Saving a full 20% deposit while property prices continue climbing is one of the most frustrating positions a first home buyer can find themselves in. The first home loan deposit scheme, now operating as the First Home Guarantee, exists specifically to break that cycle. In cities like Brisbane, Sydney, and Melbourne, the gap between what you have saved and what the lender wants can feel like a moving target. The longer you save, the further the market moves, a cycle that has kept genuinely ready buyers on the sidelines for years.
The First Home Guarantee allows eligible buyers to purchase a home with as little as a 5% deposit, typically avoiding Lenders Mortgage Insurance (LMI) through an Australian Government guarantee, though outcomes can vary depending on the participating lender and the specific loan product. Since the removal of income caps in October 2025, the scheme is now more accessible than it has ever been. This 5% deposit scheme Australia-wide has also retained the FHLDS framework that many buyers will recognise from earlier years.
At Your Home Loan Consultant, our Brisbane-based brokers work with first home buyers navigating this scheme every day. It works, but only when you understand the rules before you make an offer. This guide covers everything you need: how the guarantee operates, who qualifies under the 2026 rules, the property price caps by state, how to apply, and the pitfalls that cost buyers their place.
What the First Home Guarantee actually does for buyers
How the government guarantee replaces LMI
Under standard lending rules, any buyer with less than a 20% deposit is required to pay Lenders Mortgage Insurance. LMI protects the lender, not you, and depending on the loan size it can add tens of thousands of dollars to the cost of buying. It’s a significant barrier for buyers who are financially ready to service a mortgage but haven’t yet accumulated a full 20% deposit.
The First Home Guarantee removes that cost by having the Australian Government act as guarantor for the gap between your deposit and the 20% threshold. If you purchase with a 5% deposit, the government guarantees the remaining 15%. In most cases, the lender is protected without charging you a separate LMI premium, however, the guarantee sits behind individual lender and insurer arrangements, meaning some products or lender structures may still involve fees. Always confirm the position with your specific lender before proceeding. To be clear: the government does not hand you money or contribute to your deposit. It provides a guarantee that makes the lender comfortable lending without the standard LMI safety net.
The two scheme streams available in 2026
The first home loan deposit scheme operates across two streams. The general stream requires a minimum 5% deposit and is open to eligible individuals and couples purchasing as first home buyers. The Single Parent and Legal Guardian stream requires just a 2% minimum deposit and is specifically for eligible single parents or legal guardians with at least one dependent.
Both streams require the property to be purchased for owner-occupancy. Investment purchases are excluded from both streams, regardless of deposit size or the buyer’s financial profile.
First Home Loan Deposit Scheme: who qualifies under the 2026 rules
Citizenship, age, and property ownership history
Buyers must be Australian citizens or permanent residents aged 18 or older at the time of application. Temporary visa holders are not eligible under the standard scheme rules. The first home buyer condition is equally strict: you must not have previously owned property in Australia. Some scheme guidance references a 10-year look-back window, which means buyers who owned property in the more distant past may still qualify, the relevant factor being whether that ownership falls within the window and how it is assessed under current guidance. If this applies to you, confirm your position with Housing Australia or a qualified broker before applying.
For couples applying under the general stream, both applicants must satisfy the ownership history test. One partner having previously owned property can make the couple ineligible, even if the other partner has never owned. It’s a detail that catches buyers off guard more often than it should.
The owner-occupier requirement
The scheme is strictly for properties you intend to live in. You cannot use the First Home Guarantee to purchase an investment property, regardless of how small your deposit is or how strong your financial position looks. The loan must also be structured as a principal-and-interest mortgage through an approved participating lender. Interest-only arrangements do not qualify. Non-participating lenders cannot access the guarantee regardless of the product offered.
No more income caps: what changed from October 2025
A significant change took effect on 1 October 2025: the income thresholds that previously restricted access to the scheme were removed entirely. Before that date, singles were capped at $125,000 in taxable income and couples at $200,000. From that point forward, there is no maximum household income limit for the First Home Guarantee general stream. Published Housing Australia data shows monthly scheme-backed purchases jumped from around 3,400 before the change to more than 5,600 after it, reflecting just how many buyers were previously locked out by income alone.
Removing the income cap does not remove the lender’s own serviceability assessment. Your income is still evaluated by the lender to confirm you can service the loan. The difference is that high earners are no longer disqualified from accessing the scheme simply because they earn above a threshold.
Property price caps by state and territory
Major city vs regional limits
The scheme sets maximum property prices based on location, and these vary between capital city areas and the rest of each state or territory. If a property exceeds the relevant cap, it is ineligible for the scheme regardless of how otherwise qualified the buyer is. The current caps, as published by Housing Australia, are:
- New South Wales: $1,500,000 (Sydney and selected regional centres) / $800,000 (rest of state)
- Victoria: $950,000 (Melbourne and Geelong) / $650,000 (rest of state)
- Queensland: $1,000,000 (Brisbane, Gold Coast, Sunshine Coast) / $700,000 (rest of state)
- Western Australia: $850,000 (major city) / $600,000 (rest of state)
- South Australia: $900,000 (major city) / $500,000 (rest of state)
- Tasmania: $700,000 (major city) / $550,000 (rest of state)
- ACT: $1,000,000 (territory-wide)
- Northern Territory: $750,000 (capital city) / $600,000 (rest of territory)
Buyers should verify these caps directly with Housing Australia or a participating lender, as figures can be updated between financial years.
What these caps mean for Brisbane buyers specifically
For buyers targeting the Brisbane market, the $1,000,000 cap covers Greater Brisbane as well as the Gold Coast and Sunshine Coast corridors, providing meaningful coverage across a broad range of suburbs. Regional Queensland buyers outside those corridors work within the $700,000 cap, which still covers a significant portion of available stock in many suburban and regional areas.
The detail that matters most is checking the exact location classification for your target suburb before making an offer. Outer suburbs near the boundary between metropolitan and regional classifications can fall under either cap. Assuming the higher cap applies without confirming can leave buyers in a difficult position after they’ve committed to a purchase.
Participating lenders and how the application works
Which lenders are approved for the scheme
Housing Australia maintains the approved list of participating lenders, check the current list on their website before selecting a lender, as it is updated periodically. Major banks on the list include Commonwealth Bank, NAB, Westpac, ANZ, and St George. Mutual banks and non-bank lenders such as Bank Australia, Bendigo Bank, Teachers Mutual Bank, and Liberty Financial are also included. The scheme is only accessible through these approved lenders. Choosing a non-participating lender means the guarantee cannot be applied, even if you meet every other eligibility requirement.
Loan products, interest rates, and conditions vary between participating lenders even though they all operate within the same scheme framework. The guarantee gives you access; it doesn’t determine which lender offers the most competitive rate or the most suitable product for your situation. That’s where comparing options across lenders adds genuine value.
Step-by-step application checklist
The application process follows a logical sequence. Working through each stage in order reduces the risk of delays and avoids the most common reasons applications fall over.
- Confirm your eligibility against all criteria: citizenship or permanent residency, first home buyer ownership history, intent to owner-occupy, and property type.
- Obtain pre-approval with a participating lender or through a mortgage broker who works with approved lenders.
- Identify a property within the relevant price cap for your specific location.
- Provide required documentation: proof of identity, recent tax returns or payslips, bank statements showing your genuine savings history, and a signed statutory declaration confirming eligibility.
- Your lender lodges the guarantee application with Housing Australia on your behalf.
- Proceed to formal loan approval and settlement once the guarantee is confirmed.
How the First Home Guarantee compares to other deposit options
FHOG, stamp duty concessions, and stacking benefits
The First Home Guarantee and the First Home Owner Grant are separate benefits and can be used together. In Queensland, the FHOG currently provides $30,000 for eligible new-build contracts, and that grant can sit alongside a First Home Guarantee-backed loan. Queensland first home buyers may also qualify for stamp duty concessions or exemptions depending on the purchase price, providing further cost relief at settlement. Confirm the current Queensland FHOG eligibility criteria and contract date requirements with the Queensland Revenue Office before relying on this figure.
The key distinction is what each benefit does. The First Home Guarantee removes the LMI cost and enables the loan to proceed with a lower deposit. The FHOG provides a cash contribution toward the purchase. Stamp duty concessions reduce the upfront transactional cost. A buyer using the FHOG alongside the First Home Guarantee and a stamp duty concession in Queensland could enter the market with materially lower upfront costs than they might initially realise, but each benefit has its own eligibility conditions, and the sequencing of applications matters.
Saving a 20% deposit vs using the scheme
Buyers who wait to save a full 20% deposit borrow less, avoid LMI entirely, and pay less interest over the life of the loan. In a flat or falling market, the patience required to save a larger deposit makes financial sense, provided the time to save doesn’t extend so long that interest savings are eroded by continued renting costs or missed price growth.
In a rising market, the calculus shifts. The cost of time spent saving, measured in property price growth missed rather than in dollar terms, can outweigh the LMI saving that the First Home Guarantee already eliminates. The scheme effectively compresses the waiting period for buyers who are otherwise ready. There is no universal right answer. Modelling both paths against your specific savings rate and target property price trajectory is worth doing before committing to either approach.
Common pitfalls and how a specialist broker can help
Mistakes that cause applications to fall over
The most consistent mistakes are avoidable with preparation. Buyers apply without checking the specific price cap for their suburb, assuming the broader city cap applies. Others don’t maintain a clear and consistent savings history, meaning the lender can’t verify the deposit even when the dollar amount is correct. Some buyers select a non-participating lender at pre-approval and only discover the problem when the guarantee can’t be applied. Others misread the owner-occupier condition and purchase a property they partly intend to rent, which disqualifies the application entirely.
As of 2026, there is no annual quota or waitlist under the current scheme settings, a detail many buyers don’t realise until they’ve already rushed an application unnecessarily. You don’t need to race to claim a limited number of places. What you do need is to get the eligibility and documentation right the first time, because errors discovered late in the process are difficult to resolve before settlement.
Working with a broker who knows the scheme inside and out
The first home loan deposit scheme is straightforward in principle, but the application sits at the intersection of government eligibility rules, individual lender policies, and property-specific conditions. Those three layers don’t always align neatly, and small oversights in any one of them can cost buyers their place in the process.
At Your Home Loan Consultant, our brokers work with first home buyers across Brisbane and beyond to work through the eligibility questions, identify a competitive participating lender suited to each client’s situation, and manage the guarantee application alongside the home loan approval. The right guidance means fewer surprises between pre-approval and settlement, and a clearer picture of the full purchase structure from day one.
Your next step with the First Home Guarantee
The First Home Guarantee lets eligible buyers purchase with a 5% deposit, typically avoiding LMI through the government guarantee, though lender and product-specific conditions apply. Income caps no longer apply as of October 2025. Price caps vary by location and must be confirmed for the specific suburb you’re targeting. The application runs through an approved participating lender, and the guarantee is lodged on your behalf once you have a property under contract.
For buyers who are financially ready to service a mortgage but haven’t reached the 20% deposit mark, this scheme is a genuine pathway to ownership rather than another few years of saving while the market moves. The barrier it removes is real, and the savings on LMI alone are significant for eligible borrowers.
The practical next step is straightforward. Confirm your eligibility under the first home loan deposit scheme, check the price cap for your target suburb, and speak with a broker who can assess your full picture and match you with the right participating lender. Get in touch with the team at Your Home Loan Consultant to map out your best path forward and understand exactly where you stand before you make an offer.