If you’re saving for your first home, there’s a government initiative that could fast-track your journey by several years — it’s called the Home Guarantee Scheme (HGS). Saving a 20% deposit in today’s economy is no easy feat, especially with rising living costs and property prices. In fact, CoreLogic reports that it now takes an average of 10.6 years to save a typical first home deposit. But with the Home Guarantee Scheme, eligible buyers may be able to purchase a property with just a 5% deposit — and skip lenders mortgage insurance (LMI) entirely. Since its launch in 2020, over 193,000 Australians have used this scheme to buy their first home.

What Is the Home Guarantee Scheme?
Unlike the First Home Owner Grant, which gives a lump sum payment, the Home Guarantee Scheme offers a government-backed loan guarantee. Here’s what that means in practice: You can borrow up to 95% of a property’s value. You won’t have to pay LMI, which often costs thousands of dollars when your deposit is below 20%. The government guarantees up to 15% of the loan, making lenders more comfortable approving your application. It’s a powerful strategy that makes getting into the property market much more achievable for first-time buyers and others in specific situations.

Three Guarantee Options to Know
There are three pathways under the Home Guarantee Scheme, depending on your situation:

1. First Home Guarantee – Designed to help eligible first home buyers break into the market sooner. Up to 35,000 places are available this financial year.

2. Regional First Home Buyer Guarantee – Tailored for buyers looking to purchase in regional areas. Only 10,000 spots are available in the current year – so don’t delay.

3. Family Home Guarantee – Ideal for single parents (whether you’ve owned before or not). You only need a 2% deposit, and LMI is waived. This option is capped at 5,000 places for the 2024–25 financial year.

Why So Many Buyers Are Turning to the HGS
Just a few years ago, the scheme was used by about 10% of first home buyers. Today, that figure is closer to one in three. Why the surge? Aside from high property prices and tougher lending conditions, the scheme has expanded to allow friends and siblings to buy together and include non-first home buyers who haven’t owned in the past 10 years. This flexibility has made the HGS more accessible than ever.

Key Eligibility Criteria
While the HGS can be a game-changer, it does come with conditions. Income thresholds apply (these vary depending on single vs. couple applications). Your intended property must fall within government-set price caps. Not all lenders offer HGS-backed loans, so options may be limited. A broker (like us!) can guide you through the process and help you find a participating lender.

Ready to Fast-Track Your Home Ownership?
If saving a 20% deposit feels out of reach, the Home Guarantee Scheme could help you buy your home much sooner — without paying for lenders mortgage insurance. Get in touch today to check your eligibility and see which lenders can support your application under the scheme.

Disclaimer: This article provides general information only and does not constitute financial or tax advice. Please speak with a licensed professional to consider your individual circumstances before acting on any of the information above.