First Home Guarantee: Helping First-Time Buyers Enter the Market Sooner
If you’re a first-time homebuyer eager to enter the market, the Australian government offers a helpful initiative—the First Home Guarantee (FHBG).
Typically, buyers must save a deposit of at least 20% of the property’s value. Otherwise, they need to pay for lenders mortgage insurance, which can cost thousands. The FHBG helps eligible buyers purchase a home with a smaller deposit and without paying this insurance.
How Does the First Home Guarantee Work?
Previously known as the First Home Loan Deposit Scheme, the FHBG supports first-time buyers entering the property market. Each year, the scheme provides 35,000 places. It allows buyers to purchase a home with just a 5% deposit and no lenders mortgage insurance.
The National Housing Finance and Investment Corporation (NHFIC) manages the scheme for the government. It guarantees part of the home loan issued by a participating lender. This guarantee lets buyers avoid mortgage insurance, even with a low deposit. However, it’s important to note that the guarantee is not a cash payment or a deposit contribution.
Between 1 July 2022 and 30 June 2023, 35,000 FHBG spots were available. Eligible low- and middle-income earners who saved at least 5% of a property’s value could access government-backed low-deposit loans.
Who Can Apply?
NHFIC has approved a panel of 32 participating lenders to offer the scheme. While the minimum deposit is 5%, some lenders may ask for more depending on your financial situation.
To qualify, you must meet the following criteria:
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Be a first home buyer. You must not have owned or held interest in any residential property as an owner-occupier or investor.
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Apply as an individual or couple. Couples must be married or in a de facto relationship. Friends, siblings, or parent-child pairs are not eligible.
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Earn less than $125,000 as an individual, or less than $200,000 as a couple, based on your most recent Notice of Assessment from the ATO.
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Be at least 18 years old and hold a valid Medicare card or Defence ID.
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Be an Australian citizen with a valid passport or proof of citizenship. Permanent residents do not qualify.
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Have a deposit between 5% and 20% of the property’s value. The property must meet eligibility requirements and fall within the price cap for its suburb and postcode.
