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First Home Guarantee Scheme

The Definitive Guide for 2022
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Welcome to the complete guide to the First Home Guarantee Scheme (formally known as First Home Loan Deposit Scheme) in 2022.

In this in-depth guide you’ll learn:

  • How to buy a home with a 5% deposit
  • How the expanded scheme will work
  • How long the First Home Guarantee Scheme will last
  • How you can secure a First Home Guarantee spot right NOW!
  • Lots more…

So if you’re looking to buy a home in 2022, keep reading this guide!

Let’s dive right in.


Home Guarantee Fundamentals

In this chapter, I’ll help you get a handle on the fundamentals.

So if you’re new to the Home Guarantee Scheme, you’ll absolutely love this chapter!

Then, in later chapters, we’ll cover advanced tips, techniques, strategies and case studies for first home buyers.

But for now, let’s cover the basics of the Home Guarantee Scheme.

First Home Buyers

What Is the Home Guarantee Scheme?

The First Home Guarantee Scheme (FHBG), previously known as the First Home Loan Deposit Scheme (FHLDS) is like having the government act as your guarantor – which means you can buy with only a 5% deposit and avoid paying Lender’s Mortgage Insurance (LMI).

The scheme will support up to 35,000 home buyers per financial year (and kicks off as of July 1st 2022) to buy a home with a lower deposit. But hurry, as you’ll need to act fast as the scheme has been extremely popular in previous years, and has run out of spots within months of being released.

There are income and price caps on the scheme which we cover below.


Why is the Home Guarantee Scheme beneficial?

If you are wanting to buy a home, you’d generally need to save at least 20% of the property’s value to avoid paying lenders’ mortgage insurance or possibly rely on your parents to act as a guarantor.

But, using the Home Guarantee Scheme, you only need to put in 5% of the property’s value towards your deposit with the government (or NHFIC) covering 15% of the property value. This means you can borrow up to 95% of the property value without paying LMI!

According to ABC, It said in March 2022 a 20 per cent deposit for the current median dwelling value across Australia was $147,795. Assuming a household income savings rate of 15 per cent annually, this puts the current time estimated to save a 20 per cent deposit at 11.4 years nationally.

How long does it take to save for a home loan deposit in 2022?

The Home Guarantee Scheme cuts the amount of deposit down to 5%, meaning you can get into the market much quicker and at much lower costs being able to avoid paying lenders’ mortgage insurance.

There will be 35,000 places made available from July 2022, with 35,000 spots under the newly expanded Home Guarantee Scheme – which is up from 10,000 available in previous financial years.


Why more Home Buyers are taking advantage of the Home Guarantee Scheme

Not surprisingly, more home buyers than ever before are taking advantage of the Home Guarantee Scheme to get into the market.

With over 60,000 first home buyers already having taken part in the scheme, and only a limited number of places (35,000 in 2022), why would you consider taking advantage of this scheme?

To find out more on the first home buyer schemes available in 2022, watch the video below or click here.

What are the advantages?

  • The government acts as your guarantor, making you seem a lower risk to the bank helping you – meaning you can avoid paying thousands of dollars in LMI and giving you access to lower interest rates than you possible could otherwise.
  • You can get into the property market with only a 5% deposit, compared to a minimum 8% deposit when you are required to pay LMI.
  • Your weekly repayments will go towards paying off your own home loan, rather than to rent.
  • You can also stack other first home buyer benefits, like stamp duty concessions, the first home owners grant and the first home super saving scheme on top of this new scheme – meaning you could save even more. Find out how by talking to your broker today.

What are the disadvantages?

  • If you are buying with a lower deposit, you will be borrowing a higher loan amount and pay more interest compared to borrowing less if you had a 20% deposit.
  • The Home Guarantee was previously limited to 10,000 spots (now 35,000) spots per year and it’s on a first-come, first-served basis. So you can miss out if you are not quick enough or if you’re not prepared prior to the July commencement date.
  • Some property commentators have argued these new schemes may further drive up property prices, locking out would be home buyers who cannot get access to the scheme.
  • This does come with a property price cap, which can limit your potential first home purchase.


How do you know if you are eligible for Home Guarantee Scheme?

We’ve outlined the criteria of the Home Guarantee scheme below.

Requirement Eligibility
Income Single up to $125,000 taxable income for FY22

Couples up to $200,000 taxable income for FY22

Deposit Yes, at least 5% savings, up to a maximum of 20% savings
First Home Buyer Yes, you must not have owned property in Australia
Citizen Yes, Australian citizens only
Property Price Cap Yes, see below.
Minimum Age Yes, aged 18 years and older
Living Arrangement You must move in and live in the property as your home within 6 months.

If you move out of the home you are no longer covered by the scheme.

Relationship If buying as a couple, you must be married or de-facto you cannot buy with parents, a friend, or sibling.
Banks Only 27 lenders can offer the scheme, the major banks include CBA and NAB and some non-major lenders include Bendigo Bank, Bank Australia & Teachers Mutual Bank.


To be an eligible first home buyer for this scheme, you will be required to fulfil the following:

  • ✅ You have never held property in Australia, including a lease of land or company title.
  • ✅ You are 18 years of age or above.
  • ✅ An Australian citizen.
  • ✅ You satisfy the income test.

Home Guarantee Scheme

How Home Guarantee Has Helped Sarah + Alby

Sarah and Alby had been saving for a few years to buy their first home but were struggling to build more than a 10% deposit to get into the market.

They found the perfect home for $396,193 and were wanting to see if the Home Guarantee made sense for them. They were also eligible for the $15,000 first home owners grant in Queensland which can also be used with the Home Guarantee Scheme.

Bank Loan LMI Costs Weekly payments on 4%
Option 1 $363,700 Nil $400
Option 2 $363,700 $10,554 $412
Option 3 $363,700 $9,998 $411


Now while the weekly saving doesn’t look like much, it would equate to $18,720 in additional repayments over 30 years!

After living in the home for 12 months, Sarah & Alby wanted to sell, upgrade and move out of their home.

Because their home loan was $10,554 lower, they had extra funds to put towards their new home instead of spending it on lenders mortgage insurance.


Changes to the First Home Guarantee Scheme in 2022

Aside from there being more spots available, there were also a number of name changes to the scheme from 1 July 2022.

Previous name Name from 1 July 2022 Acronym from 1 July 2022 Updates from 1 July 2022
First Home Loan Deposit Scheme (FHLDS) First Home Guarantee FHBG New name and 35,000 new Scheme places are being released in FY23
Family Home Guarantee No change FHG 5,000 new Scheme places are being released in FY23
New Home Guarantee No change NHG No longer available, this is part of the First Home Guarantee scheme.

So the First Home Loan Deposit Scheme (FHLDS) is now known as First Home Guarantee (FHBG)!


Home Guarantee Property Price Caps

In this chapter, I’m going to give you the property requirements for the price caps.

Including the MASSIVE changes being rolled out from 1st July 2022.

So if you’ve been confused by contradicting numbers, this guide will come in handy.


What Are the Property Requirements

For the First Home Guarantee (previously the first home loan deposit scheme) both newly constructed and existing homes qualify for the scheme.

Area Price Cap from 1 July 2022 OLD Price Cap 1st July 2021 to 30 June 2022
New South Wales—capital city and regional centre $900,000 $800,000
New South Wales—other $750,000 $600,000
Victoria—capital city and regional centre $800,000 $700,000
Victoria—other $650,000 $500,000
Queensland—capital city and regional centre $700,000 $600,000
Queensland—other $550,000 $450,000
Western Australia—capital city $600,000 $500,000
Western Australia—other $450,000 $400,000
South Australia—capital city $600,000 $500,000
South Australia—other $450,000 $350,000
Tasmania—capital city $600,000 $500,000
Tasmania—other $450,000 $400,000
Australian Capital Territory $750,000 $500,000
Northern Territory $600,000 $500,000
Jervis Bay Territory and Norfolk Island $550,000 $550,000
Christmas Island and Cocos (Keeling) Islands $400,000 $400,000


Source: NHFIC

There is also a free tool to help work out the maximum price cap here. Warning the post code tool hasn’t been updated as at June 2022, so you need to refer to the legislation here.


What determines the higher price caps?

Throughout the country, some regional centres are allocated higher price caps. This means that the buyers can purchase at a higher price and still be eligible for the deposit scheme.

The population of the region determines this.

The government outlines that regional centres with over 250,000 people like the Gold Coast, Geelong and Newcastle will have a higher price cap.


Dwellings in these larger regional centres are more expensive than in other areas.

So if the property price is higher, the available rate for the grant will be higher to accommodate.


How to Apply For the Home Guarantee

Whether you are looking at buying a home this year or thinking about making a move in 2023, in this chapter I’m going to show you how to get prepared and apply for the Home Guarantee Scheme.

(Including lots of advanced tips and strategies I’ve learned from years of helping first home buyers.)

So if you’re wondering if you’re eligible, and want to know how to get a Home Guarantee Spot before they run out, you’ll learn a ton from this chapter.


Am I eligible for the First Home Loan Deposit Scheme?

  • ✅ If you are applying alone, your income will be up to $125,000
  • ✅ If you are applying as a couple, your combined income can be no more than $200,000
  • ✅ Owner-occupied loans are to be set up for principle and interest.


What do I need to provide to apply for the First Home Guarantee? 

In the first instance, you need to speak with a Mortgage Broker or eligible lender for the reservation process.

On top of the regular information you’ll need to provide your mortgage broker, you’ll need:

  • ✅ Your Medicare Card, and Position on the Card
  • ✅ Your ATO Notice of Assessment for the taxable year ending 2021-2022
  • ✅ Regular home loan documents, like your payslips and bank statements.
  • ✅ Signed First Home Buyer Declaration for FY2022-23 (download here)


How will my Home Guarantee loan be assessed?

Borrowers will be assessed by their income, loan amount and previous history when it comes to buying a house. For your loan to be eligible, you will need to fit the criteria including

  • ✅ A loan is eligible if the Loan to Value (LVR) ratio is between 80 to 95%
  • ✅ The value of the property doesn’t exceed the price cap for the area.
  • ✅ You are applying with one of the 27 lenders that can offer the scheme (detailed below).
  • ✅ Two borrowers applying must be either a spouse or defacto of the other borrower.
  • ✅ Two borrowers applying must both be eligible as first home buyers.
  • ✅ The loan is for a residential property.
  • ✅ There is a maximum of two borrowers applying, no more.
  • ✅ The residential property subject to the loan must be owner-occupied.
  • ✅ The loan term does not exceed 30 years.

What other government schemes can I use alongside the First Home Loan Deposit Scheme? We cover this below, but while you’re applying for the First Home Loan Deposit Scheme, you can use the First Home Super Saver Scheme towards your deposit!


Do I only need 5% deposit for the Home Guarantee Scheme?

In addition to the minimum deposit of 5% savings under the scheme, home buyers will need to cover stamp duty, bank fees and legal costs.

So for example, a first home buyer in Queensland will need at least $30,000 (5%) deposit on a $600,000 purchase plus extra deposit funds to cover the costs, which include:

  • Stamp Duty – $12,850
  • Transfer Duty – $1751
  • Government Fees  – $197
  • Bank fees – $700 (establishment fees, valuation fees which range from $0 to $700)
  • Conveyancing Fees – $2,000
  • Building/Pest Fees  – $500
  • Lenders Mortgage Insurance  – $0 waived under Home Guarantee Scheme

On top of the 5% savings of $30,000 you’d need a further $18,098 to cover these costs bringing your total deposit to $48,098.


How much LMI am I saving with this scheme?

Lenders’ mortgage insurance is calculated on a sliding scale, so the actual savings will vary depending on the deposit, loan to value ratio (LVR) and your home loan amount.

For example, a home buyer purchasing a home in Brisbane for $750,000 without access to the Home Guarantee Scheme would need to pay the following LMI which changes depending on the deposit.

Deposit Option Total Deposit LVR LMI Costs
1. Lowest Deposit $92,903 91% + LMI $26,919
2. 10% deposit $100,403 90% + LMI $18,415
3. 12% deposit $115,403 88% + LMI $12,746
4. 20% deposit $175,403 80% Nil

The deposit option above includes bank deposit + stamp duty and other costs.

Read More: LMI Calculator


FHLDS Lenders: Which banks can access the First Home Guarantee Scheme?

The 27 lenders participating in the First Home Loan Deposit Scheme are:


How long the Home Guarantee Scheme will last

The current proposed Home Guarantee Scheme is proposed to start 1 July 2022 and will run until 30 June 2023 with 35,000 guarantees each year, this is an increase from the 10,000 available in previous financial years.

In previous years, the 10,000 allocations have run out within 3-4 months but with the extra availability, it should hopefully last longer to allow more first home buyers to take advantage of the scheme.

The government is also working on the Regional First Home Buyer Support Scheme which will help a further 10,000 home buyers in regional Australia to buy a home. This is due to launch in late 2022.

They are also planning the Shared Equity Scheme, which will cut the cost of buying a home by 40% with the government taking joint ownership. This scheme is only available if you earn less than $90,000 individually, and less than $120,000 per year as a couple so it will be available to fewer potential homeowners and is also due to launch in the next 12 months.

It’s difficult to say how long the Home Guarantee Scheme will last, as it is on a first-come, first-served basis so if you want to secure a spot today contact our Mortgage Brokers.



I hope you enjoyed this updated guide to the Home Guarantee Scheme in 2022.

Now I’d like to hear from you: Which strategy from today’s guide are you going to try first?

Are you going to apply with a 5% deposit? Or are you going to try to save a little more to reduce your repayments?

If you’d like help with applying for your Home Guarantee Scheme, and securing a home leave a quick message here and our Mortgage Brokers will be in touch within 4 business hours.

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Approximately 40% of home loan applications were rejected in December 2018 based on a survey of 52,000 households completed by 'DigitalFinance Analytics DFA'. In 2017 to 2018 Hunter Galloway submitted 342 home loan applications and had 8 applications rejected, giving a 2.33% rejection rate.
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