Introduction
I want to tell you about a couple I helped recently.
Both working — one in engineering, one in education. Combined income around $145,000. They’d been renting in Werribee, saving carefully for two years, and had $40,000 sitting in their account. Genuine, consistent savings. The kind of financial discipline that deserves a reward.
They came to me thinking they were still years away from buying. They had HECS debt, one credit card, and the assumption that you need a 20% deposit to get a foot in the door.
Four months later they settled on a 4-bedroom home in Werribee for $590,000. Their deposit was $29,500. They paid zero Lenders Mortgage Insurance.
The reason? The First Home Guarantee Scheme — and knowing exactly how to use it.
What Is the First Home Guarantee Scheme?
The First Home Guarantee (previously called the First Home Loan Deposit Scheme) is an Australian Government initiative administered by Housing Australia. It allows eligible first home buyers to purchase a property with as little as a 5% deposit — without paying Lenders Mortgage Insurance (LMI).
Here’s how it works in plain English:
Normally, if you borrow more than 80% of a property’s value, lenders charge you LMI — an insurance premium that protects them if you default. On a $590,000 home with a 5% deposit, that LMI could cost you $18,000–$22,000.
Under the First Home Guarantee, the government guarantees the remaining 15% of your deposit to the lender. So the lender treats your loan as if it has a 20% deposit — which means no LMI.
The government isn’t giving you money. They’re not taking a share of your home. They’re simply acting as guarantor, which removes the LMI requirement entirely.
The Big News: The Scheme Just Got Much Better
From 1 October 2025, the Australian Government expanded the scheme significantly. Here’s what changed:
No more place limits. Previously, only 35,000 buyers per year could access the scheme — spots filled up fast, especially at the start of each financial year. That cap is now gone. Any eligible first home buyer can apply, any time of year.
No more income caps. The old rules required singles to earn under $125,000 and couples under $200,000. Those limits have been removed entirely. Your income no longer determines whether you can access the scheme.
Higher property price caps. For Melbourne, the cap increased to reflect current market prices — meaning more properties in Melbourne’s west qualify under the scheme.
For first home buyers in Werribee, Point Cook, Tarneit, Truganina and Williams Landing, this is genuinely significant. These suburbs sit comfortably within the property price caps, and the removal of income and place limits means you can apply with confidence rather than racing against a quota.
Back to the Werribee Couple — The Full Story
Let me walk you through exactly what happened with my clients, because the detail is where the value is.
They came to me with $40,000 saved and a combined income of $145,000. On paper, a strong position. But there were two things complicating the picture.
The first was a $25,000 HECS debt in one name. HECS debt affects your borrowing power because lenders factor in your mandatory repayments as an ongoing expense. With a $25,000 HECS balance, those repayments were eating into the total amount the couple could borrow.
Here’s the strategy we used: I identified that certain lenders don’t count HECS debt against your borrowing power if the balance is under $20,000. So we got the couple to pay $5,000 off their HECS — bringing it from $25,000 to $20,000 — before submitting their application. That one move increased their borrowing power enough to comfortably service the loan they needed.
The second complexity was a credit card. Most people don’t realise that lenders assess your credit card limit — not just your balance — when calculating borrowing power. We made sure this was factored in correctly before applying.
Then came the property search. They found a home in Werribee for $590,000. Here’s why that number mattered:
- 5% deposit on $590,000 = $29,500
- Stamp duty = $0 (full exemption applies under $600,000 in Victoria)
- Closing costs (conveyancing, inspections) = approximately $3,000
- LMI = $0 (covered by the First Home Guarantee)
- Total cash needed at settlement = approximately $32,500
They had $40,000 saved. They were comfortable, not stretched.
I sourced pricing from multiple participating lenders, presented the options clearly, explained which lenders don’t count HECS debt under $20,000, and let them make an informed decision. They chose the lender that suited their situation best.
They’re now homeowners. Mortgage repayments that are less than what they were paying in rent. And they did it without waiting another two years to save a bigger deposit.
Who Qualifies for the First Home Guarantee?
As of 2026, the key eligibility criteria are:
You must be: An Australian citizen or permanent resident aged 18 or over, buying a property to live in (not an investment), and a first home buyer — or someone who hasn’t owned residential property in Australia in the last 10 years.
The property must: Fall within the applicable price cap for your area and be a residential property (house, townhouse, apartment, house and land package, or off-the-plan).
Your deposit must be: At least 5% but less than 20% of the purchase price, demonstrated through genuine savings.
Joint applications are allowed — including with a partner, friend, or family member. Both applicants must meet the eligibility criteria.
The most important thing to understand is that you cannot apply directly to Housing Australia for the scheme. You apply through a participating lender as part of your home loan application. This is where having a broker is particularly valuable — not every lender participates, and among those that do, interest rates, fees and policies vary considerably.
Why Using a Broker for the First Home Guarantee Matters
There are over 30 participating lenders on the scheme panel — ranging from the major banks to smaller credit unions and non-bank lenders.
The lenders on the panel don’t all offer the same rates, the same flexibility, or the same lending policies. Some are stricter on HECS debt. Some have better pricing for first home buyers. Some move faster through the approval process.
When you walk into a single bank and ask about the scheme, you get one option. When you work with me, I compare the full panel, identify which lenders suit your specific situation — income, savings, debts, property type — and present you with options. You make the decision. I just make sure it’s an informed one.
Ready to Find Out If You Qualify?
If you’re buying in Melbourne’s west — Werribee, Point Cook, Tarneit, Truganina or Williams Landing — I can tell you in a 30-minute call whether you qualify for the First Home Guarantee, which participating lenders suit your situation, and what your path to buying looks like.
No jargon. No pressure. Just clarity.
Yash Duggal is a mortgage broker based in Melbourne’s west, specialising in home loans for first home buyers. Credit Representative Number 562209, authorised under Australian Credit Licence 389328.
The information in this article is general in nature and does not constitute financial advice. Scheme eligibility criteria, property price caps and lender participation may change. Please consult a licensed mortgage broker or visit the Housing Australia website for current information before making any financial decisions.
