Chloe KennedyHow do you buy your first home in Australia with only a 5% deposit — and avoid paying tens of thousands of dollars in Lenders Mortgage Insurance? For eligible buyers in 2026–27, the answer is the First Home Buyer Guarantee (FHBG), administered by Housing Australia on behalf of the federal government. With updated income thresholds, revised property price caps, and an expanded panel of participating lenders, the scheme remains one of the most powerful tools available to first-time buyers — but only if you understand exactly how the new rules apply to your situation.
What Is the First Home Buyer Guarantee and How Has It Changed?
The First Home Buyer Guarantee (FHBG) is a federal government initiative that allows eligible first-time buyers to purchase a home with a minimum 5% deposit — without paying Lenders Mortgage Insurance (LMI). Housing Australia provides a guarantee to the participating lender for up to 15% of the purchase price, bridging the gap to the standard 20% threshold that lenders require to waive LMI.
The scheme replaced the earlier First Home Loan Deposit Scheme (FHLDS) and was rebranded when Housing Australia (formerly the National Housing Finance and Investment Corporation, or NHFIC) took over administration. For the 2026–27 financial year, 35,000 guarantee places are available annually across the FHBG and the related Regional First Home Buyer Guarantee.
What this means for you: A buyer purchasing a $700,000 property needs just $35,000 as their deposit (5%), rather than $140,000 (20%). The government guarantee covers the gap, and no LMI premium — which can exceed $15,000 on a $700,000 loan — is charged.
What Are the New Income Limits for the FHBG in 2026–27?
The income test for the FHBG is based on your taxable income as shown on your most recent Australian Taxation Office (ATO) Notice of Assessment. For the 2026–27 financial year, the income limits are:
- Single applicants: up to $125,000 per year in taxable income
- Joint applicants (couples): combined taxable income up to $200,000 per year
These thresholds have remained consistent with the 2025–26 limits. The government reviews them annually in the context of wage growth and housing affordability pressures. The assessment uses the previous financial year's Notice of Assessment — so for a purchase made in late 2026, you would typically provide your 2025–26 tax return.
If your income has increased and you are now above the threshold, you will not qualify for the FHBG regardless of other factors. There is no partial eligibility or phased withdrawal of the benefit — it is a hard cut-off. Buyers who narrowly exceed the limit should explore state-based stamp duty concessions or the First Home Owner Grant (FHOG), which have different eligibility rules.
"Buyers often assume the income limit applies to gross salary, but it's taxable income — which can be lower once deductions are factored in," says a mortgage broker regularly working with first-home clients in Melbourne. "Salary sacrifice arrangements and pre-tax super contributions can bring taxable income below the threshold for some applicants."
What Deposit Rules Apply Under the 2026–27 FHBG?
The FHBG requires a minimum deposit of 5% of the property purchase price. However, the rules around what counts as a genuine deposit, and how the property price cap interacts with your deposit, are more detailed than they first appear.
Genuine savings: Most participating lenders require that at least part of your 5% deposit constitutes "genuine savings" — funds accumulated over at least three months in your own accounts. Gifts from family may be accepted but are typically subject to a lender's own credit policy, not the FHBG rules.
The First Home Super Saver Scheme (FHSSS): You can use voluntary super contributions withdrawn under the First Home Super Saver Scheme (FHSSS) as part of your FHBG deposit. The maximum releasable amount under the FHSSS is $50,000 for individuals. Combining FHSSS savings with regular savings is one of the most tax-effective ways to build a deposit, given voluntary contributions are taxed at just 15% rather than your marginal rate.
Property price caps matter: Your deposit must be calculated against a purchase price that does not exceed the property price cap for your state or territory. Buying above the cap disqualifies you from the scheme entirely, even if your deposit is sufficient.
With Australia's housing market continuing to see strong price growth — Sydney and Melbourne remain among the most expensive entry points — staying within the price cap is one of the scheme's key practical limitations for buyers in major cities.
Which Lenders Are Eligible to Offer the FHBG in 2026–27?
Not every lender in Australia participates in the FHBG. Housing Australia approves a panel of participating lenders — as of 2026, this includes both the major banks and a wide selection of smaller lenders and non-bank lenders.
Major bank participants include:
- Commonwealth Bank of Australia (CBA)
- National Australia Bank (NAB)
- Australia and New Zealand Banking Group (ANZ)
- Westpac Banking Corporation
Non-bank and regional lenders on the panel include institutions such as Bendigo Bank, Bank Australia, Auswide Bank, and others — the full list is published on the Housing Australia website and updated throughout the year.
Choosing the right lender matters as much as qualifying for the guarantee. Participating lenders still set their own interest rates, serviceability assessments, and credit policies. The FHBG does not standardise loan conditions — it only replaces the LMI requirement. This means comparison is essential.
ASIC's review of mortgage broker obligations in 2026 reinforces that brokers must act in the best interests of borrowers — making an accredited broker a valuable ally when navigating FHBG lender options. Many brokers are accredited with multiple FHBG panel lenders and can compare offers across the panel.
How to apply through a lender: Application for the FHBG is made directly through a participating lender — there is no separate government portal for buyers. The lender verifies eligibility and submits the guarantee application to Housing Australia on your behalf.
What Are the 2026–27 Property Price Caps by State and Territory?
Property price caps under the FHBG vary by state and territory, with separate thresholds for capital cities and major regional centres versus other regional areas. These caps are reviewed annually and were updated for 2026–27.
| State / Territory | Capital City & Major Regional Centres | Rest of State |
|---|---|---|
| New South Wales | $900,000 | $750,000 |
| Victoria | $800,000 | $650,000 |
| Queensland | $700,000 | $550,000 |
| Western Australia | $600,000 | $450,000 |
| South Australia | $600,000 | $450,000 |
| Tasmania | $600,000 | $450,000 |
| Australian Capital Territory | $750,000 | — |
| Northern Territory | $600,000 | — |
Source: Housing Australia, 2026–27 financial year.
Key reading: A property in Sydney must cost no more than $900,000 to be eligible. Given that Sydney's median house price has surpassed this in many suburbs, the cap effectively steers FHBG buyers toward apartments, townhouses, and emerging growth corridors. ANZ's revised housing forecast for 2026 suggests that price growth is moderating — which may improve the practical reach of these caps over the coming year.
Regional buyers benefit from the lower threshold in the "rest of state" column. Importantly, the Regional First Home Buyer Guarantee — a sister scheme — has higher income thresholds for regional applicants, making it worth investigating separately if you're buying outside a capital city.
How Do You Apply for the FHBG? A Step-by-Step Process
Applying for the First Home Buyer Guarantee involves coordinating your own documentation with a participating lender's process. Here is the standard application sequence:
- Check your eligibility: Confirm you are an Australian citizen aged 18 or over, have not previously owned property in Australia, and meet the income and property price cap requirements.
- Gather your documents: Collect your most recent ATO Notice of Assessment, at least three months of bank statements showing genuine savings, proof of identity, and pre-approval documents if you have them.
- Select a participating lender or mortgage broker: Choose from the Housing Australia panel. A broker accredited with multiple panel lenders can run a comparison for you at no cost.
- Submit your home loan application: Apply for a loan with the FHBG as part of the application. Your lender will check FHBG eligibility and submit the guarantee request to Housing Australia if you qualify.
- Receive formal approval: Once your loan is conditionally approved and the guarantee confirmed, proceed to exchange contracts and settlement.
- Move in within a reasonable timeframe: The FHBG requires owner-occupancy — you must intend to live in the property as your principal place of residence.
Key takeaway: Places under the FHBG are limited. Historically, the most popular lenders fill their allocated places in the early weeks of each financial year (from 1 July). Having your documentation ready in June, and applying through a lender as soon as the new year opens, gives you the best chance of securing a place.
Can You Stack the FHBG with Other Government Schemes?
Yes — and doing so can significantly reduce the upfront cost of your first purchase. The FHBG is designed to complement, not replace, other first-home buyer support.
First Home Owner Grant (FHOG): A state and territory-administered cash grant (typically $10,000–$30,000 for new builds, varying by jurisdiction) that can be used alongside the FHBG. The FHOG applies specifically to new or substantially renovated homes — it does not apply to established properties in most states.
Stamp duty concessions: All Australian states and territories offer stamp duty exemptions or reductions for eligible first home buyers. These are separate from the FHBG and have their own income and property price thresholds. In New South Wales, for example, buyers can choose between a one-off stamp duty payment or an annual property tax under the First Home Buyer Choice scheme.
First Home Super Saver Scheme (FHSSS): As noted under deposit rules, FHSSS withdrawals can form part of your FHBG deposit — effectively allowing you to save your deposit in a tax-advantaged environment before using it with the guarantee.
Combining these schemes requires planning and awareness of each scheme's conditions. A licensed financial adviser or mortgage broker familiar with first-home buyer structures can map the combination most beneficial for your situation.
Disclaimer: The information in this article is for general informational purposes only and does not constitute financial or legal advice. Eligibility rules, income thresholds, and property price caps are subject to change by the Australian government. Consult a licensed financial adviser or mortgage broker for advice specific to your circumstances.
Frequently Asked Questions
Is the FHBG available for both new and established homes? Yes. The FHBG applies to new builds, off-the-plan purchases, house-and-land packages, and established dwellings — provided the property price is within the relevant cap for your state or territory.
What happens if my income exceeds the threshold after I receive the guarantee? Once the FHBG guarantee is in place, a subsequent increase in your income does not affect the guarantee. The income test applies only at the time of application.
Are there restrictions on the type of loan? The FHBG is available on principal and interest home loans only. Interest-only loans and investment loans do not qualify.
How many places are available, and when do they open? The federal government allocates 35,000 places per year across the FHBG and the Regional First Home Buyer Guarantee. New places open each year on 1 July. Places through individual lenders can fill quickly, particularly at major banks, so applying early in the financial year is strongly recommended.
