First Home Guarantee Expanded to $1.5M in NSW: What This Means for You

The Federal Government's First Home Guarantee (FHG) scheme now allows purchases up to $1.5 million in Sydney, a significant increase that opens doors to many more suburbs and property types for first home buyers in NSW.

This expansion means eligible buyers can purchase in suburbs that were previously out of reach under the old price caps. If you are a first home buyer in NSW, understanding how to take advantage of this scheme could save you tens of thousands of dollars.

What Is the First Home Guarantee?

The First Home Guarantee allows eligible first home buyers to purchase with just a 5% deposit, with the government guaranteeing up to 15% of the loan value. This guarantee means you do not need to pay Lenders Mortgage Insurance (LMI), which typically costs between $20,000 and $50,000 on a high-LVR loan.

The scheme is administered by Housing Australia (formerly the National Housing Finance and Investment Corporation) and delivered through participating lenders and mortgage brokers. It is not a cash grant, but rather a guarantee that reduces the risk to the lender, allowing them to approve loans with smaller deposits.

NSW Price Caps for 2026

The property price caps determine the maximum purchase price for properties eligible under the scheme. These caps are updated periodically to reflect changes in property values across different regions.

Location	Price Cap	Change
Sydney	$1,500,000	Increased from $900,000
Newcastle and Lake Macquarie	$900,000	Increased from $750,000
Illawarra (Wollongong)	$900,000	Increased from $750,000
Regional NSW	$900,000	Increased from $600,000

The increase to $1.5 million in Sydney is particularly significant. It means first home buyers can now access the scheme in popular middle-ring suburbs that were previously above the cap, including areas in Sydney's North-West like North Kellyville, Box Hill, and Stanhope Gardens.

Who Is Eligible?

To qualify for the First Home Guarantee, you must meet all of the following criteria.

Australian citizen. You must be an Australian citizen aged 18 or over. Permanent residents are not eligible
First home buyer. You must not have previously owned property in Australia, including investment property, vacant land, or a commercial property
Income threshold. Your taxable income must be no more than $125,000 per year for singles, or $200,000 combined for couples
Owner-occupier. You must intend to live in the property as your primary residence. It cannot be purchased as an investment
Minimum deposit. You need at least 5% of the purchase price saved as genuine savings
Loan type. The loan must be a standard principal-and-interest home loan (interest-only loans are not eligible)

Couples must both be first home buyers to qualify. If one partner has previously owned property, neither partner can use the scheme for a joint purchase.

The Real Savings: Worked Examples

To understand the real financial impact of the First Home Guarantee, let us compare the costs of buying with and without the scheme across different price points.

Example 1: $1,200,000 Property in North Kellyville

Scenario	Deposit	LMI Cost	Total Upfront
Without FHG (20% deposit)	$240,000	$0	$240,000
Without FHG (10% deposit)	$120,000	~$28,000	$148,000
With FHG (5% deposit)	$60,000	$0	$60,000

Savings with the FHG: You save $180,000 compared to a 20% deposit, or $88,000 compared to a 10% deposit with LMI. This is money that stays in your pocket or can be used toward stamp duty, legal fees, and moving costs.

Example 2: $900,000 Property in Riverstone

Scenario	Deposit	LMI Cost	Total Upfront
Without FHG (20% deposit)	$180,000	$0	$180,000
Without FHG (10% deposit)	$90,000	~$18,000	$108,000
With FHG (5% deposit)	$45,000	$0	$45,000

At a lower price point, the FHG still saves you $135,000 compared to a standard 20% deposit. For many first home buyers, this is the difference between buying now and waiting years to save a larger deposit.

How Many Places Are Available?

The government releases 35,000 First Home Guarantee places annually across Australia. Places are allocated on a first-come, first-served basis through participating lenders. The financial year runs from 1 July to 30 June.

Historically, places in NSW (particularly Sydney) are among the first to be filled due to high demand. Given the expansion to $1.5M, demand is expected to be even higher in 2026. If you are considering using the scheme, acting early in the financial year gives you the best chance of securing a spot.

In addition to the standard FHG, the government also offers:

Regional First Home Buyer Guarantee. 10,000 places per year for regional property purchases
Family Home Guarantee. 5,000 places per year for single parents (2% deposit required)

How to Apply: Step by Step

The application process is straightforward, but it must be done through a participating lender or mortgage broker. Here are the steps.

Check your eligibility. Review the income limits, first home buyer status, and property price caps for your state
Get pre-approved. Work with a mortgage broker to assess your borrowing capacity and secure pre-approval
Find your property. Start house hunting within the $1.5M cap. Use our borrowing power calculator to understand what you can afford
Reserve your place. Your broker applies for a FHG spot on your behalf when you are ready to make an offer. The spot is reserved for 90 days
Make your offer and exchange. Once your offer is accepted, proceed with the standard conveyancing process
Complete settlement. Move into your new home and begin making repayments

The scheme is available through over 30 participating lenders in Australia. Not all lenders participate, so working with a broker gives you access to the widest range of FHG-participating institutions.

Combining With Other Grants and Concessions

One of the most powerful aspects of the First Home Guarantee is that it can be stacked with other government assistance. Here is what you can combine it with in NSW.

First Home Owner Grant (FHOG). $10,000 for the purchase or construction of a new home valued up to $600,000 in NSW
Stamp Duty Exemption. Full exemption for properties valued up to $800,000. Concessions apply for properties between $800,000 and $1,000,000
First Home Super Saver Scheme (FHSSS). Withdraw up to $50,000 in voluntary super contributions to put toward your deposit, benefiting from concessional tax treatment

For a comprehensive guide on all 5% deposit pathways available in 2026, read our complete guide to buying with just 5% deposit.

Common Mistakes to Avoid

While the First Home Guarantee is a valuable scheme, there are some common mistakes that can trip up applicants.

Not acting early enough. Places fill up fast. Start the process well before you plan to buy, ideally 3 to 6 months in advance
Forgetting about other costs. The 5% deposit covers the purchase price, but you still need money for stamp duty (unless exempt), legal fees, building inspections, and moving costs
Exceeding the income threshold. Your income is assessed based on your most recent tax return. A pay rise or bonus could push you over the $125,000/$200,000 limit
Not comparing lenders. Just because a lender participates in the FHG does not mean they offer the most competitive rate. Compare rates and features across multiple lenders
Borrowing too much. Just because you can borrow up to $1.5M does not mean you should. Factor in future rate rises, lifestyle costs, and an emergency fund

Frequently Asked Questions

Can I use the First Home Guarantee for an apartment or townhouse?

Yes. The scheme covers houses, townhouses, apartments, and house-and-land packages, as long as the total purchase price is within the applicable price cap. The property can be new or existing.

What happens if I want to sell or refinance after using the FHG?

You can sell or refinance at any time. If you sell within the guarantee period and the sale price has fallen below the loan balance, the government guarantee covers the shortfall (not you personally). If you refinance, the guarantee may transfer to your new lender in some circumstances. Speak with your broker about the process.

Can I rent out the property after buying with the FHG?

The property must be owner-occupied. You cannot purchase the property as an investment from the outset. However, if your circumstances change after purchasing (for example, a job relocation), you may be able to rent it out. You should notify Housing Australia and your lender of any change in occupancy.

Does the First Home Guarantee cover stamp duty?

No. The FHG is a loan guarantee only. It does not cover stamp duty. However, separate stamp duty concessions exist for first home buyers in NSW. Properties up to $800,000 are fully exempt from stamp duty, and concessions apply between $800,000 and $1,000,000.

Can I combine the FHG with a family guarantee (parents as guarantors)?

No. The First Home Guarantee cannot be combined with a family or guarantor loan arrangement. You must choose one or the other. If your parents are willing to act as guarantors, compare both options with a broker to determine which saves you more money overall.

Ready to take advantage of the expanded First Home Guarantee? Contact our specialists to check your eligibility and secure your spot before places fill up.