What is the First Home Guarantee?

The First Home Guarantee (FHBG) is an Australian Government program designed to help eligible buyers purchase a home sooner. Managed by Housing Australia under the Home Guarantee Scheme, it allows qualified buyers to buy a home with a deposit as low as 5%. Typically, buyers who have less than a 20% deposit are required to pay lenders mortgage insurance. However, under this guarantee, Housing Australia provides a guarantee to participating lenders for up to 15% of the property’s value, making it easier for buyers to secure a loan with a smaller deposit, subject to lender conditions.

How Does the First Home Guarantee Work?

Eligible home buyers can apply for a qualified loan through a participating lender to purchase an approved property. The First Home Guarantee (FHBG) supports up to 35,000 guaranteed loans each financial year. Qualified borrowers may also combine the FHBG with other government programs, such as the First Home Super Saver Scheme, state and territory first home owner grants, or stamp duty concessions. It’s important to note that the FHBG does not provide a cash payment or serve as a deposit for the home loan.

What type of property can be bought?

To qualify for the First Home Guarantee, the property must be a ‘residential property’, as defined by the program. Participating lenders can clarify if there’s uncertainty. Eligible properties include:

• an existing house, townhouse, or apartment
• a house and land package
• land with a separate contract to build a home
• an off-the-plan apartment or townhouse

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Different property types come with specific dates and requirements related to construction lending. The loan agreement must not exceed a 30-year term.

• Applicants must plan to live in the purchased property as their primary residence. Investment properties are not eligible for the First Home Guarantee.
• Applicants can be either first-time home buyers or individuals who have previously owned a property but have not owned any property in Australia in the last 10 years. Prior property ownership includes having an interest in real property (such as owning land) in Australia, a lease of land in Australia, or a company title interest in Australian land.

Note: If you qualify for the Regional First Home Buyer Guarantee (RFHBG) or the Family Home Guarantee (FHG), you are not eligible for the First Home Guarantee (FHBG). To determine which Guarantee you may be eligible for, you can use the Eligibility Tool available from us.

What property price thresholds apply?

The First Home Guarantee (FHBG) is designed to assist with the purchase or construction of a modest home, and the value of the property must not exceed the price cap for the area where it’s located. The price limits for capital cities, large regional centres, and regional areas are as follows:

The price caps for capital cities also apply to regional centers with populations over 250,000, such as Newcastle & Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast, and Sunshine Coast, where property prices can be higher than in other regional areas.

Note: For land purchases, Participating Lenders require the land to be titled before Housing Australia can issue a guarantee. This means the title must be secured within the 90-day pre-approval period.

Note: If you are planning to enter contracts for purchasing land and building a home, it’s advisable to discuss any potential risks with your participating lender (and broker, if applicable). Keep in mind that you must sign a fixed-price building contract, and any changes made after signing could affect your eligibility for the Scheme. Additionally, your bank may require you to pay Lenders Mortgage Insurance (LMI) or cover any extra costs yourself.

Who is eligible?

• Citizenship & Residency: Applicants must be Australian citizens or permanent residents aged 18 or over.
• Income Limits: Individual applicants need to have a taxable income of up to $125,000 per year, while joint applicants must have a combined taxable income of up to $200,000 per year. These figures are based on the previous financial year’s Notice of Assessment from the Australian Taxation Office. For applications between 1 July 2024 and 30 June 2025, the income threshold is based on the 2023-24 financial year.
• Deposit Requirement: To qualify for the First Home Guarantee, applicants must have saved at least 5% of the property’s value as a deposit. If you’ve saved 20% or more after covering additional costs like stamp duty and legal fees, the home loan will not be eligible for the guarantee.
• Loan Repayments: Loans under the First Home Guarantee must have scheduled repayments of both principal and interest for the entire loan term, although there are limited exceptions for interest-only loan

How to apply?

• To apply for the FHBG, eligible home buyers must go through a participating lender. You can find the full list of these lenders at www.housingaustralia.gov.au.
• Each financial year, there will be 35,000 FHBG places available through these lenders.
• The FHBG itself does not involve any costs or repayments. However, applicants are responsible for all costs and repayments related to the home loan they secure with the FHBG.
• Housing Australia does not accept applications directly and does not keep a waiting list for FHBG places.

Note: Before finalizing a home loan agreement, it’s wise to discuss with your lender or broker how fluctuations in interest rates or house prices might affect your personal situation.