2022 First Home Guarantee – 5% Deposit for First Home Buyers

Pay only a 5% Deposit on your Home Loan with the Government's First Home Guarantee (previously FHLDS). Here we explore the different expansions of this scheme, it’s eligibility and how to apply.

Page updated 08 April 2022

Since January 2020, the Government has introduced the First Home Guarantee scheme (Previously known as the First Home Loan Deposit Scheme), as a means to assist eligible first home buyers into entering the property market with less barriers and sooner.  

Since its inception, the First Home Guarantee scheme has seen expansions allowing providing even more groups of people easier and faster access to buying their home through the New Home Guarantee scheme in the 2021-22 financial year, the Family Home Guarantee from 1 July 2021 – 30 June 2025 and the Regional Home Guarantee from 1 October 2022 – 30 June 2025.   

From 1 July 2022 – 30 June 2025 there will be 50,000 spots per year for eligible home buyers to take advantage of the First Home Guarantee and it’s expansions. Of these 50,000 places, 35,000 will be allocated for the First Home Guarantee, while the other 15,000 will be allocated to the Family Home Guarantee (5,000), and the Regional Home Guarantee (10,000).

What is the First Home Guarantee and how does it work? 

The First Home Guarantee is a Government incentive for first home buyers to purchase their first home with a deposit as low as 5%, without the need to pay Lenders’ Mortgage Insurance (LMI).   

LMI is a one-insurance payment that protects the lender in the event that you default on your home loan repayments. It is usually applicable when borrowing over 80% of the value on the property, however, with the First Home Guarantee, the Government will underwrite your home loan and act as a guarantor to ensure you don’t have to pay LMI.    

Eligibility for the First Home Guarantee

  • Income test 

    Singles with a taxable income less than $125,000, couples less than $200,000 for the previous financial year. Please note when applying for a place in this scheme, you will need to provide the relevant Notice of Assessment from the ATO for the previous financial year. 

  • Joint applications 

    Couples are only allowed to apply if they are married or in a de-facto relationship. Other joint applicants (siblings, friends, parent/child, etc) are not eligible. 

  • Prior Ownership 

    You must provide proof you have never owned or held interest in property in Australia before. This includes commercial property, investment or company title properties. 

  • Citizenship 

    All applicants must be Australian Citizens, aged 18 years or over. 

  • Owner Occupied 

    You need to move into the property within six months of owning your home and continue to live in that property for so long as your home loan has a guarantee under the Scheme.

Property Price caps 

State/Territory 

 
 

Capital city/regional centre 

 
 

Rest of state 

Purchase established property 

Build or purchase newly built home  

Purchase established property 

Build or purchase newly built home 

NSW 

$800,000 

$950,000 

$600,000 

$600,000 

VIC 

$700,000 

$850,000 

$500,000 

$550,000 

QLD 

$600,000 

$650,000 

$450,000 

$500,000 

WA 

$500,000 

$550,000 

$400,000 

$400,000 

SA 

$500,000 

$550,000 

$350,000 

$400,000 

TAS 

$500,000 

$550,000 

$300,000 

$400,000 

ACT 

$500,000 

$600,000 

N/A 

N/A 

NT 

$500,000 

$550,000 

N/A 

N/A 

Source: National Housing Finance and Investment Corporation - For previous financial years' price caps visit NHFIC here. 

What are the benefits of the scheme?  

The main benefit of the First Home Guarantee to any eligible first home buyers is providing quicker access to the property market through the removal of barriers. As this scheme allows you to buy a house with a lower deposit, you can benefit by saving time on saving up a 20% deposit and have the opportunity to purchase your first home quicker.  

As well as entering the property earlier, with the First Home Guarantee you can save thousands by not paying LMI at settlement. And, as an added bonus, as LMI  is usually added to your loan amount, you’ll be saving even more money on the interest you would may on LMI while it’s a part of your loan balance.   

Example of the First Home Guarantee works  

If you’re looking to purchase and existing property in NSW valued at $600,000, however only have a 5% deposit of $30,000, you would likely need to pay LMI.  However, if you successfully receive one of the 35,000 places available in the First Home Guarantee, the Government would essentially step in to provide a guarantee to cover your loan amount in the case of a default. In this example you would be saving thousands due to the First Home Guarantee, by avoiding the LMI payment.   

How to apply for the First Home Guarantee 

To apply for the First Home Guarantee, you will need to send your application directly with one of the Scheme’s participating lenders or through a mortgage broker.  

Contact your local Mortgage Choice broker today to find out if you’re eligible – and to find out which lenders are involved in the scheme. 

Your local Mortgage Choice broker

or

Who are the participating lenders for the First Home Guarantee  

There are currently 27 participating lenders across Australia offering places under this scheme, a number of which are included in Mortgage Choice’s lender panel.  

Get in contact with your broker to find out which lenders are involved in the scheme and if any are right for you.   

Changes to the First Home Guarantee from the 2022 Budget 

  • Increase in total placements offered to 50,000 per year for three years from the 2022-23 Financial Year, then 35,000 per year ongoing 
  • 5,000 of the 50,000 places will be allocated to the Family Home Guarantee 
  • 10,000 of the 50,000 places will be allocated to the Regional Home Guarantee 

To find out more about the New Home Guarantee, visit the National Housing Finance and Investment Corporation website. 

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