast.

Regional First Home Buyer Guarantee Property Price Caps Table

* Regional centres are Newcastle and Lake Macquarie, Illawarra, Geelong, Gold Coast and Sunshine Coast.

# The greater capital city areas of the States and the Northern Territory; and the entire Australian Capital Territory are excluded from the RFHBG

A limited number of banks and mortgage lenders are participating in the HGS. This could limit your options when it comes to selecting a home loan, as you may not be able to borrow from our approved lander and make use of the HGS.

Before you apply for the HGS, consider comparing home loans from participating lenders to get a better idea of which mortgage options may best suit your financial situation and personal goals. For example, some loans may offer features and benefits that particularly appeal to you.

It’s important to remember that getting a home loan with the help of the HGS is still a risk. While you won’t need to save up as high a deposit or pay LMI, you’ll still have a larger than average home loan balance on your property. This could take a long time to pay off, and cost you more in interest over the long run.

Also, by starting with a low deposit, you’ll have relatively little equity in your property for a long time, until you’ve made enough principal and interest repayments and extra repayments. 

For example, RateCity research found that a borrower who bought into the scheme in Sydney with a 5% deposit at the end of 2022 could potentially see their equity drop to -6% by the end of 2024, based on economic forecasts at the original time of writing.

The longer the time you spend with low or negative equity, the harder it may be to refinance your home loan in the future without having to pay LMI, locking you into mortgage prison. Be sure to consider all of the potential risks and rewards before making a commitment.