First Home Guarantee – 5% Deposit for First Home Buyers

Page updated 14 April 2025 

The scheme is part of the federal government's suite of Home Guarantees which also includes the Family Home Guarantee for single parents, the Regional First Home Buyer Guarantee and previously included the New Home Guarantee.

As part of the 2025 Federal Election, Labor have promised changes to the First Home Guarantee. Find out more. 

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

The First Home Guarantee is a Government incentive that allows 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.    

Property price caps

Source: Housing Australia Property Price Caps - 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. 

Who are the participating lenders for the First Home Guarantee  

Not all banks currently participate in the scheme, however multiple are included in Mortgage Choice’s lender panel.

Major lenders currently include

• NAB
• Commonwealth Bank
• Westpac

Get in touch with your broker to find our which lenders are involved in the scheme and if any are right for you

Labor’s proposed changes to the New Home Guarantee as part of the 2025 federal election

Anthony Albanese announced that Labor will extend the New Home Guarantee if elected on May 3 2025.

Labor’s proposed changes will

• Remove income caps from the New Home Guarantee scheme so all first home buyers are eligible
• Increase property price caps

Labor’s proposed extended price caps for the First Home Guarantee

• Deposit is not inclusive of other upfront costs including stamp duty, transfer fees etc

Upon announcing the policy, Labor said “The median home price in Australia today is $820,000. Five per cent of that is $41,000. The last time $41,000 covered the 20 per cent deposit for a median home was 2002. That’s the generational scale of this change.

“This means a Sydneysider and first home buyer can purchase a $1 million apartment with a $50,000 deposit with their loan guaranteed by the Albanese Government.

“It means a Queenslander and first home buyer can purchase an $850,000 home with a $42,500 deposit.”