In short: The First Home Guarantee lets you buy with a 5% deposit and no LMI while owning 100% of your home, with no income cap. Help to Buy needs only a 2% deposit and the government funds up to 40% of the price, so your loan and repayments are far smaller, but you share ownership and must earn under $100,000 (single) or $160,000 (couple). Higher earners take the Guarantee; tighter budgets often suit Help to Buy.
Key takeaways
- The First Home Guarantee (FHG) has no income cap and unlimited places; the Melbourne and Geelong price cap is $950,000.
- Help to Buy caps income at $100,000 for singles and $160,000 for couples, with a Victorian price cap of $950,000 at the time of writing.
- On a $650,000 new home, Help to Buy roughly cuts your monthly repayment by about $1,440 compared with the FHG, but the government owns 40% of the property.
- You can stack either scheme with the Victorian $10,000 First Home Owner Grant on a new home and the first-home-buyer stamp duty exemption or concession.
- Eligibility is only half the question; lender appetite and your long-term plans decide which one actually works.
Both schemes exist to solve the same problem, compared here using the rules at the time of writing: Melbourne prices have outrun the speed at which most people can save a 20% deposit. They solve it in very different ways, and the choice changes what you can afford, what you repay each month and what you own at the end.
The two schemes at a glance
| Feature | First Home Guarantee | Help to Buy |
|---|---|---|
| Minimum deposit | 5% | 2% |
| Government role | Guarantees part of the loan so no LMI is charged | Takes an equity stake of up to 40% (new) or 30% (existing) |
| Who owns the home | You, 100% | You and the government, in proportion |
| Income cap | None since October 2025 | $100,000 single / $160,000 couple |
| Places | Unlimited | Limited allocation each year |
| VIC price cap | $950,000 Melbourne and Geelong; $650,000 rest of Victoria | $950,000 at the time of writing |
| Residency | Citizen or permanent resident, 18+, owner-occupier | Citizen or permanent resident, owner-occupier |
| Prior ownership | None in Australia in the last 10 years | Must not currently own property |
Full rules for both are published by Housing Australia, and our First Home Guarantee guide and Help to Buy guide walk through each in detail, and our first home buyer loans service arranges both.
Worked example: a $650,000 new townhouse in Wollert
Assume a couple buying a brand-new townhouse in Wollert for $650,000. For illustration, at 6.00% p.a. over 30 years:
| First Home Guarantee | Help to Buy (new home, 40%) | |
|---|---|---|
| Deposit | $32,500 (5%) | $13,000 (2%) |
| Government contribution | Nil (guarantee only) | $260,000 equity |
| Loan amount | $617,500 | $377,000 |
| Monthly repayment | $3,702 | $2,260 |
| Your ownership share | 100% | 60% |
| LMI | None | None |
The Help to Buy couple repays roughly $1,440 less every month. Over a year that is more than $17,000 of breathing room. The catch is on the other side of the ledger: when they sell, 40% of the sale price goes back to the government, including 40% of any growth. They can also buy the government out in stages once their income and equity allow, at the property's value at that time, not the original price.
When the First Home Guarantee is the better pick
Your household earns above the Help to Buy caps
This is the clearest dividing line. A couple on a combined $170,000 is simply not eligible for Help to Buy, and since the income caps came off the First Home Guarantee in October 2025 there is nothing stopping them using it. Check where you stand with the First Home Guarantee eligibility calculator.
You want the whole upside
Melbourne's north has grown quickly, and if you believe your suburb will keep growing you may not want to hand 30% or 40% of that growth back. With the Guarantee you keep every dollar of capital gain, and your main residence is exempt from capital gains tax.
You can service the larger loan comfortably
Lenders assess you at your rate plus 3 percentage points, so the $617,500 loan above is tested at roughly $4,969 a month. If your income clears that with room to spare, the Guarantee is straightforward. Run your numbers through the borrowing power calculator before you decide.
When Help to Buy is the better pick
Your deposit is the real bottleneck
Saving $32,500 is a long road for a single person paying Melbourne rent. Saving $13,000 is achievable within a year or two for many. If you have a modest deposit and stable income under the cap, Help to Buy gets you in years sooner.
Servicing is tight on one income
A single applicant on $85,000 has a net income of about $5,607 a month at 2026–27 tax rates. A $3,702 repayment is two thirds of that and would not pass most lenders' assessments. A $2,260 repayment is a different conversation. Help to Buy is often the only route into a house rather than a unit for single buyers; we cover this in more depth in our single-income buying post.
Stacking with Victorian concessions
Whichever federal scheme you use, the Victorian benefits apply on top:
- First Home Owner Grant: $10,000 for a new home valued up to $750,000, provided you live in it for 12 continuous months starting within 12 months of settlement. Details in our FHOG guide.
- Stamp duty: full exemption for first home buyers up to $600,000 and a sliding concession from $600,001 to $750,000. The $650,000 Wollert townhouse sits inside the concession band. Confirm the exact figure with the State Revenue Office or our stamp duty calculator.
- Off-the-plan concession: if the townhouse is bought off the plan, the temporary duty concession is still available until 20 October 2026.
The legal side of these concessions, including residence requirements, is covered on our stamp duty exemptions and concessions page.
The parts people miss
- Not every lender offers both. Help to Buy runs through a panel of participating lenders. The Guarantee has a broader panel, but each lender applies its own credit policy on top of the scheme rules.
- Genuine savings still matter. Even under Help to Buy, most lenders want to see your 2% deposit held for three months. Our genuine savings guide explains what counts, and the upfront costs calculator shows what you need beyond the deposit.
- The price caps bite differently. Both schemes cap Melbourne at $950,000 at the time of writing, but the cap is on the property value, not your loan. A $960,000 house in Greenvale is out for both.
Frequently asked questions
Can I use Help to Buy and the First Home Guarantee together?
No. They are alternative pathways, not stackable ones. You choose one federal scheme, then add the Victorian First Home Owner Grant and stamp duty concessions where you qualify. A broker can model both pathways side by side so you see the deposit, loan size and repayment for each before committing.
Does Help to Buy mean the government can sell my home?
No. You live in the home and control it as an owner-occupier. The government holds an equity interest that is repaid when you sell, refinance it out, or buy it back in stages. You must keep meeting the scheme's conditions, such as living in the property and staying under the income cap, or you may be asked to start buying out the government's share.
What if my income rises above the Help to Buy cap after I buy?
The scheme includes review points, and if your income exceeds the cap for a sustained period you may need to begin buying back the government's share. This is worth planning for if you are early in your career. In some cases a buyer close to the cap is better off stretching to the First Home Guarantee from the start.
Talk to GNT Finance
Gorakh Timilsina models both schemes for first home buyers across Melbourne's north every week, and the right answer is different for almost every household. There is no cost to you for our home-loan service in most cases. Book a free consultation or call 0426 403 703 and we will show you the numbers side by side.
This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.