Breaking the 20% Deposit Barrier
For decades, the standard advice given to first-time buyers was to save a 20% deposit to avoid paying Lenders Mortgage Insurance (LMI). However, in fast-moving property markets where median capital city home prices continue to rise, saving $150,000 to $200,000 in cash can take 7 to 10 years, during which time property values often outpace savings rates.
Under the Australian Government's Home Guarantee Scheme (managed by Housing Australia), eligible first home buyers can purchase a residential property with just a 5% cash deposit, while the government guarantees the remaining 15% of the loan. This completely eliminates the LMI premium, which would otherwise cost between $15,000 and $35,000 upfront.
Eligibility Rules You Need to Know
To qualify for the First Home Guarantee (FHBG), applicants must be Australian citizens or permanent residents aged 18+, earning under $125,000 for singles or under $200,000 for couples (as verified by your latest ATO Notice of Assessment).
Crucially, places are allocated through participating panel lenders on a first-come, first-served basis each financial year. At Gravity Financial, our brokers have direct allocation pipelines with major and regional participating lenders to secure your spot swiftly.