Since October 2025: unlimited places, no income caps, and a $1.5M Sydney price cap. The scheme that changes the maths for first buyers.
The First Home Guarantee (FHBG) is the most powerful tool available to Australian first home buyers — and its October 2025 expansion made it dramatically more accessible.
How the Guarantee Works
Normally, borrowing more than 80% of a property's value means paying Lenders Mortgage Insurance — often $25,000–$35,000 at 95% LVR. Under the FHBG, Housing Australia guarantees up to 15% of your loan, so a participating lender treats your 5% deposit like 20%. You pay no LMI. It's a guarantee, not a grant — no money changes hands and nothing is repaid.
What Changed in October 2025
- Places uncapped — previously limited to 35,000 per year; now every eligible buyer can access it
- Income caps removed — the old $125k single / $200k couple limits are gone
- Price caps lifted — Sydney and major NSW regional centres: $1.5 million
This turned the FHBG from a rationed lottery into a mainstream pathway.
Who's Eligible
- First home buyers (or previous owners who haven't owned in the last 10 years)
- Australian citizens or permanent residents, 18+
- Buying to live in the property (owner-occupier)
- Minimum 5% genuine deposit
- Purchasing under the property price cap for your area
Singles, couples, friends and siblings buying together can all apply under current settings.
The Maths on an $800,000 Purchase
| Without FHBG (95% LVR) | With FHBG | |
|---|---|---|
| Deposit | $40,000 | $40,000 |
| LMI | ~$28,000 | $0 |
| Effective start position | −$28,000 equity to LMI | Clean |
How to Apply
The guarantee is accessed through participating lenders — you can't apply to the government directly. Not all lenders participate, and assessment standards still apply. As brokers, we confirm your eligibility, pick the strongest participating lender for your profile, and reserve your guarantee place as part of the pre-approval.
FHBG, FHOG, FHSSS, FHBAS — Untangling the Alphabet
Four schemes, four different jobs, and they stack. The First Home Guarantee (federal, via Housing Australia) removes LMI at 5% deposit. The First Home Owner Grant (NSW, $10,000 via Revenue NSW) applies to new builds only. The First Home Buyers Assistance Scheme (NSW) zeroes stamp duty under $800,000. And the First Home Super Saver Scheme (ATO) releases up to $50,000 of voluntary super contributions for your deposit. A first home buyer purchasing a new build at $750,000 in Western Sydney could legitimately use all four at once.
Common Ways Buyers Miss Out
The guarantee must be arranged before unconditional approval through a participating lender — you can't retrofit it after settlement. Buying with a non-first-home-buyer partner breaks eligibility for the whole application. Property type matters: the home must be residential and owner-occupied, and price caps apply per region ($1.5M for Sydney). And while places are now uncapped, lender assessment still applies — a guarantee is not an approval, and serviceability at the ~3% buffer still decides your ceiling (test yours on the Borrowing Capacity Calculator).
Guarantee vs the Alternatives
If you don't qualify — previous ownership, price above cap, buying as an investor — the fallbacks each have their own guide: guarantor loans replace the deposit with family equity, paying LMI is a rational buy-now play in rising markets, and Help to Buy suits lower-income buyers via shared equity. Our low deposit loans service compares every path with your actual numbers, free — and see how the whole picture stacks up suburb by suburb across Western Sydney.
Life After the Guarantee
The guarantee isn't a product you're stuck with — it's training wheels that fall away naturally. As you repay and your property grows, your LVR drops; once you're below 80%, the guarantee has effectively done its job, and you can refinance to any lender in the market on standard terms, participating or not. Refinancing above 80% is where care is needed: leave a participating lender early at 90% LVR and the new lender will want LMI the guarantee previously replaced. The scheme also survives life changes better than people expect — you can renovate freely, and selling simply ends the guarantee with no penalty or repayment, since no money ever changed hands. What you can't do is convert the home to an investment property while relying on the guarantee's owner-occupier basis; if your plans head that way, talk to us first and we'll restructure cleanly. Guarantee-era loans should be reviewed annually like any other — the market moves, and so should your rate.
Frequently Asked Questions
Is the First Home Guarantee a grant or free money?
Neither — it's a government guarantee that replaces the need for LMI. You still borrow and repay your loan normally; you simply avoid a $20,000–$35,000 insurance premium.
Can I use the FHBG and the NSW stamp duty exemption together?
Yes — they stack. A first home buyer purchasing at $780,000 can pay no stamp duty (NSW exemption) and no LMI (FHBG) with only a 5% deposit.
What happens if I sell or move out?
The guarantee simply ends when you sell or refinance above 80% conditions change. If you move out early, the property may no longer meet owner-occupier requirements — talk to your lender first.
Last reviewed 27 July 2026 by Sam Elvitigala, MFAA Accredited Mortgage Broker. General information only — not personal financial or credit advice.