In short: The First Home Guarantee lets eligible first home buyers purchase with a 5% deposit and pay no lenders mortgage insurance, because the federal government guarantees up to 15% of the loan. Since October 2025 there are no income caps and unlimited places. In Melbourne and Geelong the property price cap is $950,000; elsewhere in Victoria it is $650,000.
For a first home buyer in Melbourne's north, the guarantee is often the difference between buying this year and buying in four years. On a $650,000 Craigieburn home it cuts the deposit from $130,000 to $32,500 and removes roughly $26,000 in LMI. This guide covers who qualifies, how the price caps work across Victoria, how to apply through a participating lender, and where buyers get tripped up.
What the First Home Guarantee is
The First Home Guarantee is part of the federal Home Guarantee Scheme, administered by Housing Australia. Rather than handing you money, the government guarantees the portion of your loan above 80% LVR, up to 15% of the property value. Because the lender's exposure is effectively capped at 80%, it does not need to charge LMI.
You still borrow the full 95% from a participating lender and make the full repayments. The guarantee costs you nothing and does not appear on your title. If you refinance to a non-participating lender or your LVR falls below 80%, the guarantee simply ends.
Official details are published by Housing Australia, but the practical eligibility check happens at the lender, and that is where a broker earns their keep.
Who is eligible in 2026
The October 2025 expansion removed the two biggest barriers, the income test and the annual place limit. The remaining criteria are:
| Criterion | Requirement |
|---|---|
| Buyer status | First home buyer, or have not owned property in Australia in the last 10 years |
| Citizenship | Australian citizen or permanent resident (all applicants, if buying jointly) |
| Age | 18 or older |
| Occupancy | Must live in the property as your principal place of residence |
| Deposit | At least 5% of the purchase price, generally genuine savings |
| Income cap | None |
| Places | Unlimited |
| Loan type | Principal and interest, owner-occupied, from a participating lender |
| Applicants | Individuals, couples, or two eligible friends, siblings or family members buying together |
"Not owned property in the last 10 years" is broader than most people realise. If you owned an apartment in 2014 and sold it in 2015, you can qualify. If you sold in 2018, you cannot, until 2028.
Temporary visa holders
The guarantee requires citizenship or permanent residency for every applicant. Temporary visa holders such as 482 or student visa holders are not eligible, though they may still get a loan through other channels. See home loans for visa holders.
Property price caps in Victoria
| Location | Price cap |
|---|---|
| Melbourne (Greater Capital City Statistical Area) and Geelong | $950,000 |
| Rest of Victoria | $650,000 |
The Melbourne boundary matters for northern-corridor buyers. Mickleham, Kalkallo, Donnybrook, Wollert, Sunbury and Craigieburn all sit inside the Greater Melbourne area, so the $950,000 cap applies. Further north toward Wallan and Kilmore the regional cap of $650,000 applies. Check the eligibility calculator or ask us to confirm before you make an offer near a boundary.
Eligible properties include established houses, townhouses, apartments, off-the-plan purchases, and house-and-land packages where the total of land plus build contract is within the cap.
Deposit and LMI saved at common price points
| Purchase price | 5% deposit | 20% deposit avoided | Indicative LMI avoided at 95% LVR |
|---|---|---|---|
| $500,000 | $25,000 | $100,000 | around $20,000 |
| $650,000 | $32,500 | $130,000 | around $26,000 |
| $800,000 | $40,000 | $160,000 | around $32,000 |
| $950,000 | $47,500 | $190,000 | around $38,000 |
LMI figures are indicative only and vary by lender and insurer. Model your own scenario on the LMI calculator.
Worked example: $650,000 in Wollert
A couple, both Australian citizens, renting in Epping, want a four-bedroom home in Wollert listed at $650,000. They have $45,000 saved.
Without the guarantee at 95% LVR
- Deposit $32,500, loan $617,500
- LMI indicatively $26,000, capitalised, so the loan becomes roughly $643,500
- Stamp duty approximately $11,357 (first home buyer sliding concession)
- Conveyancing and inspections about $2,500
- Cash needed: about $46,400
- Repayment for illustration, at 6.00% p.a. over 30 years: about $3,858 per month
With the First Home Guarantee
- Deposit $32,500, loan $617,500
- LMI nil
- Stamp duty approximately $11,357
- Conveyancing and inspections about $2,500
- Cash needed: about $46,400
- Repayment for illustration, at 6.00% p.a. over 30 years: about $3,703 per month
Same house, same cash, and the guarantee saves about $26,000 in insurance and $155 a month for 30 years. The couple's $45,000 is tight against $46,400 in costs, which is a good reason to also look at whether a $620,000 property, or a new build attracting the $10,000 First Home Owner Grant, makes the numbers more comfortable.
Worked example: $580,000 house-and-land in Mickleham
A single nurse, permanent resident, is buying a house-and-land package in Mickleham: land $290,000, build $290,000.
- Total $580,000, under the Melbourne cap
- Deposit 5%: $29,000
- LMI: nil under the guarantee
- Stamp duty: nil, because duty is assessed on the land ($290,000) and she is a first home buyer under $600,000
- First Home Owner Grant: $10,000, because it is a new home under $750,000
- Net cash needed after the grant: roughly $22,000 including conveyancing
This is why house-and-land in Mickleham, Kalkallo and Donnybrook is so popular with first home buyers: the guarantee, the grant and the duty exemption stack. Read more at house and land packages and construction loans.
How to apply
The guarantee is applied for through a participating lender at the same time as your home loan. You cannot apply directly to Housing Australia.
- Confirm eligibility with a broker. Citizenship, ownership history and the price cap for your target suburb are checked up front.
- Get pre-approval through a participating lender. Not every bank participates, and some participating lenders have tighter policies on the deposit source. Read home loan pre-approval.
- Reserve a guarantee place. The lender reserves your place with Housing Australia once pre-approved. Even though places are unlimited, the reservation still has to happen.
- Find a property within the cap and sign the contract. For an established home you generally have 90 days from reservation to sign; for a build there is a longer window.
- Move in within 6 months of settlement (or completion of the build) and live there as your principal residence.
Documents you will need
- Passport or citizenship certificate, or visa grant notice for permanent residents
- Notice of assessment from the ATO for the most recent financial year
- A signed declaration that you have not owned property in Australia in the last 10 years
- Evidence of your 5% deposit and its source
- Standard income and identification documents (see the documents checklist)
Combining the guarantee with other schemes
| Scheme | Can combine? | Notes |
|---|---|---|
| Victoria First Home Owner Grant ($10,000) | Yes | New homes up to $750,000 only |
| Victoria first home buyer stamp duty exemption or concession | Yes | Nil duty to $600,000, concession to $750,000 |
| Help to Buy shared equity | No | You choose one federal scheme, not both |
| Guarantor loan | Generally not needed | The guarantee replaces the need for a guarantor |
Most northern-Melbourne first home buyers stack the guarantee, the grant and the duty exemption on a new build. Details on the state schemes are in the stamp duty guide and the First Home Owner Grant guide.
Repayments are higher at 95% LVR
A 5% deposit means borrowing 95%, and the repayment reflects that. Compare a $650,000 purchase for illustration at 6.00% p.a. over 30 years:
| Deposit | Loan | Monthly repayment |
|---|---|---|
| 20% ($130,000) | $520,000 | about $3,118 |
| 10% ($65,000) | $585,000 | about $3,507 |
| 5% ($32,500) | $617,500 | about $3,703 |
The lender assesses you at the actual rate plus 3 percentage points, so on a $617,500 loan you must show you could afford roughly $4,970 a month at 9.00%. If you cannot, the guarantee does not help; borrowing capacity comes first. Check yours with the borrowing power calculator.
Common mistakes
Assuming the guarantee means automatic approval. It removes LMI, not the serviceability test. A buyer with high credit card limits or a car loan can still be declined.
Signing a contract before the place is reserved. Always get pre-approval and the reservation before you bid or sign. An unconditional purchase with no reservation can leave you paying LMI you thought you had avoided.
Buying just over the cap. A $960,000 property in Melbourne is ineligible. Negotiate the price down or walk away.
One applicant not being a citizen or PR. If you are buying with a partner on a temporary visa, the guarantee is unavailable. Some couples buy in one name, but that has serviceability and legal consequences worth discussing with a conveyancer, see buying property with a partner.
Forgetting the deposit must usually be genuine savings. Lenders under the scheme generally still apply their normal genuine savings rules. See genuine savings explained.
Renting the property out. The guarantee requires you to live there. Moving out and renting it within the scheme's occupancy period can trigger the guarantee's cancellation and an LMI premium.
Frequently asked questions
Can I buy a house with a 5% deposit in Victoria?
Yes. Under the First Home Guarantee, eligible first home buyers in Victoria can buy with a 5% deposit and no LMI, up to $950,000 in Melbourne and Geelong or $650,000 in regional Victoria. You must be an Australian citizen or permanent resident, live in the home, and pass the lender's normal income and credit assessment. Places are unlimited and there is no income cap.
Is there an income cap for the First Home Guarantee?
No. Since October 2025 the income caps have been removed entirely. Previously, singles earning over $125,000 and couples over $200,000 were excluded. Now any eligible first home buyer can apply regardless of income, though your income still determines how much the lender will approve.
Does the First Home Guarantee cost anything?
No. The guarantee is free. You do not pay a fee, a premium or a share of your property to the government. Your costs are the normal loan costs from your lender, stamp duty if it applies, and conveyancing. The only "cost" is that a 95% loan carries higher repayments than an 80% loan.
Can I use the First Home Guarantee for a house-and-land package?
Yes. House-and-land packages and off-the-plan purchases are eligible, provided the combined land and build cost is within the price cap ($950,000 in Melbourne). You also generally have a longer timeframe to complete the build than you would for an established purchase. It combines with Victoria's $10,000 First Home Owner Grant on new homes.
What happens if I sell or refinance?
If you sell, the loan is repaid and the guarantee ends; there is no clawback. If you refinance to another participating lender while still above 80% LVR, the guarantee can usually transfer. Refinance to a non-participating lender above 80% and you would pay LMI with the new lender. Once you are below 80% LVR the guarantee no longer matters.
Can two friends buy together under the scheme?
Yes. Since 2023 the scheme has allowed any two eligible people to apply jointly, not only spouses and de facto partners. Both applicants must meet every criterion, including citizenship or permanent residency and no property ownership in the last 10 years, and both must live in the home.
Talk to GNT Finance
We arrange First Home Guarantee loans for buyers across Mickleham, Craigieburn, Wollert and the rest of Melbourne every week, and we know which participating lenders take a sensible view on deposits and borrowing capacity. Gorakh Timilsina will confirm your eligibility, reserve your place and structure the loan, at no cost to you for our home-loan service in most cases. We speak English, Nepali and Hindi.
Book a free consultation or call 0426 403 703.
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.