First Home Guarantee Scheme Information

The First Home Guarantee Scheme is designed to help more first home buyers enter the property market sooner. House & Land Co can help you understand how it applies to your budget, your borrowing options and your pathway into your first home.

The First Home Guarantee Scheme allows eligible WA first home buyers to buy a home with just a 5% deposit with no income limit. Lenders Mortgage Insurance also isn’t required under the scheme, saving thousands in upfront costs.

There is, however, a property price cap of $850,000 in WA.

Lenders mortgage insurance (LMI) is a policy that homebuyers have to take out if their deposit is less than 20% of the property’s value (this means they have a loan-to-value ratio (LVR) of more than 80%). 

Although it’s the borrower that pays the premium, LMI actually protects the lender. It’s of zero financial benefit to the borrower and can run into the thousands, so not having to pay it is a big saving. 

The Family Home Guarantee (FHG) is a part of the Home Guarantee and is aimed at helping eligible single parents or single legal guardians with dependent children to buy a home sooner. 

Just like the broader Home Guarantee, if you take up the FHG you don’t need to pay for LMI. But the Family Home Guarantee allows applicants to buy a house with a deposit as low as two percent of the property’s value. 

The FHG is available to people who have previously owned a home, provided your taxable income is $125,000 or lower and they plan to live in the place they buy. 

Lenders Mortgage Insurance (LMI) is required when your deposit is under 20% (a loan-to-value (LVR) ratio of 80%). LMI protects the lender, not you, and can cost thousands. The First Home Guarantee removes this expense. 

The Family Home Guarantee Scheme helps eligible single parents or legal guardians with dependent children buy a home with a deposit as low as 2%.

Applicants must have taxable income under $125,000, can have previously owned a home and must plan to live in the property.

While both schemes are aimed at helping potential homebuyers buy property, the Home Guarantee Scheme reduces the deposit you need, while Help to Buy is a shared equity scheme. 

The two programs have a few things in common – they both require low deposits and get buyers out of paying for LMI. But Help to Buy has income caps in place and, rather than the government guaranteeing up to 15% of your home to make up for the deposit shortfall, the government contributes up to 40% in a shared equity scheme that you pay back over an agreed time period. 

The scheme will help more people into the property market, but it’s also expected to fuel demand, which could lead to higher prices for property in Australia, particularly in areas with limited supply. The scheme may go some way to leveling the playing field, by extending opportunities to single parents and those regionally based. 

Having a first home buyers guarantee scheme is a massive deal because it puts buying your first home within reach.

Reduced upfront cost

Removing LMI and reducing the amount you need for your deposit reduces the upfront costs involved in buying a home substantially. This means you can put more of your money into creating the home you really want. 

Property caps to increase

Increasing property price caps is a reflection of house prices in Perth continuing to rise. Now, more buyers can use the scheme to find a forever home with increased choice, rather than being confined to a small section of homes towards the lower end of the market. 

More lender choice for brokers

The first home buyers guarantee scheme also broadens the amount of potential lenders, which is great for brokers. There are over 30 participating lenders, from big banks like NAB and CBA to smaller regional and customer-owned banks means there’s something for everyone. 

An effective broker should be able to offer you a number of different lending choices.