For years, the First Home Guarantee came with two frustrations: a limited number of places that ran out early, and income caps that excluded plenty of working professionals. Both are gone. The scheme as it stands in 2026 is far more accessible than most people realise, and in the ACT it stacks with zero stamp duty. Here’s how it works.
What the First Home Guarantee actually does
Normally, if you borrow more than 80% of a property’s value, the lender charges Lenders Mortgage Insurance, an insurance premium that protects them and typically gets added to your loan. On a Canberra purchase, LMI can run from around $10,000 to over $30,000.
The First Home Guarantee removes that cost. Housing Australia (the federal body administering the scheme) guarantees up to 15% of the property’s value to your lender. That lets the lender treat you as though you’d put down a full 20% deposit, so no LMI is charged.
You bring 5%. The guarantee covers the gap. The insurance disappears. You still borrow 95% of the price, and you still have to demonstrate you can service that larger loan at the lender’s assessment rate.
What changed on 1 October 2025
This is the part most people haven’t caught up with. Three significant changes:
- Income caps removed. The previous limits ($125,000 for individuals, $200,000 for couples) no longer apply. Income is no longer a barrier to the scheme.
- Unlimited places. The old annual cap of 35,000 places, which routinely ran out and created a race to apply each July, has been abolished. Every eligible applicant can now access the guarantee.
- Higher property price caps. Caps were lifted across the country to better reflect actual house prices.
If you looked at this scheme a couple of years ago and were excluded on income, or missed out because places had run out, it’s worth looking again.
The ACT price cap
For Canberra buyers, the relevant number is the ACT property price cap of $1,000,000, applying across all areas of the territory. Buy under that, and the property qualifies.
At a $1,000,000 cap, a 5% deposit is $50,000, versus $200,000 for a full 20% deposit. That difference is measured in years of saving for most households.
Who’s eligible
Broadly, you need to:
- Be an Australian citizen or permanent resident, aged 18 or over
- Be a first home buyer, or not have owned property in Australia in the past 10 years
- Have a deposit of at least 5% (and generally no more than 20%)
- Buy a home you’ll live in (owner-occupied, not an investment), and move in within the required period
- Buy under the price cap for your location
Note the 10-year rule, it means some previous owners who’ve been out of the market for a decade can qualify again. You’ll also still need to satisfy the lender’s normal assessment on income, expenses, and credit, the guarantee removes the LMI, not the serviceability test.
Stacking it with the ACT stamp duty exemption
Here’s where Canberra first home buyers are in an unusually strong position in 2026. The First Home Guarantee handles the deposit side (5%, no LMI). The ACT stamp duty exemption handles the settlement side (zero conveyance duty, no income or price limits since 1 July 2026).
Used together on a $800,000 Canberra home, that’s roughly a $40,000 deposit instead of $160,000, no LMI bill of $20,000-plus, and no stamp duty bill of around $23,000. It’s the most favourable first-home-buyer environment the ACT has offered.
Want to know if you qualify, and what it means in dollars? A 15-minute call confirms your eligibility across both schemes and calculates the real cash you’d need at settlement.
Book a 15-min call -> · 02 7245 4001
What to watch out for
Three honest caveats:
- You’re borrowing 95%. A smaller deposit means a bigger loan, higher repayments, and more interest over time. Avoiding LMI is genuinely valuable, but it doesn’t make the loan smaller.
- Serviceability still applies. Lenders assess you at a buffered rate above the actual rate. Plenty of buyers qualify for the scheme but not for the loan size they want.
- Negative equity risk. With only 5% down, a fall in property values could leave you owing more than the home is worth. That matters most if you might need to sell in the short term.
None of these are reasons to avoid the scheme, but they’re worth understanding before you commit.
The bottom line
The First Home Guarantee is more accessible in 2026 than at any point since it launched: no income caps, no place limits, and a $1,000,000 cap in the ACT. Combined with the ACT’s stamp duty abolition for first home buyers, it removes two of the biggest upfront barriers to buying in Canberra. The remaining hurdle is serviceability, which is where getting the right lender matters.
To check your eligibility, book a 15-minute call with Harbir, or explore our first home buyer loans.
Or call 02 7245 4001 | Email info@creditstar.com.au
Frequently Asked Questions
Q1. What is the First Home Guarantee?
Ans. A federal scheme, administered by Housing Australia, that lets eligible first home buyers purchase with a 5% deposit and no LMI. The government guarantees up to 15% of the property value to the lender.
Q2. Is there an income cap on the First Home Guarantee?
Ans. No. The income caps ($125,000 individual / $200,000 couple) were removed on 1 October 2025. Income is no longer a barrier to the scheme.
Q3. Are places still limited?
Ans. No. The annual cap of 35,000 places was abolished on 1 October 2025. Every eligible applicant can now access the guarantee, there’s no longer a race to apply.
Q4. What is the property price cap in the ACT?
Ans. $1,000,000, applying across all areas of the ACT. The property must be under this cap to qualify.
Q5. Do I still need to avoid LMI another way?
Ans. No, that’s the point of the scheme. The government guarantee means no LMI is charged, saving typically $10,000 to $30,000 or more on a Canberra purchase.
Q6. Can I use it if I’ve owned property before?
Ans. Possibly. Eligibility extends to those who haven’t owned property in Australia in the past 10 years, so long-term former owners can qualify again.
Q7. Does the scheme make my loan smaller?
Ans. No. You still borrow 95% of the price. The scheme removes the LMI cost, not the loan size, so repayments and total interest are higher than with a larger deposit.
Q8. Can I use the scheme for an investment property?
Ans. No. The property must be owner-occupied, you need to live in it and move in within the required period after settlement.
Q9. Can I combine it with the ACT stamp duty exemption?
Ans. Yes, and it’s a powerful combination. The guarantee covers the deposit side, the ACT exemption removes stamp duty entirely for eligible first home buyers.
Q10. Do I still need to qualify with a lender?
Ans. Yes. The guarantee removes LMI but not the serviceability assessment. Lenders still assess your income, expenses, and credit at a buffered rate above the actual interest rate.
This guide is general information only and doesn’t take into account your personal situation. Scheme rules, caps and thresholds change, confirm current details with Housing Australia or a broker before relying on any specific figure. For advice specific to your circumstances, book a call with Harbir Hundal, Credit Representative 506564 of BLSSA Pty Ltd ACN 117 651 760, Australian Credit Licence 391237.