The First Home Guarantee (FHG) is one of the most valuable schemes available to Australian first home buyers. It lets eligible buyers purchase a home with just a 5% deposit and no Lenders Mortgage Insurance (LMI) — the Federal Government acts as guarantor for the other 15%.
The 2026 financial year has 35,000 FHG places plus an additional 10,000 Regional FHB Guarantee places. Here’s the full breakdown — eligibility, caps, and how to apply.
How it works (in plain language)
Normally, if you buy with less than a 20% deposit, you pay LMI — Lenders Mortgage Insurance. On a $700,000 purchase with a 10% deposit, LMI is typically $13,000–$18,000.
Under the First Home Guarantee, the Federal Government guarantees the portion of the loan between 80% and 95% LVR. For the lender, that’s the same risk level as a 20% deposit, so they don’t require LMI.
You still need a real 5% deposit from genuine savings (or a gift, in many cases). You still need to meet the lender’s serviceability requirements. The guarantee simply removes the LMI cost.
Price caps per state (2026)
FHG places have price caps. If the property exceeds the cap, you cannot use the scheme on it.
| State | Capital / Metro | Regional |
|---|---|---|
| NSW | $1.5M (Sydney & regional centres) | $800K |
| VIC | $950K (Melbourne) | $650K |
| QLD | $1M (Brisbane & SEQ) | $800K |
| WA | $800K (Perth) | $600K |
| SA | $700K (Adelaide) | $500K |
| ACT | $1M (all ACT) | — |
| TAS | $600K (Hobart) | $450K |
| NT | $600K (Darwin) | $550K |
Income caps (2026)
- Single applicant: $125,000 per year (taxable income)
- Couples / joint applicants: $200,000 combined taxable income
Income is assessed on the previous financial year’s Notice of Assessment (NOA) from the ATO.
Other eligibility requirements
- Australian citizen or permanent resident (at least 18)
- Genuine first home buyer — never owned property in Australia (either solo or jointly)
- Must live in the home for at least 6 months of the first 12 months after settlement
- The purchase must be a single residential dwelling (not an investment-first purchase)
- Loan must be with a participating FHG lender (32 lenders in 2026, including all major banks)
Important: FHG places are allocated on a first-come first-served basis through the financial year. In past years, places have filled by mid-year in high-demand states. If you’re eligible, apply early.
How to apply — step by step
- Check eligibility: confirm income cap, citizenship, FHB status, target property within state cap.
- Save your 5% deposit (plus stamp duty and buying costs — the 5% is just the deposit).
- Speak to a home loan specialist or FHG-participating lender. The specialist submits your application for both the loan and the FHG place.
- Get a FHG place reservation (lenders hold places on your behalf once pre-approved).
- Find your property within the price cap.
- Proceed to formal application and settlement. No LMI charged at settlement.
FHG vs paying LMI vs saving more — which wins?
If you qualify for FHG, it almost always beats the alternatives:
- vs paying LMI: you save $10,000–$20,000+ in LMI on a typical FHB purchase.
- vs saving a 20% deposit: you’re in the market 18–24 months sooner. In rising markets that 18 months of appreciation typically exceeds the LMI cost by 2–3x.
The main reason not to use FHG is if you don’t qualify (above income cap, or target property above price cap).
Ready to apply for the FHB Guarantee?
We match you with a home loan specialist who’s a registered FHG lender participant. Free to you, no obligation.
Get Matched →Common mistakes to avoid
- Forgetting stamp duty and buying costs. The 5% deposit is just the deposit — you still need cash for stamp duty (where applicable), conveyancing, inspections, and moving costs.
- Applying too late in the financial year. Places can run out. Aim to apply by Q3 (Jan–Mar).
- Buying above the price cap. The property must be at or below the cap, not “close to”. If $1 over, you can’t use FHG on it.
- Not checking whether your target lender is FHG-participating. Not all lenders are. A specialist knows which are and which offer the sharpest rates within that subset.
This article is general information only, not financial advice. FHG rules are set by the Federal Government and can change — always confirm current rules with a licensed specialist or the Housing Australia website (housingaustralia.gov.au).