For many first-home buyers, saving a full 20% deposit while also covering Lenders Mortgage Insurance (LMI) is one of the biggest barriers to entering the Sydney market. The Australian Government’s First Home Guarantee scheme, administered by Housing Australia, is designed specifically to address this by letting eligible buyers purchase with a smaller deposit without paying LMI.
What the Scheme Actually Does
Under the First Home Guarantee, the government guarantees a portion of an eligible buyer’s home loan, which allows participating lenders to approve a purchase with a deposit as low as 5% (for eligible buyers) without requiring the buyer to pay LMI — a cost that can otherwise run into the tens of thousands of dollars on a Sydney-sized loan. It’s important to understand this is a guarantee, not a cash grant — you still need to service the full loan amount, and you’ll generally pay more in total interest over time on a smaller deposit compared to a larger one, all else being equal.
Eligibility Basics (Always Confirm Current Settings)
Eligibility criteria — including income caps, property price caps by region, and the number of places available each financial year — are set by Housing Australia and reviewed periodically, so any specific figures can change between financial years. Rather than relying on a number that may be out of date by the time you read this, check the current income caps, price caps for your specific NSW region, and place availability directly on the Housing Australia website, or confirm with a mortgage broker who tracks scheme updates as part of their day-to-day work.
How It Interacts With Other First-Home Buyer Support
The First Home Guarantee can potentially be used alongside other state-based first-home buyer support, such as stamp duty concessions or exemptions offered by NSW for eligible first-home buyers, though the specific combination of schemes you’re eligible for depends on your individual circumstances, the property price, and current settings for each program. A broker or the relevant government agency can confirm which combination applies to your specific situation.
Practical Steps to Get Started
- Check current income and property price cap eligibility directly with Housing Australia or a participating lender.
- Confirm place availability for the current financial year — places are limited and allocated progressively.
- Speak to a broker about which participating lenders offer competitive rates under the scheme, since not all lenders offering the guarantee price it identically.
- Model the total cost difference between a 5% deposit under the scheme versus saving a larger deposit over a longer period, since the right choice depends on your specific savings trajectory and how the Sydney market is moving while you save.
Getting Tailored Advice
Because eligibility and scheme details shift over time, and because the right deposit strategy depends heavily on your personal savings position and timeline, it’s worth having this conversation directly with a mortgage broker or a buyers agent experienced with first-home buyers — firms like Strike work specifically with first-home buyers navigating exactly this kind of scheme eligibility alongside the broader purchase process.
If you’re weighing whether to buy now under the scheme or continue renting and saving, our guide on rentvesting covers a middle-ground strategy worth considering.
Frequently Asked Questions
Can I use the First Home Guarantee together with my superannuation under the First Home Super Saver Scheme?
These are separate schemes with their own eligibility rules, and depending on your circumstances you may be able to use both — confirm current interaction rules with a broker or directly with the relevant government agency, since scheme settings change periodically.
Does the scheme cover new builds as well as established homes?
Generally yes, subject to current price caps and property type rules for your region — confirm specifics for your target property type directly with Housing Australia or a participating lender.
What happens if I’m no longer eligible partway through the home-buying process?
Eligibility is generally assessed at the time of loan approval, so it’s worth confirming your position stays stable (income, property choice, place availability) throughout your search, and flagging any changes in circumstances to your broker promptly.
Key Takeaway
The scheme can materially reduce the upfront cost of entering the market, but eligibility settings shift, and a smaller deposit means more interest paid over time. Confirm current details directly and model the full cost picture before deciding it’s the right path for you.