What is the Home Australia Guarantee Scheme?
Home Guarantee Scheme – Frequently Asked Questions (FAQs)
At Best Foot Forward Mortgage Solutions, we regularly help first home buyers navigate the Australian Government’s Home Guarantee Scheme (HGS). Below are answers to the most common questions we’re asked, explained clearly and practically.
What is the Home Guarantee Scheme?
The Home Guarantee Scheme is an Australian Government initiative, administered by Housing Australia, designed to help eligible home buyers purchase a property with a low deposit.
Under the scheme, the Government guarantees part of your loan so you can:
Buy a home with as little as 5% deposit (or 2% for eligible single parents)
Avoid paying Lenders Mortgage Insurance (LMI)
Importantly, this is not a cash grant and the Government does not lend you money. You still take out a standard home loan with a participating lender.
What types of guarantees are available?
The Home Guarantee Scheme currently includes:
1. First Home Guarantee (FHBG)
For eligible first home buyers
Purchase with as little as 5% deposit
2. Family Home Guarantee (FHG)
For eligible single parents or legal guardians (first home buyer or previous homeowner)
Allows purchase with as little as 2% deposit
How does the Government guarantee actually work?
The Government guarantees the portion of the loan above your deposit (up to 15%), which reduces the lender’s risk.
This means:
You can borrow up to 95–98% of the property value
You do not pay LMI
You are still fully responsible for the loan
Once your loan-to-value ratio (LVR) falls below 80%, the guarantee becomes irrelevant and has no ongoing impact.
Who is eligible for the Home Guarantee Scheme?
Eligibility depends on the specific guarantee, but generally you must:
Be an Australian citizen or permanent resident
Be at least 18 years old
Meet income thresholds (these can change and should be confirmed)
Intend to live in the property as your principal place of residence
Be a first home buyer (except for the Family Home Guarantee)
Eligibility rules are strict, and lender interpretation can vary — this is where professional guidance matters.
Are there property price caps?
Yes. Each scheme has property price caps, which vary by:
States, Capital Cities and Regional Centres-
NSW 1.5 Million, VIC $950,000, QLD $1,000,000, WA $850,000, SA $900,000, TAS $700,000
All Other Areas
NSW $800,000, VIC $650,000, QLD $700,000, WA $600,000, SA $500,000, TAS $550,000
Territies
ACT $1,000,000, NT $600,000, Jervis Bay Territory & Norfolk Island $550,000, Christmas Island & Cocos (Keeling) Islands, $400,000.
The purchase price must be at or below the relevant cap to be eligible. Caps are reviewed periodically and may be updated.
Do I still need genuine savings?
In most cases, yes.
While the deposit can be as low as 5% (or 2%), lenders typically still require:
Evidence of genuine savings, or
A demonstrated savings pattern
Some lenders may accept alternatives (such as gifted funds), but this depends on your overall profile and lender policy.
Can I use the Home Guarantee Scheme with any bank?
No. Only participating lenders can offer loans under the scheme.
Not all banks participate, and not all participating lenders interpret policy the same way. Loan structure, employment type and borrowing capacity can vary significantly between lenders.
Can I refinance later if I use the scheme?
Yes.
You are not locked into your lender forever. However:
Refinancing too early may not be cost‑effective
Many buyers wait until they’ve built sufficient equity or employment history
Once your LVR is below 80%, refinancing becomes much easier
Strategic planning upfront makes future refinancing smoother.
Can I fix my interest rate under the Home Guarantee Scheme?
Yes. You can choose:
Variable rates
Fixed rates
Split loans (part fixed, part variable)
Many first home buyers choose to fix for 1–2 years to create repayment certainty during the early stages of ownership — particularly when borrowing at a high LVR.
Does the Home Guarantee Scheme affect my borrowing capacity?
The scheme helps with deposit size, not servicing.
Your borrowing capacity is still assessed based on:
Income
Employment type and stability
Existing debts
Living expenses
Two buyers with the same deposit can receive very different loan outcomes depending on how lenders assess their risk.
Is the Home Guarantee Scheme right for everyone?
Not always.
While the scheme can be an excellent pathway into the market, it’s important to consider:
Long‑term affordability
Employment stability
Future plans (upgrading, investing, relocating)
A tailored strategy ensures the scheme supports your goals rather than limiting your options later.
How can Best Foot Forward Mortgage Solutions help?
At Best Foot Forward, we:
Assess your eligibility for the Home Guarantee Scheme
Compare participating lenders and policies
Structure your loan for both today and the future
Guide you through the application process step‑by‑step
Our focus is clarity, strategy and long‑term outcomes — not just getting a loan approved.
Want to explore your options?
Shona will walk you through the process, assess your borrowing capacity, and explain the application pathway and lending strategies available to you — with the clarity and care our clients consistently praise.
To explore your options, you can book a complimentary discovery call with Principal Mortgage Broker Shona Stephenson.
Shona will walk you through the lending process, assess your borrowing capacity, and help you understand the application pathway and loan structures available to you — recommending the strategy that best fits your situation, goals and risk profile.
You’ll receive clear, practical guidance and the level of care and attention our clients consistently praise.
Best Foot Forward Mortgage Solutions
📞 0417 693 281
✉️ shona@bestff.com.au
🌐 https://www.bestff.com.au/
The information contained is general information only and does not consider your objectives, financial situation and needs. Please talk to us if you need a fast-tracked home loan, and we can help you find a lender that has the processes in place to process the application quickly. We strongly recommend that you do not act on any information provided on this website without individual advice from your trusted advisor. You should also obtain a copy of and consider the Product Disclosure Statement for all financial products before making any decision.
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