The First Home Guarantee — formerly the First Home Loan Deposit Scheme — has become one of the most useful federal supports for first home buyers in Australia. In 2026, it remains one of the few mechanisms that lets eligible buyers enter the market with a 5% deposit and skip Lenders Mortgage Insurance (LMI) entirely. But the scheme has eligibility limits, property price caps and lender restrictions that catch a lot of buyers off-guard.

Here's what's worth understanding before you assume the scheme applies to you.

How the scheme works

The federal government effectively guarantees the portion of your loan above 80% LVR (the part that would normally require LMI). For the lender, this removes the LMI requirement. For you, this can save anywhere from $5,000 to $30,000+ in upfront costs — money that stays in your pocket rather than being paid to an insurer that protects the lender.

You still need a 5% genuine savings deposit, plus funds for stamp duty (often waived for first home buyers in Victoria), conveyancing, building inspections, and the small handful of other costs that pop up. Plan on having around 7-8% of the purchase price available in total to comfortably complete a purchase under the scheme.

The eligibility tests

To qualify in 2026, you need to:

The income cap is the trap most often. It's based on your most recent notice of assessment, not your current income, so a recent promotion or career change can affect eligibility either way.

What's changed for 2026

The property price caps have been updated for 2026 to reflect higher housing prices. The income caps remain at $125K single / $200K combined for now, though there's ongoing political discussion about raising them given wage growth and housing affordability trends.

The scheme now also covers a wider range of property types in 2026, including some off-the-plan and new-build purchases that were previously excluded.

How to combine with other schemes

The First Home Guarantee is one of several supports available to first home buyers. The smart play is to stack them where eligible:

For a typical Melbourne first home buyer buying a new build under $750K, combining the First Home Guarantee with the stamp duty concession and FHOG can save $40,000+ compared to entering the market without using these schemes.

The practical pathway

If you're considering using the scheme, the practical steps are:

  1. Confirm eligibility with a broker against current criteria (criteria change periodically)
  2. Get pre-approved through a scheme-participating lender
  3. Identify a property within the price cap that suits your needs and timing
  4. Engage a conveyancer, get a building inspection, and proceed to formal approval
  5. Settle, get the keys, and start the long journey of building equity

The scheme has limited annual places and they release in lots — being pre-approved early in the financial year usually means better access to scheme places.

If you'd like a structured review

Working through the schemes, eligibility tests, and timing requires careful planning. We help first home buyers map the path every week — and we'll be straight with you about whether the scheme actually fits your situation, or whether saving for a larger deposit (and skipping the scheme) is the better play.

The right answer depends on your income trajectory, your timeline, and the kind of property you want to buy. Book a 30-minute strategy call and we'll work through the maths together.