First Home Guarantee Expanded: What it Means for You

If you are looking to enter the Victorian property market, the “First Home Guarantee” discussion now has two aspects. At a federal level, the First Home Guarantee (FHBG) has recently expanded, allowing more buyers to purchase with a 5% deposit and avoid Lenders Mortgage Insurance (LMI). At a state level, the Victorian First Home Owner Grant (FHOG) provides a $10,000 boost for eligible new homes.

Published

March 16, 2026

Federal First Home Guarantee in a nutshell

The FHBG is a federal initiative designed to help first home buyers purchase sooner with a smaller deposit. Instead of saving 20%, you may be able to buy with as little as 5%. The government effectively steps in as guarantor for up to 15% of the property value, which means you avoid paying LMI.

From 1 October 2025, the expanded settings made the scheme far more accessible:

Deposit as low as 5% for eligible first home buyers
Government guarantees up to 15% of the property value, so no LMI applies
Unlimited places for first home buyers, rather than a capped number each year
Income and property price caps removed across Australia
Applications lodged through participating lenders and mortgage brokers

To qualify, you generally need to be a first home buyer (or a previous owner who has been out of the market for a long period), an Australian citizen or permanent resident, and you must live in the property as your home rather than renting it out. There is also a 2% deposit pathway for eligible single parents and single legal guardians under the related Family Home Guarantee stream.

Victorian First Home Owner Grant at a glance

The Victorian FHOG sits alongside the federal scheme. It is a one-off payment, not a guarantee, and it directly boosts your upfront funds. Key points include:

Grant amount of $10,000 in Victoria
Applies only to new homes or newly built homes that have never been occupied
Property must be valued at $750,000 or less
You must be a first home buyer in Victoria and live in the property as your principal place of residence

You can apply for the grant through the State Revenue Office or via your lender as part of your loan process.

How using both can help you

If you meet the criteria, you can combine the FHBG and FHOG on the same purchase. In practical terms:

The federal guarantee reduces the deposit hurdle and removes LMI
The $10,000 state grant can go towards your deposit, costs at settlement or fit-out expenses
Together, they can cut years off the time it takes to save and reduce the cash you need on the day you get the keys

A typical example would be a Victorian first home buyer purchasing a new property under $750,000. They might save a 5% deposit, use the federal guarantee to avoid LMI, and receive the $10,000 FHOG to support their upfront costs.

Benefits and watchpoints

The expanded settings are powerful, but they still need to be used wisely.

Benefits:

Buy with a much smaller deposit than the traditional 20%
Avoid a significant LMI bill
Use a grant to ease the financial pressure at settlement

Watchpoints:

Bigger loans can strain your budget if you chase the maximum you can borrow
More buyers using low-deposit pathways can add competition at entry-level price points
Each scheme has detailed eligibility rules, occupancy requirements and timing you must meet

Practical next steps

If you are considering these options, a simple roadmap is to:

Confirm your FHBG eligibility with a participating lender or broker
Check the latest FHOG criteria on the Victorian State Revenue Office website
Ask for detailed repayment modelling across different price points and interest rate scenarios
Set a personal maximum purchase price based on your lifestyle and buffer, not just the bank’s limit
Get advice from a qualified broker, financial adviser or solicitor before you sign anything

(Information in this article is based primarily on current guidance from Housing Australia and the Victorian State Revenue Office.)

More Information on FHBG