The Australian Government is expanding support for first-home buyers through two flagship initiatives: the Help to Buy shared equity scheme and the First Home Guarantee program. These programs aim to lower the barriers to entering the housing market by reducing deposit requirements and eliminating Lenders Mortgage Insurance (LMI).
🏠 Help to Buy: Shared Equity Assistance
The Help to Buy scheme enables eligible first-home buyers to purchase a property with as little as a 2% deposit. Under this initiative, the federal government will contribute up to 40% of the purchase price for new homes and 30% for existing homes, reducing both the required loan amount and monthly repayments (Commonwealth of Australia, 2025a).
Key Features:
- Deposit: Minimum of 2%
- Government Contribution: 30% (existing homes), 40% (new homes)
- No LMI: Eliminates lender insurance costs
- Income Caps: $100,000 for singles, $160,000 for couples/single parents
- Property Price Caps: Adjusted by location, e.g., $950,000 in Melbourne and $1.3 million in Sydney
The 2025–26 Federal Budget allocated $800 million in additional funding, bringing the total investment in Help to Buy to $6.3 billion, with the goal of assisting 40,000 Australians over the coming years (Department of Treasury, 2025).
🏡 First Home Guarantee: 5% Deposit, No LMI
The First Home Guarantee (formerly the First Home Loan Deposit Scheme) allows first-home buyers to purchase a property with a 5% deposit and avoid paying LMI, as the government guarantees up to 15% of the loan (Housing Australia, 2025).
Key Features:
- Deposit: Minimum of 5%
- No LMI: Government guarantees the shortfall
- Eligibility: Broader than previous schemes, with no strict income caps
- Coverage: Expanded to include more buyers and properties across all states
This program is part of the broader Housing Australia Future Fund strategy to make homeownership more achievable amid rising costs.
📝 Summary Table
| Feature | Help to Buy | First Home Guarantee |
|---|---|---|
| Minimum Deposit | 2% | 5% |
| Government Support | 30–40% ownership equity | 15% loan guarantee |
| LMI Requirement | Not required | Not required |
| Income Limits | Yes | No (more inclusive) |
| Property Price Caps | Yes (location-based) | Yes (higher caps available) |
| Program Cap | 40,000 places | 35,000 places per year |
📣 What This Means for Buyers
For aspiring homeowners, these programs represent a rare opportunity to enter the property market with significantly less upfront capital. However, borrowers should:
- Assess their eligibility carefully.
- Seek advice from brokers or financial advisers.
- Stay informed about state-based grants that may stack with these national programs.
🔍 References
- Commonwealth of Australia. (2025a). Budget 2025–26: Housing measures. https://budget.gov.au/content/03-housing.htm
- Department of Treasury. (2025). Federal Budget 2025–26 Overview. https://budget.gov.au
- Housing Australia. (2025). First Home Guarantee. https://www.housingaustralia.gov.au/support-buy-home/first-home-guarantee
- Realestate.com.au. (2025, May 14). Help to Buy explained: How the new scheme helps first-home buyers with just 2% deposit. https://www.realestate.com.au/news/help-to-buy-scheme-explained
- ABC News. (2025, May 13). Government expands home guarantee scheme. https://www.abc.net.au/news/2025-05-13/home-ownership-scheme-expansion