How Does the Home Guarantee Scheme (e.g. First Home Guarantee) Work with Brokers in Victoria?

By Lowest Interest Rates Australia

Introduction

When I bought my first home in Melbourne, the biggest hurdle wasn’t finding the perfect place — it was scraping together the deposit. Saving 20% felt like climbing Mount Dandenong with a backpack full of bricks! That’s when I discovered the Home Guarantee Scheme and realised I didn’t need to do it all on my own. My broker walked me through every detail, and suddenly, home ownership felt a whole lot closer.

Today, more Victorians are using the Home Guarantee Scheme (HGS) — including the First Home Guarantee — to fast-track their property dreams. But navigating eligibility, lender limits, and paperwork can get tricky, which is why working with a broker makes the process so much smoother.

In this article, I’ll break down how the scheme works, who qualifies, how brokers fit into the process, and how you can use it to buy your first home in Victoria with as little as 5% deposit — without paying Lenders Mortgage Insurance (LMI).

Table of Contents

1. What Is the Home Guarantee Scheme?
2. The Different Guarantees Explained
3. Eligibility Criteria for Victorian Buyers
4. How the 5% Deposit Works
5. Which Lenders Participate
6. How Brokers Help You Access the Scheme
7. Benefits of Using a Broker for the HGS
8. Case Study: A First-Home Buyer in Melbourne
9. Common Pitfalls and How a Broker Helps Avoid Them
10. Final Thoughts – Work with Lowest Interest Rates

What Is the Home Guarantee Scheme?

The Home Guarantee Scheme (HGS) is an Australian Government initiative designed to help eligible buyers purchase a home sooner by reducing the deposit required. It’s administered by Housing Australia (formerly the National Housing Finance and Investment Corporation, or NHFIC).

Under the scheme, the government essentially acts as a partial guarantor for your home loan — allowing you to buy a property with as little as 5% deposit while avoiding Lenders Mortgage Insurance (LMI). Normally, if you have less than a 20% deposit, you’d need to pay LMI, which can add thousands to your costs.

With the guarantee, the government covers up to 15% of the property’s value as security to the lender. That means you can get into your home sooner, with less savings required.

The Different Guarantees Explained

The HGS isn’t just one program — it’s a family of initiatives tailored to different buyers. Here are the main ones available in Victoria:

1. First Home Guarantee (FHBG)

For first-home buyers purchasing a new or existing home with as little as 5% deposit. The government guarantees up to 15% of the property’s value, allowing you to skip LMI.

2. Regional First Home Buyer Guarantee (RFHBG)

Similar to the FHBG but designed for regional areas across Victoria, helping locals buy in their community with a 5% deposit. You must have lived (or currently live) in the region for at least 12 months before applying.

3. Family Home Guarantee (FHG)

For single parents (with at least one dependent child) who may have previously owned property. Allows purchase with as little as 2% deposit, with the government guaranteeing up to 18% of the property value.

4. New Home Guarantee (NHG)

This variant supported new builds and newly constructed homes, though it’s now largely folded into the FHBG and RFHBG.

Each scheme has its own eligibility rules, property price caps, and participating lenders — which is where your broker comes in handy.

Eligibility Criteria for Victorian Buyers

While the criteria may vary slightly between the guarantees, here are the general rules for Victorians applying under the HGS:

• 🏡 You must be an Australian citizen or permanent resident aged 18 or older.
• 💰 Your income must be below the threshold:
  • Singles: $125,000 or less (taxable income)
  • Couples: $200,000 combined
• 🔑 You must live in the property (it can’t be an investment).
• 💵 You need a minimum 5% genuine savings deposit.
• 📅 You must meet first-home buyer criteria (unless applying under the Family Home Guarantee).
• 📍 The property must be within the price caps for Victoria (as at 2025):
  • Melbourne & Geelong: Up to $900,000
  • Regional Victoria: Up to $750,000

These caps ensure the scheme helps buyers in a range of markets — from inner-city apartments to regional family homes.

How the 5% Deposit Works

Under the First Home Guarantee, you only need a 5% deposit (as long as it’s from genuine savings). The government guarantee covers up to 15% of the property value, giving the lender the equivalent of a full 20% security.

That means:

• You don’t need to pay Lenders Mortgage Insurance (which could save you $10,000–$30,000).
• You can enter the market sooner — before property prices rise further.
• Your repayments are based on the full loan amount (including the guaranteed portion), but your costs are lower upfront.

It’s a win-win — and your broker will calculate how this affects your borrowing capacity and repayments.

Which Lenders Participate

The Home Guarantee Scheme is available only through participating lenders approved by Housing Australia. As of 2025, there are around 30 approved institutions, including major banks and smaller regional lenders.

Some of the main participants include:

• Commonwealth Bank of Australia (CBA)
• NAB (National Australia Bank)
• Bank Australia
• Bendigo Bank
• Regional Australia Bank

Each lender has its own policies, interest rates, and internal limits on how many HGS applications they can accept each financial year. Working with a broker helps you find which lender currently has available places — because once spots are filled, you’ll have to wait for the next round.

How Brokers Help You Access the Scheme

Here’s where brokers shine. The Home Guarantee Scheme can be complex, especially with its income tests, property caps, and lender quotas. A broker acts as your personal guide through the process, helping you avoid missteps that could cost you your eligibility.

Here’s how a broker helps:

• Checks your eligibility: They’ll confirm you meet all the scheme’s requirements before you apply — including income, deposit, and property price limits.
• Finds a participating lender: Brokers know which lenders currently have available HGS allocations.
• Compares loan options: Even within the scheme, different lenders have different rates and fees. Your broker finds the most competitive deal.
• Handles all paperwork: From pre-approval to final settlement, your broker ensures every form meets Housing Australia’s criteria.
• Advises on timing: Brokers know how quickly HGS spots fill and can lodge your application at the right time to secure your place.

Essentially, they turn what could be a bureaucratic maze into a clear, confident path to home ownership.

Benefits of Using a Broker for the HGS

While you can technically apply through a bank directly, using a broker offers several key advantages:

• ✅ Access to multiple lenders (not just one bank)
• ✅ Up-to-date knowledge of available guarantee slots
• ✅ Expert guidance on structuring your deposit and loan
• ✅ Avoiding unnecessary credit enquiries
• ✅ Support even after settlement — reviewing your rate annually

And because most brokers (including those at Lowest Interest Rates) are paid by the lender, you generally won’t pay any out-of-pocket broker fees. It’s expert help at no cost to you.

Case Study: A First-Home Buyer in Melbourne

Case Study – Jake & Mia’s First Apartment in Footscray

Jake and Mia were renting in Melbourne’s inner west, saving hard but struggling to hit the elusive 20% deposit. They had $45,000 in savings — not nearly enough for a $700,000 apartment. Their broker at Lowest Interest Rates introduced them to the First Home Guarantee.

With just a 5% deposit, they qualified for a $700,000 purchase — and avoided around $25,000 in LMI costs. Their broker handled the application through NAB, secured their place before the annual cap filled, and managed the entire process from pre-approval to settlement.

Today, they’re living in their dream apartment — and planning to refinance once their equity grows. It’s a perfect example of how a broker can make the scheme accessible and stress-free.

Common Pitfalls and How a Broker Helps Avoid Them

While the Home Guarantee Scheme is fantastic, there are some traps that first-home buyers often stumble into — and that brokers help prevent:

• Missing out on a place: HGS spots are limited each year. Brokers monitor allocations and apply quickly when new ones open.
• Choosing an ineligible property: Not every property qualifies. Brokers confirm the price and type before you commit.
• Incorrect deposit source: Some savings (like gifts) don’t count as “genuine.” Brokers help you structure your deposit correctly.
• Underestimating costs: You’ll still need to budget for stamp duty, legal fees, and inspections. Brokers make sure your total budget is realistic.
• Applying to the wrong lender: Each lender has unique criteria — your broker knows which are most flexible for your profile.

In short, brokers help you avoid delays, rejections, and unnecessary stress — while maximising your chances of success.

Final Thoughts – Work with Lowest Interest Rates

The Home Guarantee Scheme has opened doors for thousands of Victorians who once thought home ownership was out of reach. But understanding the rules, eligibility, and timing can be overwhelming without expert help. That’s where a skilled mortgage broker comes in.

At Lowest Interest Rates, our brokers specialise in helping first-home buyers access government programs like the First Home Guarantee, Regional Guarantee, and Family Home Guarantee. We handle the research, paperwork, and lender negotiations so you can focus on finding your perfect home.

🏠 Ready to buy your first home? Visit LowestInterestRates.com.au today to connect with a trusted Victorian mortgage broker who’ll help you secure your place in the Home Guarantee Scheme — and get you into your dream home faster.