First Home Guarantee Scheme: Key Facts

Clients may be eligible to purchase their first home with as little as a 5% deposit via the First Home Guarantee Scheme.

How does it work?

Clients usually need to save a deposit of 20% if they want to borrow to buy a home without needing to pay lenders mortgage insurance (LMI). Under the First Home Guarantee Scheme (formerly the First Home Loan Deposit Scheme), the Government will provide a limited loan guarantee of up to 15% of the home value. This may enable clients to buy their first home with a deposit of only 5%1  and no LMI will be payable.

What are the key points?

  • Clients need to earn less than the income limit and meet other eligibility conditions.
  • The purchase price will be capped, depending on the property’s location.
  • Clients need to move into the home as their main residence within certain timeframes.

Who may be eligible?

To be eligible for the First Home Guarantee Scheme, clients must:

  • be an Australian citizen aged 18 years or older
  • earn a taxable income of less than $125,000 pa (for individuals) or $200,000 pa (for couples combined), based on the last financial year
  • not have owned a residential, investment or business property before
  • intend to be an owner-occupier of the purchased property, and
  • be purchasing a home (both newly built and established properties qualify under this scheme).

If your client is a member of a couple, they must be legally married or in a de facto relationship and both will need to meet the eligibility criteria.

For more information about the types of properties that may be eligible and important timeframes, see 

What types of homes can I buy?

Under the scheme, clients able to purchase an eligible property which includes:

  • an existing freestanding house, townhouse or apartment
  • a house and land package
  • land and a separate contract to construct a home, or
  • off-the-plan townhouse or apartment.

Certain requirements apply depending on the type of property and contract your client is entering.

What are the property price caps?

Caps apply to the purchase price to ensure participation is spread fairly across the country. The capital city price caps will apply to large regional centres with a population over 250,000, namely the Gold Coast, Newcastle and Lake Macquarie, the Sunshine Coast, Illawarra (Wollongong) and Geelong.

Price caps for 2021/22  Price caps for 2022/23
Capital city and regional centres  Rest of state Capital city and regional centres Rest of state
NSW  $800,000 $600,000 $900,000 $750,000
VIC  $700,000 $500,000 $800,000 $650,000
QLD  $600,000 $450,000 $700,000 $550,000
WA  $500,000 $400,000 $600,000 $450,000
 SA  $500,000 $350,000 $600,000 $450,000 
 TAS  $500,000 $400,000 $600,000 $450,000
 ACT  $500,000  - $750,000
 NT  $500,000  - $600,000  -

What are some issues your client should consider?

While the First Home Guarantee Scheme may help clients buy their first home sooner, client’s need to keep in mind that a smaller deposit means a bigger loan. A bigger loan means bigger loan repayments, as well as higher total interest payments over the life of the loan. It may be the case that the additional interest payable outweighs the LMI savings. 

Also, if your client moves out of their home for an extended period of time and rent their home out, the loan may no longer be guaranteed by the Government. Your client may need to pay additional fees and charges, as well as LMI, depending on factors such as the value of the home and the outstanding debt at that point.

Which lenders are participating and how do clients apply?

Applications can be made directly via one of the approved lenders or their authorised representative (such as a mortgage broker). The Government has appointed specific lenders to the panel of mortgage lenders able to offer guarantees under the scheme.

What lending rules apply?

Clients need to meet lender’s normal credit criteria to ensure they can service a loan of up to 95% and provide evidence they have saved the 5% deposit. Loans must be principal and interest (not interest only) and terms can be up to 30 years.

What other assistance programs are available?

The First Home Guarantee scheme complements (but doesn’t directly interact with) other Government assistance programs. These include the:

  • First Home Super Saver Scheme, where your client could save for the deposit on their first home in the concessionally taxed superannuation system
  • First Home Owner Grant, which offsets the effect of Goods and Services Tax on buying or building a home, and
  • State and Territory based stamp duty concessions.

What next?

To find out more about the First Home Guarantee you can find out more at

Individual lenders may require a larger deposit, based upon lending criteria and your client’s personal circumstances.


More information

If you have any questions, or would like more information, please contact the IOOF TechConnect team on 1300 650 414.

The information in this section of the website is intended for financial advisers only and is not to be distributed to clients. It has been prepared on behalf of Australian Executor Trustees Limited ABN 84 007 869 794 AFSL 240023, IOOF Investment Management Limited ABN 53 006 695 021 AFSL 230524, IOOF Investment Services Ltd ABN 80 007 350 405, AFSL 230703 and IOOF Ltd ABN 21 087 649 625 AFSL 230522 based on information that is believed to be accurate and reliable at the time of publication.