For many first-time buyers, owning a home isn’t just a goal, it’s a lifelong dream. But with rising prices, the pressure to save a big deposit, and upfront costs like stamp duty, that dream can feel out of reach.
However, the First Home Loan Deposit Scheme (FHLDS), now known as the Home Guarantee Scheme, is designed to make it easier for you. With just a 5% deposit and no lenders’ mortgage insurance (LMI), you can buy your home earlier under this.
What Is the First Home Loan Deposit Scheme?
This government initiative supports eligible first-home buyers who don’t have the full 20% deposit. Instead of paying LMI, the government covers up to 15% of your loan, so you avoid LMI and save more on your home buying.
That means you could stop renting earlier and start building equity in your own home, all without the extra cost of insurance. Meanwhile, it includes three types of sub-schemes:
- First Home Buyer Guarantee (FHBG) for first-home buyers with at least a 5% deposit.
- Family Home Guarantee (FHG) for single parents who have dependent children with as little as a 2% deposit.
- Regional First Home Buyer Guarantee (RFHBG) for first-home buyers purchasing in regional areas to improve housing in growing communities.
Changes Happened In the First Home Loan Deposit Scheme in 2025
This scheme has evolved to include more Australians. Therefore, in 2025, several updates happened in this scheme, like
- Permanent residents are now included.
- You can qualify only if you haven’t owned a home in the past 10 years.
- Friends and siblings can now buy together, and it’s no longer limited to couples only.
- Over 35,000 places are available in this financial year till 30th June 2025.
- Limits vary by region but reflect today’s housing prices.
- Also, income limits have increased from $125k to $175k (singles) and $200k to $250k (couples).
These updates are making it easier for more people to enter the market.
Who Can Apply for the First Home Loan Deposit Scheme?
This scheme is designed for first-home buyers who need a helping hand while buying their first home. But not everyone qualifies.
To be eligible at present, you must
- Be an Australian citizen or permanent resident.
- Your age should be 18 years old.
- Have not owned property in the last 10 years
- Your taxable income should be below $175,000 (single) or $250,000 (couple)
- You should be buying as an individual or with a spouse or de facto partner.
- You must also live in the home you’re buying. Investment properties are not allowed under this scheme
So if you’re looking to buy your first home and meet the criteria, you’ll get the support you need.
Types of Properties You Can Buy
Not every property is eligible under the scheme. Only a few are eligible, such as
- An existing home – This includes established houses, apartments, and townhouses.
- A newly built home – Move-in-ready homes that were recently completed and haven’t been previously sold.
- Off-the-plan homes – Homes that are yet to be built or are under construction. Ideal if you’re looking for a new build with time on your side.
- A house and land package – This is when you buy land and sign a building contract with a builder at the same time.
- Land with a separate building contract – You purchase land now and build later, but both contracts must meet specific timelines.
Also, the property must be within your region’s price cap and must be used as your primary residence.
How To Apply For The First Home Loan Deposit Scheme
Applying under this scheme requires thoughtful consideration. So, follow these steps to give yourself the best place to live.
Check If You Qualify
Start by reviewing your eligibility as per the required criteria. For example, your age criteria, the type of property you can buy, and income caps. Make sure you also plan to live in the property because this scheme doesn’t support investment purchases.
Choose A Participating Lender Or Mortgage Broker
Not every lender offers this scheme. You’ll need to apply through a government-approved participating lender or go through a broker who partners with them.
A broker can help compare options and guide you through different lenders’ processes. Thus, he can ensure you’re applying through the right channels, all while saving you time and stress.
Getting Pre-Approval
Before you start searching for your home, getting pre-approved is important. In this, the lender reviews your finances and gives you a clear answer to how much you can borrow.
Though it’s not a final loan offer, it shows sellers you’re serious. Also, it keeps you focused on homes that actually fit your budget, thereby saving you from making costly mistakes.
Find a Property That Fits The Criteria
Whenever you start searching for your home, make sure it meets the scheme’s rules. It must fall within your area’s price cap to be for owner-occupation (not renting) and meet the eligible property types.
Apply Through Your Lender Or A Mortgage Broker
When you’ve found your property, your lender/mortgage broker will lodge your scheme application on your behalf. If places are still available, they’ll reserve a spot for you under the scheme.
You’ll need to provide relevant documents, including proof of identity, income, deposit, and purchase details. Your broker or lender will guide you through this, so nothing gets missed.
Major Considerations for First-Home Buyers Using This Scheme
While the First Home Loan Deposit Scheme makes homeownership more accessible, there are still a few key things you should consider.
Not Every Property Is Eligible
Just because a property looks great doesn’t mean it qualifies. It must meet the scheme’s type and price cap rules. Always check your region’s limits and ensure your property ticks all the boxes before making an offer.
Not All Lenders Participate
Only a set number of lenders are approved to offer this scheme. If you apply through the wrong lender, you’ll miss out on the benefits of this scheme. That’s why working with a broker helps because they’ll connect you with the right lender upfront.
Availability of Scheme Benefits
The scheme has a cap on how many people can access it each year. For example, it is currently available for 35,000 people till 30th June 2025. If you delay, you could miss your opportunity. Get your pre-approval early and be prepared to act fast once you find the right home.
LMI May Still Apply in Other Cases
While the scheme helps you avoid LMI. But if your circumstances or application details don’t meet requirements (like missing documentation), your lender may still charge it. Always recheck with your broker before signing.
Deposit Isn’t Your Only Cost
Though 5% is a low deposit, there are other upfront costs too. So, check other costs like stamp duty (unless exempt), solicitor fees, moving costs, and inspections. Keep a strong budget for everything and not just for the deposit.
You Must Live In the Property
One important condition of the scheme is that the property must be your home, not an investment. That means you’ll need to move in and live there, usually within 6 to 12 months after settlement.
So, if you’re not planning to stay in the home, this scheme might not be the right fit. But if you are, it’s a great way to get into the market with a smaller deposit and fewer upfront costs.
Conclusion
Thus, the First Home Loan Deposit Scheme (Home Guarantee Scheme) is more than just a government benefit. It’s a real opportunity to enter the market with less deposit and no LMI. But you must make sure to fulfil the required eligibility criteria for you and the purchased property.
Also, with the recent updates like higher income caps and expanded eligibility for permanent residents, more Australians now qualify. Thus, if you’re planning to buy, it is the right time.
For more personalised guidance, book a consultation call at 1300 GET LOAN, 0456 456 267 or a direct appointment at Nfinity Financials .
FAQs
Here are a few answers to the most commonly asked questions about the First Home Loan Deposit Scheme.
Q1. What is the First Home Deposit Scheme in Australia?
It’s a government scheme helping first-home buyers purchase with just a 5% deposit and no LMI.
Q2. What’s the maximum income to qualify?
In 2025, the income limit is $175,000 for singles and $250,000 for couples.
Q3. Can you use this scheme to buy an investment property?
No, you must live in the property you buy under the scheme for at least 6-12 months.
Q4. Do you have to pay back the government guarantee?
No, the government is not giving you money, it’s just acting as a guarantor so you avoid LMI.
Q5. What schemes are available under the Home Guarantee Scheme?
The scheme includes the First Home Buyer Guarantee, Family Home Guarantee, and Regional First Home Buyer Guarantee. Each one is designed to support different home buyer needs.
