First Home Guarantee 2026: Eligibility, Property Price Caps & How to Apply

Introduction: Why the First Home Guarantee Matters More Than Ever in 2026

Let’s be honest. Saving a 20% deposit to buy your first home in Australia right now is genuinely hard.

In Sydney, the median house price sits above $1.4 million. Even in Brisbane or Adelaide, you’re looking at properties well over $700,000. A 20% deposit on a $750,000 home is $150,000 — and that’s before you factor in stamp duty, legal fees, building inspections, and moving costs. For most working Australians, that kind of savings target can take a decade or more to hit.

That’s exactly the problem the First Home Guarantee was designed to solve.

The FHBG allows eligible first home buyers to purchase a property with as little as a 5% deposit, while the Australian Government — through Housing Australia — provides a guarantee covering the next 15%. That means your lender treats the loan as if you had a 20% deposit, and you avoid paying Lenders Mortgage Insurance, which can easily cost $15,000 to $65,000 depending on the purchase price.

And in 2026, the scheme has never been more accessible. Following a major expansion from 1 October 2025, there are now no income caps, no annual place limits, and significantly higher property price caps across every state and territory. Whether you earn $60,000 or $300,000 a year, if you’ve saved a 5% deposit and haven’t owned property in Australia before, you could qualify.

In this guide, we’ll walk you through everything you need to know — from exactly how the scheme works and who qualifies, to the updated price caps by state, how to apply step by step, and the common mistakes to avoid.

What Is the First Home Guarantee (FHBG)?

The First Home Guarantee — also known as the Australian Government 5% Deposit Scheme — is a federal government initiative administered by Housing Australia (formerly the National Housing Finance and Investment Corporation, or NHFIC).

The scheme was originally launched in 2020 as the First Home Loan Deposit Scheme (FHLDS), before being rebranded as the First Home Guarantee in 2022. In October 2025, it was expanded again and is sometimes referred to simply as the “5% Deposit Scheme” in government communications.

How the government guarantee works

Here’s the key thing to understand: this is not a cash grant. The government does not put money into your bank account.

Instead, when you borrow with a 5% deposit and use the FHBG, Housing Australia acts as a guarantor to your lender for up to 15% of the property value. From the lender’s perspective, the loan is effectively secured at an 80% loan-to-value ratio (LVR), which is the threshold above which LMI is normally charged.

So you get to borrow more without paying thousands of dollars in LMI — and the government takes on the risk of that 15% gap.

What is LMI and why does avoiding it matter?

Lenders Mortgage Insurance is an insurance policy that protects the lender (not you) if you default on your loan. It is charged when your deposit is less than 20% of the property value. LMI premiums are typically capitalised into the loan, meaning they’re added to your debt — and you pay interest on them for years.

At current property prices, here’s roughly what LMI costs without the scheme:

Purchase Price5% DepositEstimated LMI Cost
$500,000$25,000~$10,000–$13,000
$750,000$37,500~$18,000–$24,000
$1,000,000$50,000~$28,000–$36,000
$1,500,000$75,000~$50,000–$65,000

Estimates only. Actual LMI varies by lender, insurer, and loan characteristics.

The FHBG saves you that entire cost.

Who administers it?

The scheme is administered by Housing Australia, but you cannot apply through Housing Australia directly. Applications are made through a panel of participating lenders — more than 50 banks, credit unions, and non-bank lenders as of 2026, including all four major banks.

How the First Home Guarantee Works

The loan mechanics

When you apply through a participating lender using the FHBG:

  1. You bring a minimum 5% genuine deposit
  2. You borrow up to 95% of the property value
  3. Housing Australia provides a guarantee for the 15% “gap” between your deposit and the 80% LVR threshold
  4. You repay the full loan over the standard loan term (up to 30 years)
  5. The guarantee remains in place until you reach 80% LVR naturally (through repayments or property appreciation)

Important: You are responsible for repaying the entire loan. The government guarantee is not a subsidy — it is a contingent liability that only activates if you default and the lender cannot recover the full loan amount.

Owner-occupier requirement

You must intend to live in the property as your principal place of residence. Investment properties are not eligible. You are generally required to move in within six months of settlement and occupy the home continuously thereafter.

Genuine savings requirement

Most lenders require your 5% deposit to come from genuine savings — money you’ve accumulated over time. Some acceptable sources include:

FHBG Eligibility Criteria in 2026

The eligibility rules were simplified as part of the October 2025 expansion. Here’s the full breakdown.

Citizenship and residency

You must be an Australian citizen or permanent resident at the time you enter the contract to purchase your home. Temporary visa holders are not eligible.

Age

You must be at least 18 years old.

First home buyer status

This is the critical one. You (and any co-applicant) must not have previously owned residential property in Australia, either individually or jointly. This includes:

There is a limited exception for “re-entry buyers” — people who have owned property in the past but meet certain circumstances — but this applies under specific rules. Check with Housing Australia or a participating lender if your situation is complex.

Income requirements — scrapped from October 2025

Prior to October 2025, the FHBG had income caps: $125,000 per year for individuals and $200,000 combined for couples. These caps have now been fully removed.

As of 2026, there are no income restrictions on the First Home Guarantee. A household earning $300,000 a year can apply just as a household earning $60,000 can — provided they meet the other criteria and pass the lender’s own serviceability assessment.

Note: While the government scheme has removed income caps, lenders will still assess your ability to repay the loan at a stressed interest rate (typically the loan rate plus a 3% buffer, per APRA guidelines).

Relationship status and co-applicants

You can apply:

All co-applicants must individually meet the first home buyer and citizenship requirements.

Owner-occupancy

You must intend to occupy the purchased property as your principal place of residence. You cannot use the FHBG for an investment property.

Credit and financial assessment

The government scheme itself does not run a credit check — that is left to the participating lender. However, to be approved for a loan through a participating lender, you’ll still need to meet standard lending criteria:

Pro Tip: Even though the FHBG has no income cap, lenders will cap how much they’ll lend you based on their own serviceability assessment. Knowing your borrowing capacity before you start shopping is essential — use the calculators on lender websites, or better yet, speak to a mortgage broker.

FHBG Property Price Caps by State & Territory (2026)

Property price caps were substantially increased from 1 October 2025 to reflect current market conditions. The cap that applies to your purchase is based on the suburb and postcode at the time of contract, not settlement.

Every state has two cap tiers: a higher “capital city and designated regional centres” cap, and a lower “rest of state” cap. Some major regional cities — like the Gold Coast, Geelong, and Newcastle — attract the higher capital city cap.

State/TerritoryCapital City & Designated Regional CentresRest of State/Territory
New South Wales$1,500,000 (Sydney, Newcastle, Lake Macquarie, Illawarra/Wollongong)Lower tier — check postcode tool
Victoria$950,000 (Melbourne, Geelong)Lower tier — check postcode tool
Queensland$1,000,000 (Brisbane, Gold Coast, Sunshine Coast)Lower tier — check postcode tool
Western Australia$850,000 (Perth)Lower tier — check postcode tool
South Australia$900,000 (Adelaide)Lower tier — check postcode tool
Tasmania$700,000 (Hobart and regional centres)$550,000
ACT$1,000,000 (entire territory)N/A (single cap)
Northern Territory$750,000 (Darwin — from 1 July 2026)$600,000

Source: Housing Australia / firsthomebuyers.gov.au. Always verify your specific suburb using the official Postcode Search Tool at firsthomebuyers.gov.au, as boundaries can split suburbs and postcodes.

Why the caps matter — a real-world example

Consider two buyers in New South Wales:

The difference between being in a “capital city” zone and a “rest of state” zone can be hundreds of thousands of dollars in maximum eligible purchase price. Always check before signing a contract.

Critical Warning: The cap applies to both the purchase price AND the lender’s property valuation. If your lender values the property below the purchase price and that valuation is under the cap but the purchase price is over it, the scheme will not apply. Similarly, if you’re buying land and building, the combined cost of land and construction must sit below the cap.

What Properties Are Eligible?

The FHBG is flexible about property type. You can purchase:

What you cannot purchase

Regional considerations

There is no separate Regional First Home Buyer Guarantee in 2026 — it was folded into the main FHBG in October 2025. Regional buyers now access the same scheme as metropolitan buyers, with the relevant tier of price caps applying to their location.

Step-by-Step: How to Apply for the First Home Guarantee in 2026

Step 1: Check your eligibility

Before anything else, confirm you meet the basic eligibility requirements:

Use the eligibility checker at firsthomebuyers.gov.au to confirm your status.

Step 2: Estimate your borrowing power

Contact a mortgage broker or use an online borrowing calculator to estimate how much a lender will offer you based on your income, expenses, and existing debts. Remember: the FHBG removes the income cap for the scheme itself, but your lender will still apply a serviceability buffer of around 3% above the loan rate.

Step 3: Save your deposit

You need a genuine savings deposit of at least 5% of the purchase price. You can also supplement this with:

Step 4: Compare participating lenders

There are more than 50 participating lenders on the Housing Australia panel in 2026, including all four major banks (ANZ, Commonwealth Bank, NAB, and Westpac) plus many regional banks, credit unions, and non-bank lenders. Interest rates and loan features vary considerably between lenders, even when all are offering FHBG-eligible products. Shop around, or use a mortgage broker who can compare multiple lenders.

Step 5: Get pre-approval (conditional approval)

Before you start inspecting properties, approach your chosen lender (or broker) for pre-approval. This will tell you how much they’re willing to lend, and it confirms your FHBG eligibility has been assessed. Most pre-approvals are valid for 3–6 months.

Step 6: Reserve your FHBG place

Once your lender confirms you are eligible for the FHBG, they will reserve a guarantee place on your behalf through Housing Australia. Because places are now unlimited (since October 2025), there is no waitlist or competitive allocation — eligible applicants simply apply and receive the guarantee through their lender.

Step 7: Find a property within the price cap

With your pre-approval in hand, search for properties that sit within the price cap for your region. Always confirm the cap for the specific suburb and postcode — not just the general city — before making an offer.

Step 8: Apply for formal approval

Once your offer is accepted and you have a signed contract of sale, your lender will progress to formal (unconditional) approval. They will order a valuation of the property to confirm it meets the price cap requirements.

Step 9: Settlement

After formal approval, you’ll proceed to settlement — the process where ownership is legally transferred to you. From this point, you are responsible for all loan repayments. You must occupy the property as your principal residence within the timeframe specified in your loan agreement (typically six months of settlement).

Pro Tip: Work with a licensed conveyancer or solicitor to manage the settlement process. They’ll ensure all paperwork is correct and liaise with the lender on your behalf.

Participating Lenders in 2026

You can access the FHBG only through lenders on the Housing Australia panel. As of 2026, this includes:

The Big Four:

Other major banks and lenders:

Plus: dozens of regional banks, building societies, credit unions, and non-bank lenders.

A current list of all participating lenders is available at firsthomebuyers.gov.au.

Why lender choice matters

Even though the FHBG is a government scheme, each lender sets their own:

A 0.5% difference in interest rate on a $700,000 loan means approximately $3,500 per year in extra repayments. Over 30 years, that compounds significantly. Don’t just go with your existing bank — compare at least three lenders, or use a qualified mortgage broker.

Questions to ask your lender:

  1. What is your current comparison rate for a FHBG-eligible loan?
  2. Does your serviceability assessment allow the FHSS withdrawal as part of my deposit?
  3. What is your turnaround time for pre-approval and formal approval?
  4. Do you offer an offset account on your FHBG-eligible loans?
  5. What are your fees — application fees, ongoing fees, discharge fees?

FHBG vs Other Australian First Home Buyer Schemes

The FHBG is just one of several government programs designed to help first home buyers. Here’s how they compare.

Comparison: Major Federal and State Schemes

SchemeBenefitWho It’s ForDeposit Required
First Home Guarantee (FHBG)Government guarantee, no LMIAll first home buyers5%
Help to BuyShared equity (govt co-owns up to 40% of new / 30% of existing)Lower-to-middle income buyers2%
Family Home GuaranteeGovernment guarantee, no LMISingle parents / guardians with dependants2%
First Home Owner Grant (FHOG)Cash grant ($10,000–$30,000 depending on state)First home buyers of new homesN/A (separate from deposit)
First Home Super Saver Scheme (FHSS)Tax-effective savings in superannuationAll first home buyersUp to $50,000 withdrawal
Stamp duty concessionsReduced or waived stamp dutyVaries by state — income and price limits applyN/A

Help to Buy vs FHBG

The Help to Buy scheme — launched in late 2025 — is a shared equity arrangement where the federal government co-purchases up to 40% of a new home (or 30% of an existing home) alongside you. It has income caps (singles under $100,000, couples under $160,000 per year), which makes it different from the now-uncapped FHBG.

With Help to Buy, you need only a 2% deposit, which is even lower than the FHBG’s 5%. But you’re sharing ownership with the government, which means when you sell, the government is entitled to its proportional share of the sale price — including any capital gains.

For most buyers, the FHBG is simpler: you own 100% of the property from day one, and once your loan balance drops below 80% LVR, the guarantee quietly expires and you’re completely independent of the government.

Family Home Guarantee

The Family Home Guarantee is specifically designed for single parents (and eligible single legal guardians) with at least one dependent child. It operates like the FHBG but requires only a 2% deposit and provides a guarantee of up to 18% of the property value. Income caps may apply — check the current rules at Housing Australia.

First Home Owner Grant (FHOG)

The FHOG is a state-based cash grant for buyers of new (or substantially renovated) homes. It can be stacked with the FHBG — meaning you could potentially use both the cash grant and the guarantee on the same purchase. State-level FHOG amounts in 2026:

State/TerritoryFHOG AmountFor New Homes?
NSW$10,000Yes (up to $600,000)
VIC$10,000Yes (up to $750,000)
QLD$30,000Yes (up to $750,000)
WA$10,000Yes (statewide)
SA$15,000Yes (up to $650,000)
TAS$30,000Yes (FY25-26)
ACTDuty concession (not cash)—
NT$10,000Yes (up to $650,000)

Advantages & Disadvantages of the FHBG

Advantages

1. Enter the market years earlier. For many buyers, the 5% deposit threshold is achievable in 2–3 years of disciplined saving. A 20% deposit could take a decade — time during which property prices can rise significantly.

2. Save $10,000 to $65,000 in LMI. This is real, upfront money that stays in your pocket rather than being added to your loan balance. On a $1 million property with a 5% deposit, you could save over $35,000 in LMI alone.

3. No income cap in 2026. The removal of the $125,000/$200,000 income threshold means higher-earning first home buyers can also access the scheme, which was previously unavailable to them.

4. Unlimited places. No more annual caps, no waitlists, no rushing to apply before “spots run out.”

5. Stacks with other schemes. You can use the FHBG alongside the FHOG cash grant, stamp duty concessions, and FHSS withdrawals for a significantly reduced upfront cost.

Disadvantages

1. You’re borrowing more. A 5% deposit means a 95% LVR loan. Your loan balance is large, and the higher loan amount means more interest paid over the life of the loan. Someone with a 20% deposit borrowing $800,000 on a $1,000,000 property pays significantly less interest over 30 years than someone borrowing $950,000 on the same property.

2. Higher repayments. A larger loan means larger monthly repayments. Make sure you’ve stress-tested your budget at the lender’s assessment rate.

3. Property cap restrictions. If your target suburb sits above the price cap for your region, you won’t be eligible — you’ll need to look elsewhere or save a larger deposit.

4. Equity risk. Buying with a 5% deposit in a falling market means your equity could quickly become negative — you could owe more than the property is worth. This is a real risk in interest rate cycles.

5. Owner-occupier requirement. If your circumstances change and you want to turn the property into an investment, you’ll need to reassess your loan (and potentially lose the benefit of the guarantee).

Common Mistakes First Home Buyers Make

Mistake 1: Borrowing to the absolute maximum

Being approved for $900,000 doesn’t mean you should borrow $900,000. Lenders assess your borrowing capacity under hypothetical scenarios. Make sure you’ve thought about how you’d manage repayments if interest rates rise, your income falls, or you have unexpected expenses.

Mistake 2: Forgetting about the costs beyond the deposit

Your 5% deposit is just the start. You’ll also need to budget for:

These costs can add $15,000–$40,000 on top of your deposit, depending on the state and property price. Many first home buyers are caught off-guard by this.

Mistake 3: Assuming a gifted deposit is fine without checking

Some lenders accept gifted deposits as part of the 5% genuine savings requirement; others don’t. Confirm your specific lender’s policy before relying on a gift from family.

Mistake 4: Applying with a lender who doesn’t offer competitive rates

The FHBG doesn’t lock you into any particular interest rate. Lenders on the panel can charge very different rates. Failing to compare means potentially paying thousands more per year in interest.

Mistake 5: Not checking the postcode cap before signing

The price cap for your property is determined by its postcode — not the general city name. The difference between a “capital city” postcode and a “rest of state” postcode can be enormous. Always check the specific postcode at firsthomebuyers.gov.au before you sign a contract.

Mistake 6: Poor credit history preparation

Many first home buyers don’t check their credit report until they’re mid-way through the application process. Errors, defaults, or multiple recent credit enquiries can reduce your score and affect your approval odds. Pull your free credit report from Equifax, Experian, or illion at least three months before applying.

Tips to Improve Your Approval Chances

1. Build a consistent savings history. Lenders want to see regular, disciplined saving over 3–6 months, not a lump sum transferred in the week before application. Set up an automatic transfer to a high-interest savings account.

2. Reduce existing debts. Pay down personal loans, car loans, and credit cards before applying. Lenders assess “total debt commitments” when calculating your serviceability. Even a $200/month credit card minimum repayment reduces how much you can borrow.

3. Lower your credit card limits. You don’t need to close cards — but reducing your credit limit from $20,000 to $5,000 can meaningfully improve your assessed borrowing capacity.

4. Check and clean your credit report. Request a free copy from Equifax or Experian. Dispute any errors. If you have a paid default, add a statement of explanation.

5. Maintain stable employment. Lenders strongly prefer applicants who have been in the same job (or at least the same field) for 6–12 months. If you’re considering changing jobs, try to do it after you’ve secured formal loan approval.

6. Use a mortgage broker. A qualified mortgage broker can access multiple lenders, help you choose the right product, manage the application process, and often negotiate better rates than you’d get going direct. Brokers are generally paid by the lender, not you.

7. Get pre-approval before you start inspecting. Knowing your budget before you find a property keeps you focused and prevents you falling in love with a home you can’t afford.

How AI & Technology Are Changing Mortgage Approvals in 2026

The home loan application process has changed substantially in recent years, and 2026 is no exception.

Digital applications and open banking. Most major lenders now process applications almost entirely online. Through Australia’s Consumer Data Right (CDR) framework, applicants can share their bank account history directly with lenders — removing the need to manually collect months of bank statements. This speeds up assessment and reduces errors.

Automated income and expense verification. AI-powered tools now cross-reference your declared income against payroll data, ATO records, and transaction histories in minutes rather than weeks. For straightforward applications, conditional approvals can be issued the same day.

AI-powered property valuation. Automated Valuation Models (AVMs) use sales data, property attributes, and market trends to generate instant valuations. While full desktop and physical valuations are still required for FHBG applications, AI-assisted valuations are increasingly used in preliminary assessments.

Broker comparison platforms. Mortgage brokers now use sophisticated software to compare hundreds of loan products in real time, modelling different scenarios (fixed vs variable, offset account vs redraw) against your specific financial position.

What this means for you: The application process is faster and more transparent than it was five years ago. But AI assessments can also be more ruthless about marginal applications — inconsistencies between declared income and transaction data will flag immediately. Having clean, consistent financial records is more important than ever.

Frequently Asked Questions (FAQs)

1. What is the First Home Guarantee in 2026?

The First Home Guarantee (FHBG) is an Australian Government scheme that allows eligible first home buyers to purchase a property with a minimum 5% deposit without paying Lenders Mortgage Insurance (LMI). The government, through Housing Australia, guarantees up to 15% of the property value to the lender. As of October 2025, income caps and place limits have been removed.

2. Is there still an income cap on the First Home Guarantee?

No. Income caps were removed from 1 October 2025. Any first home buyer who meets the other eligibility requirements — citizenship, first-time buyer status, owner-occupancy intent, and the 5% deposit — can now access the scheme regardless of income.

3. How many FHBG places are available in 2026?

There is now no annual cap on places. Any eligible first home buyer who applies through a participating lender can access the guarantee. There are no waitlists.

4. Can I use the FHBG with the First Home Owner Grant?

Yes. The FHBG and state-based First Home Owner Grants (FHOG) can be used together on the same purchase, provided the property meets the eligibility requirements for both schemes (e.g., the FHOG in most states requires a new or substantially renovated home).

5. What is the property price cap in Sydney for 2026?

The property price cap for Sydney and NSW regional centres (Newcastle, Lake Macquarie, Illawarra/Wollongong) is $1,500,000 under the FHBG in 2026. This was increased from $900,000 as part of the October 2025 expansion.

6. Do I need to be a first home buyer to use the FHBG?

Yes. You (and any co-applicant) must not have previously owned residential property in Australia. There are limited exceptions for re-entry buyers under specific circumstances — check with Housing Australia or a participating lender.

7. Can friends apply for the FHBG together?

Yes. Since 2022, two or more applicants who are not in a couple relationship — such as friends or siblings — can apply jointly for the FHBG, provided each individually meets the first home buyer and citizenship requirements.

8. Can I use the FHBG for an investment property?

No. The property must be your principal place of residence. You must intend to move in within six months of settlement and live there continuously.

9. What is the minimum deposit for the First Home Guarantee?

The minimum deposit is 5% of the property purchase price. This must generally come from genuine savings, though First Home Owner Grants and (with some lenders) gifted deposits may be acceptable as part of the deposit.

10. What happens to the guarantee when I sell the property?

When you sell, the FHBG guarantee simply terminates — the government does not receive a share of the proceeds. (This is different from the Help to Buy shared equity scheme, where the government is entitled to a proportional share of the sale price.) You keep all capital gains.

11. What’s the difference between the FHBG and the Family Home Guarantee?

The Family Home Guarantee (FHG) is designed specifically for single parents or single legal guardians with at least one dependent child. It requires only a 2% deposit and provides a government guarantee of up to 18%. The FHBG is available to all eligible first home buyers (individuals, couples, and joint applicants), requires 5%, and guarantees 15%.

12. Can I use the FHBG to buy an off-the-plan apartment?

Yes. Off-the-plan apartments and townhouses are eligible property types under the FHBG, provided the purchase price (or contracted price) is within the cap for the location and the property meets other scheme requirements.

13. Is the FHBG available in regional areas?

Yes. Since October 2025, the separate Regional First Home Buyer Guarantee was merged into the main FHBG. Regional buyers use the same scheme with the relevant “rest of state” price cap (or the capital city cap if they’re in a designated regional centre like Geelong, Newcastle, or the Gold Coast).

14. How long does FHBG approval take?

The guarantee itself is issued by your participating lender through Housing Australia — it’s part of the standard loan approval process. Once you have a signed contract of sale, formal approval typically takes 2–4 weeks, though this varies by lender and application complexity.

15. Can I refinance after using the FHBG?

Yes. You can refinance to a different lender after settlement. The government guarantee will transfer with the loan, or it may terminate if you’ve reached 80% LVR by the time of refinancing. Confirm with your new lender how the guarantee is treated during the refinancing process.

16. What credit score do I need for the FHBG?

The government scheme has no minimum credit score requirement — that’s determined by the participating lender. Most major banks look for a score of around 600–700+ on the Equifax scale, though requirements vary. A higher score and clean credit history will improve your chances of approval and may help you qualify for better rates.

17. Can I use my super to fund the FHBG deposit?

Yes, through the First Home Super Saver Scheme (FHSS). You can make voluntary super contributions and withdraw up to $50,000 (in accumulated contributions) to put toward your deposit. This is often tax-effective because contributions go in at the concessional tax rate (15%) and withdrawals are taxed at your marginal rate minus a 30% offset.