First Home Guarantee 2026: Buy with a 5% Deposit and No LMI

How the guarantee works

The scheme works by having the National Housing Finance and Investment Corporation guarantee a portion of your loan, so the lender treats your 5% deposit like a 20% one and waives LMI. You still borrow 95% and repay it like any mortgage — the guarantee is not a payment, a subsidy or free money, and it does not change your interest rate (though some lenders price scheme loans differently, so compare). The annual allocation of places is capped, and participating lenders each hold a share, which means availability can dry up at busy lenders mid-year even when the national program has places left.

Three scheme streams matter in 2026: the First Home Guarantee (5% deposit, first home buyers), the Family Home Guarantee (2% deposit, single parents with dependants, not restricted to first buyers), and the Regional First Home Buyer Guarantee (5%, for regional purchases). All three share the same mechanics — government guarantee, no LMI, standard credit assessment.

Eligibility, income caps and price caps

The consistent tests: Australian citizens aged 18+; singles earning up to $125,000 or couples up to $200,000 combined (assessed on the prior financial year); owner-occupation required; and — for the first-home streams — you must not have owned property in Australia in the past ten years (the ten-year lookback relaxes the original lifetime bar). Couples must be married or de facto; friends buying jointly are ineligible.

Property price caps are set per region and updated annually — they roughly track regional median prices and are highest in Sydney and Melbourne, lower in regional centres. Because caps interact with corridor pricing, they quietly shape where you can buy: a $700,000 package in a Melbourne west corridor may fit where an $800,000 one in a premium pocket does not. Check the current caps on the Housing Australia site before shortlisting suburbs, and note that caps differ for newly built vs established homes in some regions — new builds typically enjoy headroom, another nudge toward house and land packages.

Strategy: combining the guarantee with grants

The scheme stacks with state assistance. A Queensland buyer on $100,000 purchasing a $620,000 package with a 5% deposit can combine the $30,000 First Home Owner Grant, stamp duty concessions, and the guarantee's LMI saving — together often worth $40,000–$60,000 versus buying the same home with 10% down and no concessions. The grant can also count toward the deposit when paid through an approved agent, which can push a 4% savings position over the 5% line.

The main strategic caution is servicing, not deposit: removing LMI lowers your entry cost, not your repayments, and 95% loans at 2026 interest rates are a real commitment. Stress-test repayments against rate rises, and use the repayment calculator with a buffer before treating the guarantee as permission to stretch.

Frequently asked questions

Is the First Home Guarantee still available in 2026?

Yes — the Home Guarantee Scheme continues with annual place allocations. Availability varies by lender within the year, so apply early in the financial year where possible.

Can I use the scheme for a house and land package?

Yes. New builds are fully eligible and in many regions enjoy higher price caps than established purchases. Construction loans through participating lenders can be covered — confirm your lender's process before signing land.

Does the government own part of my home?

No. The guarantee is a backstop for the lender, not an equity stake. You own 100% of the property from day one, with a normal mortgage.

What is the income test based on?

The prior financial year's taxable income, assessed from your Notice of Assessment — for singles, your income alone; for couples, combined. Falling just under the cap one year and over the next does not unwind a completed purchase, but it affects eligibility at application.

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