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First Home Guarantee Scheme
The First Home Guarantee Scheme (FHBG) is an Australian Government-backed program that helps first-home buyers step into home ownership with a smaller deposit. Instead of waiting years to save a complete 20% down payment, eligible buyers can enter the market earlier, often with just 5% upfront. For many in Melbourne and beyond, this makes homeownership feel more realistic and within reach.
In this blog, we’ll explain how the scheme works, who qualifies, what types of properties are eligible, and how it can help you get your first home sooner. After reading, you’ll know if this is the right fit for you.
What Is the First Home Guarantee Scheme?
At its core, the First Home Guarantee Scheme enables first-time home buyers to purchase a home with a minimum 5% deposit. Meanwhile, the government guarantees a portion of the loan, reducing the risk for lenders. This means that for many people, the path to owning a home becomes easier without the hefty deposit. Instead of paying 20% upfront, eligible buyers can pay as little as 5% and avoid paying the costly Lenders Mortgage Insurance (LMI).
How Does the First Home Guarantee Work?
Under this program, you only need to provide a 5% deposit. The government then acts as guarantor, covering up to 15% of the home’s value so the lender can provide the loan without requiring a large deposit. That means you can borrow up to 95% of the property price without any need for a Lenders Mortgage Insurance (LMI).
For example, on a $600,000 home, you’d only have to pay $30,000 upfront, instead of paying thousands of dollars in LMI. This makes the move-in costs far lower and homeownership much more accessible for first-time buyers. Hence, a 5% deposit scheme for first home buyers is a smart alternative to traditional lending, especially when affordability is a concern.
Eligibility for the First Home Guarantee Scheme
To qualify for the First Home Guarantee eligibility criteria, the buyer must meet the following requirements:
Be an Australian citizen or permanent resident, aged 18+
Be a first-time home buyer (or individuals who haven’t owned a property in Australia in the past 10 years)
Plan to live in the property as owner-occupiers (must not be an investment)
The property must meet all relevant property price caps, subject to location
What Types of Properties Are Acceptable?
The First Home Buyer Guarantee isn’t limited to newly built homes—other residential property types can qualify for this program. These include:
Existing houses or apartments
Townhouses or units
House-and-land packages
Off-the-plan properties
Vacant land with a building contract (check with your lender)
This flexibility allows first-home buyers to explore a variety of options depending on their budget and lifestyle.
Benefits of Using the First Home Guarantee
Here’s why the Regional First Home Buyer Guarantee can be a major advantage if you’re buying your first home:
Buy with a smaller deposit of only 5%, meaning less time is needed to accumulate savings
Avoid paying expensive LMI and enjoy lower upfront costs.
Enter the market sooner, instead of waiting years to save up 20% for deposits
Keep more savings available for moving costs, furniture, renovations or other expenses
Can be combined with other schemes (like state grants or stamp-duty concessions, where applicable)
For first-time buyers in Melbourne, this can make a real difference between continuing to rent and finally owning a home.
How to Apply for the First Home Guarantee Scheme?
Applying for the Australian Government 5% Deposit Scheme isn’t complicated, but you’ll need to follow the right steps. Here’s how you can proceed:
Choose a participating lender who’s authorised under the scheme
Prepare all the required documentation, including ID, savings history, proof of deposit, and income details
Get pre-approval done to confirm you meet the lender’s criteria
Once you find a suitable property within the price cap, apply through the First Home Guarantee Lender
On final loan approval, you sign the loan and can proceed to settlement
Let Us Help You Secure Your First Home Sooner
Navigating home loans and government schemes can be a complex process. But not anymore! MC Finance Group is here to help. If you’re a first-home buyer looking to take advantage of the First Home Guarantee Scheme in 2026, we can guide you through the eligibility checks, lender selection, and all the paperwork that comes with your first home purchase. With our support, the dream of owning your first home could be closer than you think.
So, call us on 0430 200 322 or email us at Matthew.chik@mcfinancegroup.com.au to start your house-hunting journey on the right foot.
