If you've been told you need a 20% deposit to buy in Sydney, you've been given outdated advice. The First Home Guarantee lets eligible buyers purchase with just 5% — no Lenders Mortgage Insurance, no waiting years to save more. Here's everything you need to know.
5%
Minimum deposit
$0
LMI payable
$900K
Sydney price cap (FHBG)
35K+
Places per year
What Is the First Home Guarantee (FHBG)?
The First Home Guarantee (formerly the First Home Loan Deposit Scheme) is a Federal Government program that allows eligible first home buyers to purchase with as little as 5% deposit — without paying Lenders Mortgage Insurance (LMI).
Normally, if you borrow more than 80% of a property's value, the lender charges you LMI — an insurance premium that protects the bank (not you) against default. On a $800K purchase with 5% deposit, LMI could be $25,000–$35,000. Under the FHBG, the Government acts as the guarantor for the remaining 15%, and LMI is waived entirely.
This is a genuine, meaningful scheme — not a cash handout, but a guarantee that effectively removes the biggest barrier for first home buyers: the deposit gap.
Real Example: Buying in Campbelltown with 5% Deposit
NSW first home buyer, established property under $800K stamp duty threshold. FHBG income and property price eligibility applies.
Who Qualifies for the First Home Guarantee?
The FHBG has specific eligibility criteria in 2026. You must:
- Be a first home buyer — you have never owned a residential property in Australia, and have never previously used the FHBG
- Income test: Earn under $125,000/year as a single buyer, or under $200,000/year combined as a couple (gross income, based on last year's tax return)
- Australian citizen or permanent resident
- Purchasing to live in — not as an investment property (must intend to live in the home)
- Property price cap: In Sydney, the property must be under $900,000
- Genuine deposit: The 5% must be in genuine savings (not fully gifted), though some lenders are flexible on this
Income Test Trap
The income test uses your last financial year's taxable income. If your income has increased recently and last year's return shows under the threshold, you may still qualify — even if your current pay is slightly above it. Speak to us before assuming you're ineligible.
How Much Do You Actually Need Saved?
To buy with 5% deposit in Sydney, you need to have saved:
| Purchase Price | 5% Deposit | + Costs (~$3K) | Total Needed |
|---|---|---|---|
| $700,000 | $35,000 | $3,000 | ~$38,000 |
| $780,000 | $39,000 | $3,000 | ~$42,000 |
| $850,000 | $42,500 | $3,000 | ~$45,500 |
| $900,000 | $45,000 | $3,000 | ~$48,000 |
Stamp duty excluded — $0 for first home buyers in NSW under $800K. Above $800K, stamp duty concessions apply up to $1M.
Which Sydney Suburbs Are Under the $900K FHBG Cap?
In 2026, there are still meaningful options across Greater Sydney under the $900,000 property cap — particularly in the west and southwest:
- Campbelltown: Houses from ~$720K–$820K — significant room under the cap. Guide →
- Bardia: Established homes from ~$730K–$830K. Guide →
- Leppington: House-and-land packages from ~$780K–$900K. Guide →
- Oran Park: Many packages within the $820K–$900K range. Guide →
- Liverpool: Smaller homes and townhouses under $900K. Guide →
- Marsden Park: Select packages within cap. Guide →
- Penrith: Houses and townhouses within the $800K–$900K range.
What About the Stamp Duty Saving?
On top of the FHBG (which waives LMI), NSW first home buyers also benefit from zero stamp duty on purchases under $800,000 and a concession for properties up to $1,000,000. This stacks on top of the FHBG — and the combined saving is significant:
- LMI saved (FHBG): ~$20,000–$35,000 depending on purchase price
- Stamp duty saved (under $800K): up to $31,335
- Total government assistance: $50,000–$65,000+ in equivalent value
Frequently Asked Questions
Next Step: Get Your Pre-Approval
If you think you qualify for the First Home Guarantee, the next step is getting a formal pre-approval with a participating lender. Your mortgage broker handles this — we apply for your FHBG place, recommend the right participating lender for your situation, and structure the loan so your repayments are manageable from day one.
Don't wait. FHBG places are limited each financial year, and the best time to start is now. Learn more about our first home buyer service, or call us directly on 0432 634 648.
Check If You Qualify for the 5% Deposit Scheme
Tell us your income, savings, and target suburb — we'll tell you if you qualify and which lenders will approve you today.
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