First Home Guarantee in 2026: buying with a 5% deposit

Published 10 August 2026 · DeMarque Home Loans

The First Home Guarantee changed fundamentally on 1 October 2025: income caps gone, place limits gone, price caps raised. If you looked at the scheme before then and gave up, it’s worth looking again.

Here’s how it works as at 10 August 2026.

The mechanics

Under the scheme, the government guarantees part of your home loan so that you can buy with as little as a 5% deposit without paying lenders mortgage insurance.

You still borrow the full 95% from a participating lender and repay it normally — the guarantee simply replaces the LMI a lender would otherwise require on a small-deposit loan.

What changed in October 2025

• Income caps abolished. The old limits ($125,000 single / $200,000 couple) are gone — eligibility no longer depends on what you earn.
• Place limits abolished. Previously capped at 35,000 places a year; now every eligible buyer can access it.
• Price caps raised. For NSW: $1.5 million in Sydney and major regional centres, $800,000 elsewhere in the state (as at 10 August 2026).

What the LMI saving looks like

LMI on a 95% loan can run to tens of thousands of dollars on a Sydney-priced property, either paid upfront or capitalised into the loan and accruing interest for decades. The guarantee removes that cost entirely.

The trade-off to understand: a 5% deposit means a 95% loan — bigger repayments and more interest than a larger deposit, especially with rates where they are. Model it honestly with the repayments calculator before you commit.

Who still misses out

Eligibility criteria still apply: you must be an owner-occupier, meet the first-home (or returning-buyer) definitions, and buy under the price cap for your area. And not every lender participates — though many do, and pricing varies between them, which is precisely where a broker earns their keep.

Stacking it

The guarantee combines with the NSW stamp duty concessions (zero duty up to $800,000) and the First Home Super Saver scheme — the full stack is in our complete first home guide.

Want to know if you’re eligible and which participating lender fits your profile? Start here — it takes a few minutes.