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The First Home Guarantee Scheme (HGS)

The HGS allows buyers to purchase a home with a deposit as low as 5% without the need to pay Lenders Mortgage Insurance (LMI).

Understanding the First Home Guarantee Scheme (HGS)

The First Home Guarantee Scheme (HGS) is an Australian Government initiative designed to assist eligible home buyers in purchasing a home sooner. Administered by Housing Australia, the scheme provides guarantees that enable buyers to secure a home loan with a reduced deposit as low as 5%, and no Lenders Mortgage Insurance, thereby facilitating earlier entry into the property market.

How the First Home Guarantee Works

Under the HGS, Housing Australia guarantees a portion of an eligible home buyer's loan from a participating lender. This guarantee allows buyers to purchase a home with

  • ·a deposit as low as 5%,
  • ·no need to pay Lenders Mortgage Insurance (LMI).

Specifically, Housing Australia guarantees up to 15% of the property’s value, enabling the buyer to avoid LMI costs. It’s important to note that this guarantee is not a cash payment or a deposit, but it significantly reduces the lender’s risk and speeds up homeownership for many Australians.

First Home Guarantee Overview

Min deposit

Capped places

Property Price Caps

Individual & Joint

Application earning caps

5% minimum deposit required.

Must intend to live in property

35,000 places available per year

NSW city and Illawarra cap is $900,000.

NSW regional cap is $750,000.

Singles $125,000,

joint applications

$200,000 as shown by Notice of

Assessment by ATO

Eligibility Criteria

To qualify for the First Home Guarantee:

  • ·Must be a first home buyer or have not owned a property in Australia in the past 10 years
  • ·Be an Australian citizen or permanent resident
  • ·Be 18 years or older
  • ·Have a taxable income of up to $125,000 for singles or $200,000 for joint applicants.
  • ·Intend to live in the property (investment properties are excluded)
  • ·Have a deposit between 5% and 20% of the property value

Property Price Caps

The scheme imposes property price caps that vary based on location. Property Price Capsare set by government legislation and vary based on location.

  • ·NSW capital city and Illawarra, cap $900,000
  • ·Other regional areas of NSW, cap, $750,000

For more detailed information, refer to the

Housing Australia's property price capspostcode tool.

Participating Lenders

Housing Australia works with a panel of 33 participating lenders, including:

  • ·Commonwealth Bank of Australia (CBA)
  • ·National Australia Bank (NAB)
  • ·Bank Australia
  • ·The Mutual Bank
  • ·Bank of Us
  • ·Beyond Bank

These lenders offer a range of loan options under the scheme, with their own internal lending criteria. A full list of lenders is available via Housing Australia’s site.

Other Home Guarantee Options Available

In addition to the First Home Guarantee, the Australian Government offers two other schemes under the Home Guarantee umbrella:

1. Regional First Home Buyer Guarantee (RFHBG)

Designed for eligible first home buyers purchasing in regional areas, this scheme also allows homeownership with a minimum 5% deposit and no LMI. Applicants must have lived in the region or adjacent region for at least 12 months prior to purchasing. There are 10,000 places for the FY 2024/25.

2. Family Home Guarantee (FHG)

This guarantee supports single parents or single legal guardians with at least one dependent, helping them purchase a home with as little as 2% deposit. Unlike the HGS and RFHBG, you do not need to be a first home buyer to qualify. There are 5000 placed for the FY 2024/25.

Application Process

  • ·Confirm your eligibility using Housing Australia’s guidelines.
  • ·Select a participating lender that suits your financial goals.
  • ·Gather necessary documents (ID, proof of income, deposit savings).
  • ·Apply for a home loan and notify your lender you’re applying under the HGS.
  • ·Proceed to approval and property settlement once accepted into the scheme.

The First Home Guarantee, alongside the Regional First Home Buyer Guarantee and the Family Home Guarantee, offers an opportunity for Australians to break into the property market the benefits of

  • ·Avoiding Lending Mortgage Insurance (LMI) and saving thousands
  • ·Buying sooner with a smaller deposit
  • ·Support for regional and single-parent buyers under expanded options
  • ·Clear pathways to homeownership without sacrificing financial security

With clear eligibility rules, and a network of participating lenders, these schemes remove many of the traditional roadblocks first-time buyers face.

At Cashflow Financial, we can assist you in navigating the planning and eligibility application process, understand your borrowing capacity, and make informed decisions. Contact our team today for tailored guidance on how to make the most of the First Home Guarantee scheme.

General information only. This article is general in nature and does not take your personal circumstances into account. It is not tax, financial or legal advice. Talk to us before you act on anything here.
Written by
Cashflow Financial
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