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First Home Guarantee Scheme and how it can benefit you

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Prospective homebuyers have a little more hope at getting into the property market with the First Home Guarantee scheme (FHBG) – an Australian government initiative helping house-hunting hopefuls to buy or build their first home.

With increasing numbers of first home buyers ‘tapping out’ on their dream of owning their own home, the Federal Government acting as guarantors for up to 15% of every home loan under this scheme comes at an critical time.

With as little as a 5% deposit and skipping on the usual lenders mortgage insurance (LMI), eligible applicants can now purchase a property under the FHBG scheme, getting them into the property market sooner than expected.


How does the 15% guarantee work?

20% deposit has long been the norm when it comes to how much borrowers need to save to get their first foot onto the property ladder, less they pay Lenders Mortgage Insurance (LMI). And when a first homebuyer opts for LMI, they are instantly deemed ‘high risk’.

With that in mind, the Commonwealth Government covers the difference between the eligible first homebuyer’s deposit and the typical 20% deposit threshold lenders require before issuing a loan without LMI under the FHBG.

And with LMI being one of the biggest charges buyers can face during the house-buying process, setting them back in some cases tens of thousands of dollars, it’s exciting to know that 40,000 first-home buyers will receive a helping hand in this area!


What are the benefits of this scheme?

With inflation making waves in everyday life, wages at a standstill and property prices consistently on the rise, saving for a home deposit has become one of the most difficult aspirations for first homebuyers in recent years.

And most first-home buyers don’t know is that the financial outlay doesn’t stop at the deposit. Before you even enter into your mortgage, there are fees and charges that need to be paid, reducing your loan to value ratio even further. This is why we say in this business, every dollar counts when it comes to your deposit!

With the government offering to cover the 15% gap between an eligible applicant’s 5% deposit and the standard threshold, prospective homebuyers are finally granted the chance to enter the property market. And that’s a great thing!

By covering this cost for the buyer, the FHBG allows eligible first-homebuyers to enter the property market sooner rather than later, while paying lower fees over the life of their loan. So it’s a big yes from us here at Kitty & Miles!


Property price caps

Before you can say “Awesome! Let’s take out a larger loan and buy a bigger house!” – think again. There are price caps on each state and territory, meaning that to be able to take advantage of the scheme, you’ll need to ensure the home you buy falls within the price ranges listed below:


State or Territory

Capital city and regional centres

Rest of state










Western Australia



South Australia






Australian Capital Territory

$750,000 (all areas)

Northern Territory

$600,000 (all areas)



Are you eligible for the First Home Guarantee Scheme

If you meet the following criteria, you will be one of the lucky 40,000 that can apply for the scheme. Hooray! But please note, every state and territory has different rules, so you’ll need to refer to your chosen Mortgage Broker for the specifics in your area.


Eligible applicants must:
  • Be permanent residents or Australian citizens. Further to that, if you are buying with another person, at least one of you must be a permanent resident or Australian citizen;
  • Not have previously owned or co-owned a home in Australia;
  • Not have received an Australian First Home Buyer Grant in the past;
  • Be buying to occupy the property yourself – you cannot use the scheme to buy an investment property;
  • Live in the home for at least six months after purchase;
  • Be an individual – not a company or trust;
  • Be over 18 years of age.


Does this sound like you? If you’re a first homebuyer interested in taking part in this scheme, why not give us a call? Let’s find out where you stand, and together we’ll figure out the next step on your home buying journey.

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