You earn a decent income. You have savings. But you have been watching the deposit target move further away while rent absorbs what you could otherwise be putting aside. That is the position many buyers in their 30s and 40s are in right now, and it is precisely the group the updated First Home Guarantee is now open to.
What Changed, and When
The First Home Guarantee (FHBG) is administered by Housing Australia. It allows eligible buyers to purchase with a 5% deposit and no Lenders Mortgage Insurance (LMI). The federal government guarantees up to 15% of the property value, bridging the gap to 20% and eliminating the need for LMI.
The scheme has been around since 2020 but was previously restricted by two significant barriers: an annual cap on available places, and income limits that excluded buyers earning above $125,000 as an individual or $200,000 as a couple. Both of those restrictions were removed from 1 October 2025.
The official announcement from Housing Australia confirmed three changes effective that date:
- No place limits: all Australian first home buyers who have saved a 5% deposit can apply.
- No income caps: first home buyers with higher incomes can access the scheme.
- Higher property price caps to reflect where prices have moved, and regional access simplified, with the Regional First Home Buyer Guarantee folded into the First Home Guarantee.
The scheme was also renamed the Australian Government 5% Deposit Scheme. You will see both names used. They refer to the same guarantee.
The Rules as They Currently Stand
To qualify, you generally need to be an Australian citizen or permanent resident aged 18 or over, a first home buyer (you and any co-applicant must not have previously owned property in Australia, with limited exceptions), buying as an owner-occupier and moving in within an eligible timeframe, purchasing a property within the relevant price cap for the region, and have at least 5% in genuine savings.
Your income affects your borrowing capacity through standard serviceability assessments, but no longer disqualifies you from the scheme itself.
Property price caps still apply and vary by location. The headline caps for 2026 include: Sydney and NSW regional centres at $1,500,000; Brisbane and Queensland regional centres at $1,000,000; Melbourne and Geelong at $950,000; and Perth at $850,000. Caps are set by Housing Australia and reviewed periodically. Always confirm the cap that applies to your postcode directly with Housing Australia before signing a contract, as the relevant cap is the one in force at the date of the purchase contract.
Your loan also needs to sit between an 80% and 95% LVR, and the property value must not exceed the price cap for the area. The loan term cannot exceed 30 years, and repayments must be principal and interest.
One nuance worth noting: the scheme generally requires that the applicant has not previously owned a property in Australia that was their principal place of residence. Prior ownership of an investment property that the applicant never occupied as a home is not automatically disqualifying, but applicants should verify their individual position with a participating lender or a licensed mortgage broker.
The Trade-offs Worth Thinking Through
The guarantee removes LMI, not the debt. On a $750,000 property with a 5% deposit, LMI would typically cost $28,000 to $38,000. The FHBG eliminates that cost entirely. That is real money, but you still borrow 95% of the purchase price. Your monthly repayments reflect that.
A few things to weigh:
The scheme is owner-occupier only. You must intend to live in the property as your primary residence within 12 months of settlement or completion of construction. This is not a pathway into an investment property. If investment property is the goal, that is a separate conversation involving different structures and finance approaches.
Serviceability still applies. Income caps are gone at the scheme level, but lenders still run their own assessments. A higher income improves your borrowing power, but it does not automatically mean a lender will approve 95% of a $1.4 million purchase. Your debt-to-income position, expenses, and existing commitments all feed into that assessment.
Price caps can still bite. In some markets, the cap covers a wide range of the available stock. In others, it cuts out a meaningful portion. For a dual-income household in Sydney buying close to the $1.5 million cap, the 5% deposit figure is $75,000 plus transaction costs. That is a meaningful sum, but still lower than the $300,000 a conventional 20% deposit would require.
The scheme works with new builds and house-and-land. Eligible property types include houses, townhouses, apartments, house-and-land packages, off-the-plan apartments, and land with a contract to build. This matters for buyers considering a new build, including those who want to combine the scheme with a construction finance arrangement.
A Worked Scenario
Consider two buyers, professionals in their mid-30s in Brisbane, buying jointly as owner-occupiers. They have $55,000 in combined savings and a strong combined income that would previously have excluded them from the scheme.
Target property: a new townhouse under contract at $920,000.
- 5% deposit required: $46,000
- Remaining savings available for stamp duty and purchase costs: $9,000 (they may need to supplement this)
- Government guarantee covers the gap to 20%: $138,000 (not a cash payment, a guarantee to the lender)
- LMI payable: $0
- LMI they would otherwise have paid on a comparable loan at 95% LVR: in the range of $28,000 to $38,000, based on typical LMI schedules
Brisbane's price cap sits at $1,000,000, so the $920,000 purchase is within range. Both applicants need to be first home buyers under the scheme rules. They apply through a participating lender, not directly through Housing Australia.
This scenario is illustrative only. Stamp duty, buying costs, and lender serviceability requirements will all affect the final numbers. A broker can run the actual figures against current lender criteria.
What to Do Next
If the scheme looks like it fits your situation, three practical steps:
Confirm your eligibility position. Check whether both applicants meet the first home buyer definition, that your target property is within the relevant price cap, and that your deposit is made up of genuine savings. The Housing Australia eligibility tool is the authoritative starting point.
Speak with a licensed mortgage broker who is accredited with participating lenders. The scheme is only accessible through participating lenders, not every lender offers it, and your serviceability position will shape which options are realistic. If you want to connect with a broker, you can book a call with the EWC team and we can refer you to one.
If you are also looking at an investment property or SMSF structure alongside a first home purchase, keep those conversations separate. The FHBG applies to owner-occupied purchases only. Investment property and SMSF strategies involve different structures, different finance, and different professional advice. Our services page gives an overview of how EWC supports buyers across both pathways.
General information only, not personal financial advice. Speak with a licensed adviser before acting.