Understanding Australia’s Home Guarantee Scheme: A gateway to home ownership

Owning a home has long been one of the most important aspirations for many Australian families and individuals. However, turning that dream into reality isn’t always easy. The high cost of property, coupled with the requirement for a substantial deposit—typically around 20% of the property’s value—can pose a major barrier, especially in a climate of inflation, rising living expenses, and economic uncertainty.

To address this challenge and make home ownership more attainable, the Australian Government introduced the Home Guarantee Scheme (HGS). Managed by Housing Australia, this initiative provides eligible buyers with a government-backed guarantee that enables them to purchase a home with a smaller deposit, without the need to pay Lenders Mortgage Insurance (LMI)

Why is the Home Guarantee Scheme important?

The 20% deposit requirement is often one of the biggest hurdles for first home buyers. For a property valued at AUD 700,000, for example, that would mean a deposit of AUD 140,000—an amount that could take many years to save. The HGS changes this scenario by allowing eligible buyers to enter the property market with as little as 5%, or even 2%, depending on the scheme option.

In addition to lowering the entry cost, the program offers lenders a form of security by guaranteeing a portion of the loan. This reduces the lender’s risk and makes home loans more accessible for people starting out on their journey to home ownership. Also read: How to get a home loan in Australia: step by step

What are the goals of the HGS?

The Home Guarantee Scheme is designed to achieve several key objectives:

• Facilitate access to home ownership, particularly for first home buyers and single-parent families.
• Encourage housing development in regional and decentralised areas, supporting balanced population growth.
• Reduce inequalities in access to home loans, fostering greater inclusion and social stability.
• Eliminate the need for Lenders Mortgage Insurance (LMI), providing significant savings for eligible buyers.

Additional benefits of the program

• LMI savings: Lenders Mortgage Insurance can cost tens of thousands of dollars. With the HGS, this expense is avoided altogether.
• Lower deposit requirements: Buyers can enter the property market even if they haven’t been able to save a large deposit.
• Social inclusion: The scheme supports vulnerable groups such as single parents and those living in regional communities.
• Housing stability: Owning a home offers greater long-term security and control compared to renting.

The three HGS streams

The Home Guarantee Scheme is divided into three main guarantee streams, each with its own eligibility criteria and target audience:

1. First Home Guarantee (FHG)

The First Home Guarantee is designed for those purchasing their first home or for individuals who haven’t owned property in the past 10 years. The key benefit of this stream is the opportunity to buy a home with as little as 5% deposit, without the need to pay Lenders Mortgage Insurance (LMI).

Key features:

• Minimum deposit: 5% of the property’s value
• Places available: 35,000 per financial year
• Eligible properties: New or existing homes
• Income cap: AUD 125,000 for individuals or AUD 200,000 for couples (based on the most recent financial year)
• Citizenship requirement: Applicants must be Australian citizens or permanent residents

This guarantee is ideal for young professionals, couples starting out, or anyone who has struggled to access the property market due to traditional lending requirements.

2. Family Home Guarantee (FHG)

The Family Home Guarantee supports single parents or legal guardians with at least one dependent child. This stream allows eligible buyers to purchase a home with just 2% deposit, making it one of the lowest entry points in the market.

Highlights:

• Minimum deposit: 2%
• Places available: 5,000 per year, until 30 June 2025
• Target group: Single parents or legal guardians
• Previous property ownership: Applicants may have owned property in the past, provided they do not currently own any

This guarantee recognises the financial challenges faced by single-parent households and offers them a real chance to achieve stability and security through home ownership.

3. Regional First Home Buyer Guarantee (RFHBG)

The Regional First Home Buyer Guarantee is tailored for first home buyers living outside major metropolitan areas. Its goal is to support balanced housing growth and encourage development in regional parts of Australia.

Key points:

• Minimum deposit: 5%
• Places available: 10,000 per year
• Residency requirement: Applicants must have lived in the regional area for at least 12 months
• Property type: New or existing homes located in regional areas

This guarantee helps redistribute housing demand, easing pressure on urban markets while strengthening local communities across the country.

Eligibility criteria (common to all three guarantees)

To qualify for any of the Home Guarantee Scheme options, applicants must meet the following criteria:

• Be at least 18 years of age
• Be an Australian citizen or permanent resident
• Hold a valid Medicare card or Defence ID
• Have an annual income of less than AUD 125,000 for individuals or AUD 200,000 for couples
• Not currently own, or have held an interest in, a residential property in the past 10 years
• Have a deposit between 5% and 20% of the property value (or as low as 2% for single parents under the Family Home Guarantee)
• Purchase a property within the price cap set for the relevant suburb and postcode
• Intend to live in the property as their principal place of residence—investment properties are not eligible

Property price caps vary depending on the state and region. These thresholds can change in line with housing market conditions and can be checked directly on the Housing Australia website.

How does the application process work?

Applications for the Home Guarantee Scheme must be made through authorised participating lenders. Here’s a step-by-step guide:

1. Check your eligibility

Start by visiting the official Housing Australia website and using the available tools to confirm whether you meet the eligibility criteria.

2. Contact a participating lender

Once your eligibility is confirmed, reach out to a participating bank or mortgage broker who is authorised under the scheme.

3. Submit your application

With your broker’s guidance, you’ll need to complete your home loan application and gather the required documents—such as proof of income, identification, and residential history.

4. Conditional approval and guarantee reservation

If your application is successful, you’ll receive conditional loan approval and your spot in the scheme will be reserved.

5. Purchase your property

You’ll have 90 days to finalise the purchase of your home and submit the final documentation to your lender.

Challenges and considerations

While the Home Guarantee Scheme offers significant benefits, there are a few important points to consider:

• Financial responsibility: Even with a lower deposit, taking out a home loan is a long-term financial commitment.
• Limited places available: The scheme has a capped number of guarantees each year, so acting quickly is essential.
• Strict eligibility criteria: Not all applicants will meet the requirements.

Frequently asked questions (FAQs)

1. Can I use the HGS to buy an investment property?

No. The scheme is strictly for properties that will be used as your principal place of residence.

2. What if I’ve inherited a property—can I still apply?

It depends on the type of ownership. If you’ve held a formal interest in residential property in the past 10 years, it may affect your eligibility.

3. Do I have to pay anything back to the government?

No. The guarantee is not a loan. You won’t need to repay the government—your only obligation is to repay your home loan with your lender.

4. Can I apply with my partner if only one of us has an income?

Yes, as long as both applicants meet the eligibility requirements.

5. Is there a risk of losing my spot after being approved?

Yes. If you don’t complete your property purchase within 90 days of receiving conditional approval, your reserved place in the scheme may be forfeited.

Conclusion

The Home Guarantee Scheme represents a significant step forward in Australia’s housing accessibility policies. By lowering initial barriers—such as the size of the required deposit—the program helps to democratise home ownership and offers a real opportunity for thousands of Australians to enter the property market.

If you meet the eligibility criteria and are ready to purchase your home, it’s worth exploring this scheme with the guidance of a trusted mortgage broker—and acting within the program’s timeframes. For full details, visit the Housing Australia website.