Revamped First Home Buyer Guarantee Scheme

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Revamped First Home Buyer Guarantee Scheme

The Federal Government’s First Home Loan Deposit Scheme assists first home buyers entering the housing market by allowing approved applicants to take out a mortgage with just a 5% deposit and avoid paying lenders mortgage insurance (LMI).
 
What is the First Home Loan Deposit Scheme?
Most banks and lenders require a minimum deposit of 20% of the property’s value for the borrower to be exempt from LMI. The scheme allows first home buyers who can’t reach this threshold to take out a loan if they have saved at least 5% of the value of the property they are buying. The Government will underwrite the loan so that borrowers do not have to pay LMI.
 
Price Cap Table from 1 October 2025

Eligibility
To apply for the First Home Loan Deposit Scheme, home buyers must be:
  • Applying as an individual or 2 joint applicants
  • An Australian citizen(s) or permanent resident(s) at the time they enter the loan
  • At least 18 years of age
  • No income caps: first home buyers with higher incomes can access the Scheme.
  • intending to be owner-occupiers of the purchased property
  • First home buyers or previous homeowners who haven’t owned a property in Australia in the past ten years.
  • Access the Eligibility Tool – a short questionnaire to help home buyers identify which Guarantee/s they may be eligible for.
How does the First Home Loan Deposit Scheme Work?
Talk to us first so that we can help you to determine whether you will be eligible for the scheme. We can then guide you through the process of applying for the scheme and then arrange for the required pre-approval.
What are the benefits of the First Home Loan Deposit Scheme?
The clear benefit of the Government’s scheme is that eligible first-home buyers will avoid the additional cost of lenders’ mortgage insurance (LMI). This could potentially save first-home buyers up to $28,609, (based on a purchase price of $800,000 in NSW).
The Government’s deposit scheme can also be used alongside other first-home buyer schemes that waive the normal stamp duty cost.
What are the risks of the First Home Loan Deposit Scheme?
Lenders usually charge a slightly higher rate of interest for loans at a loan ratio of 95%. This variance will depend with each lender so consult us first.

Anthony Landahl | Managing Director Equilibria Finance

This is for general information purposes only and does not constitute advice. With all of these options there are a number of considerations outside the scope of what is covered in this article that you need to understand to ensure your personal circumstances are taken into consideration.

Equilibria Finance is a mortgage broking practice specialising in delivering residential and commercial mortgage and business and asset finance solutions to the clients of financial advice and accounting practices.

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