The guarantee is not a deposit contribution
The First Home Guarantee lets you buy with a 5% deposit and avoid lenders mortgage insurance, but you still borrow 95% of the purchase price. Help to Buy is a separate scheme where the government actually contributes up to 40% of the price and takes an equity share. Confusing the two leads to misplaced expectations about what you owe, what the government gets in return, and how much exposure you carry if prices fall.
- 2,356 Help to Buy places approved within two months of the December 2025 launch .
- Very high loan-to-value ratio lending has increased markedly since the October 2025 expansion .
- Less than 1% of households are currently in negative equity, but that figure reflects past conditions .
RBA Governor Michele Bullock has warned high-LVR borrowers face real risk: "When you"'"ve got a high loan-to-valuation ratio, it doesn"'"t take as long for housing prices to decline and you"'"re in negative equity" .
How the First Home Guarantee actually works
The most common misunderstanding is that the government contributes 15% of your deposit. It does not. You put down 5%. You borrow 95%. The government guarantees up to 15% of the property value to your lender, which means the lender treats your loan as if it has an 80% LVR. That removes the requirement for lenders mortgage insurance. Nothing else changes about your loan.
You do not receive any money. Your loan is not smaller. Your repayments are based on the full 95% you borrowed. The only financial benefit is avoiding the LMI premium.
Say you buy a $750,000 home. You save $37,500 (5%). You borrow $712,500 (95%). Without the scheme, your lender would require LMI because your LVR exceeds 80%. With the scheme, the government guarantees $112,500 (15% of $750,000) to the lender. Your lender treats your loan as if you had put down $150,000 (20%). No LMI is charged. But you still owe $712,500. Your monthly repayments at 6.5% over 30 years are approximately $4,503 — the same amount you would pay without the scheme, minus the upfront LMI cost.
From 1 October 2025, the scheme has no income caps, no limits on the number of places, and higher property price caps . You must be an Australian citizen or permanent resident aged 18 or older, be a first home buyer (or not have owned residential property in Australia in the past 10 years), move in within 6 months of settlement, and live in the property while the guarantee applies .
Property price caps (First Home Guarantee, from 1 October 2025) :
State/Territory | Capital city and regional centres | Rest of state |
|---|---|---|
NSW | $1,500,000 | $800,000 |
VIC | $950,000 | $650,000 |
QLD | $1,000,000 | $700,000 |
WA | $850,000 | $600,000 |
SA | $900,000 | $500,000 |
TAS | $700,000 | $550,000 |
ACT | $1,000,000 | -- |
NT | $600,000 | -- |
Regional centres include Newcastle, Wollongong, and Illawarra in NSW; Geelong in Victoria; and Gold Coast and Sunshine Coast in Queensland .
Help to Buy means the government becomes your co-owner
Help to Buy is a fundamentally different scheme. The government contributes up to 40% of the purchase price for a new home, or 30% for an existing home, and takes an equivalent share in your property . You need just a 2% deposit, and you borrow the remainder.
Here is a worked example. You buy an existing home for $800,000 with Help to Buy:
Component | Amount | Percentage |
|---|---|---|
Your deposit | $16,000 | 2% |
Government equity share | $240,000 | 30% |
Your home loan | $544,000 | 68% |
Your loan is $544,000 — not $784,000. Your monthly repayments at 6.5% over 30 years are approximately $3,439. Compare that to $4,956 per month if you borrowed $784,000 without government assistance. That is $1,517 less per month.
But the government now owns 30% of your home. If you sell for $1,000,000 five years later, the government receives $300,000 (30% of $1,000,000). You receive $700,000, from which you repay your remaining loan. The government shares in the gain — it contributed $240,000 and receives $300,000. If the property falls to $700,000, the government receives $210,000 (30% of $700,000). It shares in the loss too.
Help to Buy comes with ongoing conditions that go beyond a standard home loan :
- Income reviews. The government reviews your income annually. If your taxable income exceeds $100,000 (individual) or $160,000 (joint) for two consecutive years, you may be required to start buying back the government"'"s share .
- Buyback increments. You can voluntarily buy back the government"'"s share in minimum 5% increments at any time after the first two years . The price is based on the current market value, not the original purchase price.
- Renovation rules. Renovations under $20,000 that do not need council approval can proceed without notifying the government. Renovations over $20,000 require notification so the government can arrange valuations before and after, ensuring you — not the government — benefit from the added value .
- You must live in it. The property must be your principal place of residence. You cannot rent it out .
- Limited lenders. The scheme launched with only Commonwealth Bank and Bank Australia. More lenders are expected to join throughout 2026 .
- Place limits. Only 10,000 places are available nationally each year, unlike the First Home Guarantee which has no cap .
Help to Buy property price caps :
State/Territory | Capital city and regional centres | Rest of state |
|---|---|---|
NSW | $1,300,000 | $800,000 |
VIC | $950,000 | $650,000 |
QLD | $1,000,000 | $700,000 |
WA | $850,000 | $600,000 |
SA | $900,000 | $500,000 |
TAS | $700,000 | $550,000 |
ACT | $1,000,000 | -- |
NT | $600,000 | -- |
The income cap is $100,000 for individuals and $160,000 for single parents and joint applicants .
Two schemes, two very different exposures to falling prices
With the First Home Guarantee, you borrow 95% of the purchase price. A 5% decline wipes out your entire equity. The RBA"'"s March 2026 Financial Stability Review noted that since the scheme"'"s expansion in October 2025, the share of very high LVR lending has increased markedly .
With Help to Buy, you borrow less — typically around 68% LVR for an existing home. This gives you a much larger buffer against price falls. Even a 30% decline would not put you in negative equity, because the government absorbs 30% of any loss through its equity share. The trade-off is that you own less of the upside.
Side-by-side comparison:
Feature | First Home Guarantee | Help to Buy |
|---|---|---|
Minimum deposit | 5% | 2% |
Government role | Guarantees 15% to lender | Buys 30-40% equity in property |
Your loan size | 95% LVR | ~58-68% LVR |
LMI required | No | No |
Income cap | None | $100,000 / $160,000 |
Place limits | None | 10,000 per year |
Government shares in price gains | No | Yes |
Government shares in price losses | No | Yes |
Ongoing obligations | Live in property | Live in property, income reviews, renovation rules, buyback triggers |
Available states | All | All except Tasmania (pending) |