The First Home Guarantee lets eligible first home buyers purchase with as little as a 5% deposit, with the government guaranteeing the rest so you avoid lenders mortgage insurance. It's separate from NSW stamp duty relief, and can be combined with it.
Saving a 20% deposit is the biggest barrier for most first home buyers, and it's exactly what the First Home Guarantee (commonly called the 5% deposit scheme) is designed to remove. It doesn't reduce the purchase price or hand you cash; it changes how much deposit you need and removes a cost that usually comes with a small deposit.
Under the First Home Guarantee, the federal government guarantees up to 15% of your loan, so you can borrow up to 95% of the purchase price with as little as a 5% deposit. Normally, borrowing above 80% means paying lenders mortgage insurance (LMI), often thousands of dollars. The guarantee lets participating lenders waive it, which is where the real saving sits.
Caps are set by region and reviewed regularly. As at 2026, Sydney sits in its own higher price cap band given the cost of housing across Greater Sydney, while regional NSW has a lower cap. Because the scheme is federal, caps and places are set by Housing Australia, and it's worth checking the current figures for your specific postcode before you rely on a number.
Yes to both. There are income thresholds for singles and couples, and the scheme runs on a fixed number of places allocated each financial year through participating lenders, so it can fill up before the year ends. Applying through a participating lender earlier rather than later reduces the risk of missing out.
The First Home Guarantee is a federal scheme about deposit size and LMI, while the First Home Buyers Assistance Scheme is a NSW scheme about stamp duty. They test different things (loan-to-value ratio versus property value) and can generally be used together, alongside the First Home Owner Grant if your purchase also qualifies for that.
Yes. You still need at least 5% of the purchase price as a genuine deposit; the scheme changes what happens to the remaining 95%, not the need to save something upfront.
No, the First Home Guarantee is only available for owner-occupied purchases, in the same way as most first home buyer schemes.
Generally yes, since you're borrowing more of the purchase price. It's worth modelling the higher loan amount against your budget, even though you're saving on LMI and getting in with less upfront.
You can still make up the difference with a larger deposit or explore other schemes, but a property priced above the cap simply won't qualify for the guarantee on that purchase.
The 5% deposit scheme is genuinely useful for first home buyers who can service a loan but haven't been able to save a large deposit, particularly once it's stacked with NSW stamp duty relief. Check current price caps and place availability for your situation before you start house hunting, since both can change during the year.
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This article is general information only and does not constitute legal or financial advice. Scheme thresholds, price caps and eligibility rules are set by Housing Australia and participating lenders and may change, always confirm current details before relying on them, and get in touch for advice on your specific circumstances.