First Home Guarantee 2026: Buy With a 5% Deposit, No Income or Place Caps
What the First Home Guarantee actually is
The First Home Guarantee is an Australian Government scheme that lets eligible first home buyers purchase a home with as little as a 5% deposit and, importantly, without paying Lenders Mortgage Insurance (LMI). Normally, if you borrow more than 80% of a property's value, the lender charges LMI to protect itself. Under the scheme, the Government (through Housing Australia) guarantees the portion of your loan above your deposit — typically up to 15% — so the lender does not charge LMI.
To be clear about what it is not: it is not a cash grant, and it does not lend you the deposit. You still need a genuine 5% deposit and you still have to meet the lender's normal credit checks. It simply removes the LMI cost and lets you buy sooner with a smaller deposit.
What changed on 1 October 2025
From 1 October 2025, the scheme was significantly expanded. The two biggest changes:
- No income caps. Previously there were income tests. As at July 2026, the income limits have been removed, so eligibility is no longer based on how much you earn.
- No cap on the number of places. The scheme used to be limited to a set number of spots each financial year (which often ran out). That annual place limit has been removed, so eligible buyers are no longer competing for a fixed number of guarantees.
In plain terms: more first home buyers can now access a 5% deposit purchase without LMI than before. Eligibility still depends on the property, the buyer and the lender — but two of the biggest historical barriers have been lifted.
Property price caps (Melbourne & Geelong: $950,000)
The scheme applies to properties up to a set price cap, which varies by location. As at July 2026, the caps include:
- Melbourne & Geelong: $950,000
- Sydney & NSW regional centres: $1,500,000
- Brisbane, Gold Coast & Sunshine Coast: $1,000,000
- Perth: $850,000 · Adelaide: $900,000 · ACT: $1,000,000
- NT: $600,000 (Darwin rising to $750,000 from 1 July 2026)
For buyers across Melbourne's western suburbs — Point Cook, Tarneit, Werribee, Truganina, Hoppers Crossing and similar — the $950,000 Melbourne cap comfortably covers most house-and-land and established family homes, which is part of why the scheme is so useful in this part of the city. Caps are reviewed periodically and can change, so check the current figure for your area before you commit.
Who is eligible
Eligibility rules apply and are set by the Government, not by us. As a general guide, you typically need to:
- Be an Australian citizen or permanent resident, at least 18 years old;
- Be a first home buyer (or an eligible previous owner who has not owned property in Australia for a set period);
- Intend to live in the home as your owner-occupied residence (it is not for pure investment purchases);
- Buy a property at or under the relevant price cap; and
- Meet the participating lender's normal lending criteria.
These are general points, not a full eligibility list, and the rules can be updated. Your individual eligibility can only be confirmed against the official criteria and the lender's assessment.
How much you could save on LMI
The main saving is the LMI you would otherwise pay on a low-deposit loan. On a typical Melbourne purchase, LMI on a 5% deposit loan can run into many thousands — and on higher-priced homes it can reach the tens of thousands of dollars. Avoiding that cost is money you keep, or that stays in your loan working for you.
There is a trade-off worth understanding: buying with a smaller deposit means a larger loan and higher ongoing repayments than if you saved a 20% deposit. Whether that trade-off suits you depends on your budget, your goals and how repayments look at current interest rates. That is exactly the kind of thing worth modelling before you buy — our borrowing power and repayment calculators are a good starting point.
Family Home Guarantee: a 2% deposit option
Alongside the First Home Guarantee, the Family Home Guarantee supports eligible single parents and eligible single legal guardians with at least one dependent child. It works on the same principle but allows a purchase with as little as a 2% deposit, again without LMI. It is not limited to first home buyers in the same way. If you are a single parent looking to buy, this is worth asking about specifically.
How to apply the right way
You cannot apply to Housing Australia directly. The guarantee is accessed through a participating lender, and a mortgage broker can help you find one, check your eligibility against the current rules, and structure the application. As a local Melbourne broker, that is where we help: confirming which scheme fits, comparing participating lenders, and getting your application ready — at no cost to you on most home loans, because we are paid by the lender.
Important information
This article is general information only, current as at July 2026, and does not take into account your personal circumstances. It is not financial, credit or legal advice. Scheme rules, price caps and eligibility criteria are set by the Australian Government and can change — always confirm the current details via the official Housing Australia and firsthomebuyers.gov.au resources. Any home loan is subject to the participating lender's normal credit assessment and approval; eligibility for a scheme place is not guaranteed. Consider seeking advice suited to your situation before making a decision.