The Home Guarantee Scheme Explained: Buy With Just 5% Deposit

Saving up a big deposit can feel like a never-ending task. With house prices rising faster than wages, a 20% deposit can take years to reach. That’s where the Australian Government’s Home Guarantee Scheme (HGS) comes in. It’s designed to help buyers get into the market sooner with as little as 5% deposit and without paying lenders mortgage insurance (LMI) or requiring a security guarantor!

How does it work?

• You only need a 5% deposit saved
• The government, through Housing Australia, guarantees up to 15% of the loan
• This guarantee means you don’t pay LMI (which can easily add $10,000 or more to your costs)
• You must move into the property within 6 months of settlement and live there as your home
• Available only through participating lenders

Who can apply?

There are a few different types of guarantees:

• First Home Guarantee (FHBG): For singles and couples buying their first home
• Regional First Home Buyer Guarantee (RFHBG): For people buying in regional areas
• Family Home Guarantee (FHG): For single parents with at least one dependent, from just 2% deposit

Property price caps apply, and not every lender offers the scheme, so it’s important to check eligibility before applying.

Pros and cons

The upsides:

• Buy sooner without needing a full 20% deposit
• Save thousands by avoiding LMI
• Options for families and regional buyers
• No income cap (starting 1st of October, 2025)
• No placement limits (starting 1st of October, 2025)

Things to keep in mind:

• Property price caps apply
• You need to live in the property, at least at the start
• Fewer lenders participate compared to standard home loans

Key takeaway

The Home Guarantee Scheme can be a great way to break into the property market earlier.

At Sure Path Finance, we can help you work out if you qualify and guide you through the process with the right lender. If you’d like to know more, get in touch and we’ll talk through your options.

Useful resources
Learn more about the Home Guarantee Scheme
Recent Media Release, removal of income cap & placement limits