Buying your first home can feel daunting, especially with rising prices and large deposit requirements. The First Home Guarantee program is a Federal Government initiative designed to make it easier for first home buyers. It allows eligible first home buyers to purchase a home with as little as a 5% deposit by having the government act as guarantor for part of the loan. In this comprehensive guide, we'll explain how the First Home Guarantee works across Australia, recent 2025 changes to the scheme, and what it means specifically for Queensland buyers.
Table of Contents
The First Home Guarantee (formerly known as the First Home Loan Deposit Scheme) is part of the Federal Home Guarantee Scheme aimed at helping Australians buy their first home sooner. Under the First Home Guarantee program, the government (through Housing Australia) guarantees up to 15% of the property's value, so that first home buyers can secure a home loan with only a 5% deposit (instead of the traditional 20%). In practical terms, this means the borrower avoids paying costly Lenders Mortgage Insurance (LMI) because the lender has a government guarantee for the shortfall between the buyer's deposit and a 20% deposit.
This lets buyers skip paying LMI premiums, which can save tens of thousands of dollars. For example, on a $500,000 home, a 5% deposit is $25,000; without the scheme a buyer would normally need $100,000 (20%) or pay extra for LMI.
Housing Australia provides the guarantee to your lender. This isn't free money, but it means the lender can lend you 95% of the home's value with confidence. You still take out a regular home loan and must meet the lender's borrowing criteria (e.g. income and credit checks).
You can buy various property types under the scheme –an existing house, unit, townhouse, a house-and-land package, off-the-plan dwelling, or even land with a contract to build –as long as the property's price is under the specific cap for its location. This gives first home buyers flexibility to choose a home that suits their needs.
The scheme is only for owner-occupiers buying or building their first home to live in. Investment purchases are not allowed. Buyers are generally required to move into the home as their principal residence within a certain time (usually within 6 months of settlement).
Eligibility Criteria for First Home Buyers
To qualify for the First Home Guarantee program, you must meet several eligibility criteria relating to your circumstances (note: some criteria are being updated in 2025, which we'll explain shortly). Here are the main requirements:
- First Home Buyer Status: You (and your co-buyer, if any) must be first home buyers, meaning you have never owned a property in Australia before.
- Citizenship or Residency: At least one applicant must be an Australian citizen, and others can be citizens or permanent residents. The scheme is not open to temporary residents or non-residents.
- Minimum Age: All applicants must be 18 years or older.
- Deposit Requirement: You need to have saved at least 5% of the property's value as a genuine deposit. The scheme does not cover buyers with zero deposit; some savings (or gifted deposit) is required.
- Income Cap: (Important: Income caps are changing –see 2025 updates below.) Currently, there is an income limit of $125,000 annual taxable income for singles or $200,000 combined for couples to be eligible. These caps are assessed on your latest tax return and Notice of Assessment.
Recent 2025 Updates to the First Home Guarantee Program
In 2025, the Australian Government announced major expansions to the scheme to help more first home buyers qualify. These changes, effective 1 October 2025, dramatically widen the scheme's reach.
Unlimited Places: Previously, the program offered a capped number of spots (for example, 35,000 places were available in the 2025-26 financial year under the old rules). From 1 October 2025, there will be no caps on the number of guarantees –meaning all eligible first home buyers can apply without worrying that the quota will run out. This removal of "place limits" ensures the scheme won't shut early due to high demand. Everyone who qualifies should get support.
Removal of Income Limits: Under the old criteria, many moderate-to-high income earners were excluded (those above $125k single or $200k couple). The new rules abolish the income caps entirely. This is a game-changer, as first home buyers of any income level can now access the 5% deposit guarantee, provided they meet the other criteria. It especially helps two-income families in cities who might have just exceeded the old limit but still found it tough to save 20% while paying rent. (Note: Lenders will still assess your borrowing capacity, but the government won't disqualify you based on income.)
The First Home Guarantee Program in Queensland
Stacking with Queensland's own incentives: Importantly, the federal First Home Guarantee can be combined with Queensland State Government assistance to really boost your home-buying power. Queensland offers a First Home Owner Grant for those buying or building a new home (currently $15,000 for eligible first-timers, and even $30,000 for certain regional new builds). Additionally, Queensland has transfer duty concessions –for example, first home buyers pay no stamp duty on homes up to $500,000, with concessions on homes up to $550,000 (thresholds as of 2025).
These are separate from the First Home Guarantee, and yes, you can use them together. If you qualify, this means you might only need a 5% deposit and you could get a grant to help with purchase costs and pay little to no stamp duty –a huge financial saving overall. For instance, you might use the First Home Guarantee to buy an existing Gold Coast apartment under $600k with 5% down, while also claiming the duty concession (saving you up to ~$10,000 in tax). Or if building new, use the 5% guarantee plus the $15k grant toward construction. Always check the latest criteria for each program, but leveraging both federal and state support is a smart way for Queenslanders to make their first home more affordable.
How to Benefit as a QLD First Home Buyer
- Confirm Your Eligibility: With the removal of income caps, most QLD first home buyers will qualify if they are Australian citizens/permanent residents, first-time buyers, with 5% saved.
- Know Your Price Cap: Use Housing Australia's postcode search tool to find the price cap in your area. For example, if you're buying around the Gold Coast or Brisbane, remember $1,000,000 is the cap (so focus your property search at or below that). If you're looking in other parts of QLD, keep the $700,000 cap in mind. This will guide you on what you can realistically target.
- Save the 5% (and a Bit More for Costs): You'll need at least 5% of the purchase price ready as a deposit. It's wise to save a bit more to cover ancillary costs like inspections, conveyancing fees, and any stamp duty (if applicable). While 5% is far more attainable than 20%, on a $600,000 home it still means about $30,000 needed, so set a clear savings goal.
- Get Pre-approval from a Participating Lender: Approach a bank or lender that's part of the scheme to get pre-approved for a loan. They will verify your eligibility and, if all looks good, reserve your place in the scheme (after Oct 1, 2025, there's no place limit, but before then ensure you secure one of the available spots). The lender submits your application to Housing Australia for the guarantee. It's often helpful to use a mortgage broker familiar with the First Home Guarantee to navigate this step.
- Go House Hunting: With your pre-approval in hand, you can house-hunt with confidence up to your approved amount. Focus on properties under the cap for your area (your lender and conveyancer can help double-check that the property you pick is eligible under the scheme's rules). When you find "the one," you'll be ready to make an offer, knowing your finance is supported by the guarantee.
- Use Professional Help (Mortgage and Legal): The scheme simplifies financing, but buying a home involves complex contracts and legal processes. Especially as a first-timer, consider having experts in your corner –a mortgage broker for loan advice and a conveyancer or property solicitor for contract and settlement advice. This can save you from costly mistakes and delays.
MCG Legal is ready to assist Gold Coast and Queensland first home buyers on this exciting journey to home ownership. We make conveyancing simple, stress-free, and fully compliant with Queensland's latest legal requirements.
