The First Home Guarantee (FHBG) is the single most valuable government scheme available to first home buyers in Australia right now. It lets you buy with just 5% deposit — and waives the Lenders Mortgage Insurance that would otherwise cost you $25,000 to $35,000. Here's who qualifies and how it works in 2026.
35K
Places available per year
5%
Minimum deposit required
$0
Lenders Mortgage Insurance
$900K
Price cap in Sydney 2026
What Is the First Home Guarantee Scheme?
The First Home Guarantee (FHBG) — formerly known as the First Home Loan Deposit Scheme — is a Federal Government initiative run by Housing Australia. It allows eligible first home buyers to purchase a property with as little as a 5% deposit without paying Lenders Mortgage Insurance (LMI).
Here's how it works: the government acts as a guarantor for the remaining 15% of your deposit. So instead of needing 20% to avoid LMI, you only need 5% — and the government "backs" the gap. The lender is protected, so they don't charge LMI. You don't make payments to the government; there's no extra fee or hidden cost. It's a pure guarantee.
In 2026, 35,000 FHBG places are released across Australia each financial year (1 July–30 June). Once they're gone, they're gone until the next financial year — which is why acting early in the financial year is important.
How the Government Guarantee Actually Works
It's often misunderstood — so here's a clear breakdown:
- You save a 5% deposit on your own (genuine savings)
- You apply through a participating lender (or a broker who accesses them)
- If eligible, Housing Australia guarantees the next 15% of the purchase price
- The lender sees your effective deposit as 20% — no LMI charged
- You borrow 95% of the property value as a standard home loan
- Once your equity reaches 20% (through repayments or growth), the guarantee is released
You never see the guarantee money — it's a behind-the-scenes arrangement between Housing Australia and the lender. The practical effect is real: you save $25,000–$35,000 in LMI and get into the market years earlier.
Who Qualifies for the First Home Guarantee?
The eligibility criteria are specific. You must meet all of the following:
Couples: Both Names on the Loan
If buying with a partner, both applicants must be first home buyers. If one person has previously owned property, the pair is not eligible — even if the other person is a genuine first home buyer. This is one of the most common disqualifying scenarios we see.
Property Price Caps in NSW (2026)
The FHBG applies only to properties under the following price caps. Going even $1 over disqualifies you from the scheme for that purchase.
| Location | 2026 Price Cap | LMI Saved (est.) |
|---|---|---|
| Sydney (Greater) | $900,000 | up to $35,000 |
| Newcastle / Lake Macquarie | $750,000 | up to $27,000 |
| Illawarra (Wollongong) | $750,000 | up to $27,000 |
| Central Coast | $750,000 | up to $27,000 |
| Rest of NSW (Regional) | $600,000 | up to $20,000 |
Caps correct as at 1 July 2025 and apply throughout the 2025–26 financial year. Verify with Housing Australia or your broker before contracting.
How Much Does the FHBG Save You?
The saving isn't just theoretical — it's the difference between having $35,000 in your pocket or adding it to your loan. Here's a realistic comparison:
| Purchase Price | 5% Deposit | LMI Without FHBG | LMI With FHBG |
|---|---|---|---|
| $600,000 | $30,000 | ~$19,800 | $0 |
| $750,000 | $37,500 | ~$26,400 | $0 |
| $850,000 | $42,500 | ~$31,500 | $0 |
| $900,000 (cap) | $45,000 | ~$35,100 | $0 |
LMI estimates are approximate and vary by lender. Based on 95% LVR. First home buyer NSW with stamp duty exemption under $800K.
How to Apply: Step by Step
You cannot apply for the FHBG directly through Housing Australia — it must be done through a participating lender or an accredited mortgage broker. Here's the process:
Check your eligibility
Income, citizenship, first home buyer status, property type. Do this before you start looking at properties.
Get your pre-approval with a FHBG-participating lender
A broker who works with multiple participating lenders compares your options and lodges the application. Places are allocated at pre-approval stage.
Receive your FHBG allocation
Housing Australia confirms your guarantee placement. This is held for 90 days while you find a property.
Find a property and sign contracts
Property must be under the price cap and eligible (see eligible property types below). Exchange contracts within your 90-day window.
Settle and move in
The FHBG guarantee activates at settlement. You now own your home with a 95% loan and zero LMI charged.
Eligible Property Types
Not every property qualifies. The FHBG applies to:
- Existing houses, townhouses, and apartments
- New builds (house and land packages, off-the-plan apartments, newly built homes)
- Land and construction contracts (where construction starts within a reasonable timeframe)
Vacant land on its own (without a construction contract) is not eligible. The property must be a residential dwelling.
Find out if you qualify — and how much you could save
Our brokers can check your FHBG eligibility, confirm available places, and compare participating lenders — all in one free call. Get your personalised grant summary below.
Or skip the form and
Common Reasons Buyers Miss Out (And How to Avoid Them)
The FHBG sounds simple, but buyers are declined or miss places for surprisingly common reasons. Here's what to watch for:
- Applying too late in the financial year — places run out. In some years, all 35,000 places are claimed by March or April. Apply from 1 July when the new tranche opens.
- Partner has previously owned property — both applicants on the loan must be first home buyers. One past property ownership disqualifies the pair entirely.
- Taxable income exceeds threshold in the year you apply — the income assessment is based on your most recent Notice of Assessment (last financial year's tax return). If you had a high-income year, this may push you over even if your current income is lower.
- Property is over the price cap — even $1 over the $900,000 Sydney cap disqualifies you from the scheme for that property. Negotiate the price, or find an alternative property.
- Deposit is entirely gifted — most participating lenders require at least some genuine savings. A full gift deposit often fails the genuine savings requirement, even with a gift letter.
- Applying through a non-participating lender — not all lenders offer the FHBG. If you go directly to a bank that doesn't participate, you can't access the guarantee. A broker with access to the full participating panel gives you more options.
Income Threshold Tip
The income test uses your most recent Notice of Assessment, not your current salary. If you received a bonus or high overtime last year that pushed your taxable income over $125,000, you may not qualify this financial year — even if your base salary is well below the threshold. Your broker can advise on timing your application to the right financial year.
Can You Combine the FHBG with the Stamp Duty Exemption?
Yes — and this is where NSW first home buyers have a genuinely exceptional set of advantages in 2026. You can stack:
- FHBG → eliminates LMI (saves $25,000–$35,000)
- NSW stamp duty exemption → $0 stamp duty under $800,000 (saves up to $31,335)
- First Home Owner Grant (FHOG) → $10,000 cash for new builds under $600,000
- First Home Super Saver Scheme → withdraw up to $50,000 per person in voluntary super contributions as part of your deposit
A couple buying a new house-and-land package in Leppington or Marsden Park under $600,000 could access FHBG + FHOG + stamp duty exemption simultaneously — up to $75,000+ in combined government support. This is not a hypothetical; our brokers structure these deals regularly.
FHBG vs Family Home Guarantee vs Regional First Home Buyer Guarantee
The FHBG is the most commonly used scheme, but two others are worth knowing about:
| Scheme | Who It's For | Min. Deposit | Annual Places |
|---|---|---|---|
| First Home Guarantee (FHBG) | First home buyers (single or couple) | 5% | 35,000 |
| Family Home Guarantee (FHG) | Single parents with dependants (not first home only) | 2% | 5,000 |
| Regional First Home Buyer Guarantee (RFHBG) | First home buyers in regional areas | 5% | 10,000 |
The Family Home Guarantee is particularly powerful for single parents — 2% deposit with no LMI. Single parents do not need to be first home buyers to access the FHG.
What If FHBG Places Run Out?
If no FHBG places are available for the current financial year, you have a few options:
- Wait for 1 July — the new tranche opens at the start of each financial year. If you're close to being ready, timing your pre-approval for early July can secure a spot in the fresh allocation.
- Buy with LMI capitalised — if property prices are rising, waiting may cost more than the LMI itself. LMI can be added to your loan (capitalised) so you don't need the cash upfront — you're essentially borrowing the insurance cost.
- Consider a guarantor loan — if your parents have equity in their home, a family guarantor arrangement can eliminate LMI entirely regardless of FHBG availability. See our deposit options guide for a full comparison.
- Apply for waived LMI through select lenders — some lenders offer LMI waivers for certain professions (medical, legal, accounting) regardless of deposit size. Ask our team about LMI waiver eligibility.
Do You Need a Broker to Access the FHBG?
You can apply directly through a participating bank — but there are strong reasons to use a broker instead:
- More lenders, more options — not all banks offer the FHBG. A broker with access to multiple participating lenders can find the best rate and conditions for your profile.
- Policy differences between lenders — each participating lender applies the FHBG differently (genuine savings requirements, income verification methods, property types they accept). A broker knows who is most likely to approve your application.
- One application, compared across lenders — rather than applying to multiple banks and getting multiple credit enquiries on your file (which damages your score), your broker submits to the right lender first time.
- FHBG + stamp duty + FHOG stacking — coordinating all three schemes requires paperwork precision. Brokers who do this every day make sure nothing is missed.
At Mortgagefy, our brokers are accredited with all major FHBG participating lenders. The consultation is free, and we're paid by the lender — never by you. Most clients who've used us for their FHBG application were approved faster and with better rates than going directly to the bank.
Ready to find out where you stand? Read more in our complete 5% deposit guide, or see which suburbs you can realistically buy in with a 5% deposit in our Campbelltown and Oran Park guides.
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