If you are a first home buyer in Australia in 2026, two federal schemes are doing most of the heavy lifting on getting you into your first home: the Australian Government 5% Deposit Scheme (formerly the First Home Guarantee) and Help to Buy. They sound similar, both let you buy with a tiny deposit, both come from the same government, both wipe out Lenders Mortgage Insurance, but underneath, they are completely different products. One lets you own 100% of a home. The other lets you own the home while the government holds an equity share of its value.
The choice between them can change your monthly repayments by more than $1,000, change how much capital growth you keep when you sell, and change which suburbs are actually in reach. And most of the explainers still online were written before the October 2025 expansion and the 5 December 2025 Help to Buy launch, so the deposit, income and price-cap numbers are wrong.
This guide is the 2026 version. We cover what each scheme is, side-by-side eligibility, state-by-state property price caps, a fully worked $700,000 Sydney example, a decision tree for "which suits whom", and the question everyone asks at the end, can I combine them?
TL;DR, 30-second comparison
| First Home Guarantee (FHG) | Help to Buy (HtB) | |
|---|---|---|
| Minimum deposit | 5% | 2% |
| Government's role | Loan guarantor (covers up to 15%) | Equity contributor, contributes up to 30% for existing homes or up to 40% for new builds in exchange for an equity share of the home's value |
| Do you own the home? | Yes, 100% | Yes, you are the sole registered owner; the government holds an equity share of its value |
| LMI | None | None |
| Income caps (2026) | None (removed 1 Oct 2025) | $103,000 single, $165,000 couples and single parents |
| Places per year | Unlimited (from 1 Oct 2025) | 10,000 (capped, 40,000 over 4 years) |
| Repayment to government | Nothing, guarantee, not equity | Government's equity percentage of the current value, repaid on sale or voluntary buy-back; repayment may also be required after two consecutive financial years over the income cap, once affordable |
| Available since | 2020 (expanded Oct 2025) | 5 December 2025 |
Bottom line in one sentence: FHG keeps it simple and lets you own all of it; Help to Buy reduces your loan and upfront deposit while the government shares in changes to the home's value. The right answer depends on your income, your borrowing power, and how much future capital growth you want to retain. [source: budget.gov.au; source: housingaustralia.gov.au]
What is the First Home Guarantee in 2026?
The First Home Guarantee (FHG) is a federal scheme administered by Housing Australia. The mechanics are simple: you save a 5% deposit, and the government guarantees up to 15% of the loan to your lender. The lender treats the combined 20% as if you had saved it yourself, so they waive Lenders Mortgage Insurance, which would normally cost $15,000 to $35,000 on a $700,000 purchase.
Three things to be clear about:
- It is not a cash grant. The government does not give you money. They sit behind the lender as a guarantor.
- You do not repay the government. There is no clawback, no equity claim, no interest charge.
- You own 100% of the home from day one. Every dollar of capital growth, every renovation choice, every decision about when to sell, it is yours.
From 1 October 2025, the FHG was massively expanded as part of the May 2025 federal budget reforms. Income caps were removed entirely. Place limits were abolished. Property price caps were lifted. [source: budget.gov.au]
FHG eligibility, 2026
- Australian citizen or permanent resident, aged 18 or over.
- First home buyer, or you have not owned residential property in Australia in the last 10 years.
- Owner-occupier only (this must be your principal place of residence).
- Minimum 5% deposit, less than 20%.
- Loan through a participating lender (most major banks plus 30+ smaller lenders are on the panel).
- Purchase price under your state's cap (see the table below).
- No income cap from 1 October 2025. [source: housingaustralia.gov.au]
What is Help to Buy in 2026?
Help to Buy launched on 5 December 2025. It is a shared-equity scheme, fundamentally different to the FHG. Instead of guaranteeing your loan, the federal government holds an equity share of your home's value. You are the sole registered owner. Housing Australia registers a second mortgage on the title as a security interest behind your lender's first mortgage. You put down a 2% deposit. The government contributes up to 30% of the purchase price for an existing home, or up to 40% for a new build. With a 2% deposit and the maximum government contribution, you borrow 68% for an existing home or 58% for a new build from a standard lender. A smaller government contribution means a larger loan for the same deposit.
Your mortgage repayments cover the amount you borrow. There is no rent or interest on the government's share. When you sell or voluntarily buy back the government's equity share, you repay its percentage of the property's current value. The amount grows or shrinks with the property's value. Repayment may also be required if your income exceeds the cap for two consecutive financial years, once you can afford it. [source: firsthomebuyers.gov.au; source: treasury.gov.au]
The scheme runs for four years with 10,000 places per year, 40,000 places total, and it is now live in every state and territory: WA came on board in January 2026 and Tasmania, the last state to pass its enabling legislation, went live on 9 June 2026.
Help to Buy eligibility, 2026
- Australian citizen, aged 18 or over (permanent residents are not eligible, citizen-only).
- First home buyer, or have not owned residential property in Australia for at least 10 years.
- Owner-occupier only, must be your principal place of residence.
- Minimum 2% deposit.
- Income cap: $103,000 single, $165,000 couples and single parents (indexed on 1 July 2026, up from $100,000 and $160,000; assessed on taxable income from your most recent Notice of Assessment). [source: treasury.gov.au]
- You must be able to service the loan on the amount you borrow.
- Purchase price under your state's HtB cap (see below, these are different to the FHG caps).
- Property must be your principal place of residence for the entire ownership period.
Side-by-side: every difference that matters
| Feature | First Home Guarantee | Help to Buy |
|---|---|---|
| Type of help | Loan guarantee (no LMI) | Shared equity (government equity share of the home's value) |
| Minimum deposit | 5% | 2% |
| Government contribution | 15% guarantee (no money changes hands) | Up to 30% existing / up to 40% new build (cash contribution) |
| Loan size on $700K home | $665,000 (95%) | $476,000 existing / $406,000 new (68% / 58%, assuming a 2% deposit and the maximum government contribution) |
| Income cap, single | No cap | $103,000 |
| Income cap, couple | No cap | $165,000 |
| Citizenship | Citizen or PR | Citizen only |
| Places per year | Unlimited | 10,000 (caps fill fast) |
| Available states | All 8 states/territories | All 8 states/territories (TAS was last to go live, 9 June 2026) |
| Property types | New or established, house/unit/townhouse/H&L | New or established, house/unit/townhouse |
| Capital gain on resale | You keep 100% | Government receives its remaining equity percentage of the sale price |
| Repayment trigger | Never (no equity claim) | Sale or voluntary buy-back; repayment may also be required after income exceeds the cap for two consecutive financial years, once affordable |
| Voluntary buy-back minimum | n/a | 5% of the property's then-current value per buy-back |
| Renovations | Free to renovate | Major renovations need government approval (the government holds an equity share of the home's value) |
| Best for | Higher earners, strong servicing, want full capital growth | Income-constrained buyers needing lower monthly repayments |
2026 property price caps, state by state
Both schemes are capped by purchase price, and the two cap systems are different. The FHG caps are higher in most states. Help to Buy caps split capital city from regional.
| State / region | FHG cap (5% deposit) | Help to Buy cap (2% deposit) |
|---|---|---|
| NSW, capital city & regional centres | $1,500,000 | $1,300,000 |
| NSW, rest of state | $800,000 | $800,000 |
| VIC, Melbourne & regional centres | $950,000 | $950,000 |
| VIC, rest of state | $650,000 | $650,000 |
| QLD, Brisbane, Gold & Sunshine Coast | $1,000,000 | $1,000,000 |
| QLD, rest of state | $700,000 | $700,000 |
| WA, Perth | $850,000 | $850,000 |
| WA, regional | $600,000 | $600,000 |
| SA, Adelaide | $900,000 | $900,000 |
| SA, rest of state | $500,000 | $500,000 |
| ACT | $1,000,000 | $1,000,000 |
| NT, territory-wide | $600,000 (Darwin $750,000 from 1 Jul 2026) / $600,000 (rest) | $600,000 |
| TAS, Hobart | $700,000 | $700,000 |
| TAS, rest of state | $550,000 | $550,000 |
Always verify the live cap for your exact postcode before lodging, both Housing Australia and Treasury can adjust caps annually. [source: housingaustralia.gov.au; source: treasury.gov.au]
Worked example: $700,000 first home in Sydney
Let us run the same purchase under both schemes. We will assume a 30-year principal-and-interest loan, a 6.05% variable interest rate (roughly mid-pack Big-4 rate post the 5 May 2026 RBA cash rate move to 4.35%, the third consecutive 25bps hike), and a couple with combined taxable income of $130,000, meaning they qualify for Help to Buy (comfortably under the $165,000 couples cap that applies from 1 July 2026). [source: rba.gov.au]
Option A, First Home Guarantee (5% deposit)
- Purchase price: $700,000
- Deposit (5%): $35,000
- Loan amount: $665,000
- LMI saved: about $22,000
- Monthly repayment (P&I, 30 years, 6.05%): $4,005
- Annual repayments: $48,060
- Government's equity share: 0%
- Your share of future capital growth: 100%
Option B, Help to Buy on an existing home (assuming a 2% deposit and the maximum 30% government equity share)
- Purchase price: $700,000
- Deposit (2%): $14,000
- Government's contribution: $210,000 (30%)
- Your loan amount: $476,000 (68%)
- LMI saved: about $15,000
- Monthly repayment (P&I, 30 years, 6.05%): $2,866
- Annual repayments: $34,392
- Government's equity share: 30%
- Your share of future capital growth: 70%
The numbers that matter
| First Home Guarantee | Help to Buy (existing) | Difference | |
|---|---|---|---|
| Deposit needed | $35,000 | $14,000 | HtB saves $21,000 upfront |
| Loan size | $665,000 | $476,000 | HtB loan is $189,000 smaller |
| Monthly repayment | $4,005 | $2,866 | HtB saves $1,139/month ($13,668/year) |
| Total interest over 30 years | about $777,000 | about $556,000 | HtB saves $221,000 in interest |
| If home grows to $900,000 in 5 years (+$200,000) | You keep $200,000 | You keep $140,000, government keeps $60,000 | FHG gives you $60,000 more growth |
| If home grows to $1,100,000 in 10 years (+$400,000) | You keep $400,000 | You keep $280,000, government keeps $120,000 | FHG gives you $120,000 more growth |
This is the crux of the trade-off. Help to Buy gives the couple about $1,140 of monthly breathing room right now, which on a $130,000 household income is meaningful. But over a decade of normal Sydney capital growth, the FHG buyer pockets more than $100,000 of additional equity.
Want to run your own scenario? Use our borrowing power calculator with both deposit options, and our stamp duty calculator, first home buyer stamp duty concessions apply on top of both schemes in most states (see our first home buyer stamp duty concessions guide).
Decision tree, which scheme suits whom?
Choose the First Home Guarantee if…
- Your household income is above $103,000 single or $165,000 couples and single parents (you are ineligible for Help to Buy anyway).
- You have or can save the 5% deposit without strain.
- You want to own 100% of the home and keep every dollar of future capital growth.
- You expect to renovate or extend, Help to Buy requires government approval for major works.
- You are a permanent resident, not a citizen (HtB is citizen-only).
- You are buying in regional VIC, regional NSW, or Perth where the FHG cap is higher than the HtB cap.
Choose Help to Buy if…
- Your borrowing capacity on your income is the binding constraint, the smaller HtB loan opens up suburbs the FHG won't reach.
- Your household income is at or below $103,000 single or $165,000 couples and single parents.
- You can only save a 2% deposit in the next 12 months.
- Monthly cash flow matters more to your household than maximising long-term equity (e.g. you have kids in childcare, or one partner is winding down work).
- You are buying a new build, the government can contribute up to 40% of the purchase price in exchange for an equity share of the home's value.
- You can act fast, the 10,000 annual places fill quickly and run on a first-come queue at participating lenders.
- You are comfortable with the government holding an equity share of your home's value and Housing Australia holding a second mortgage behind your lender's first mortgage. You remain the sole registered owner. You repay the equity share on sale or voluntary buy-back, and repayment may also be required after two consecutive financial years over the income cap, once affordable.
Neither? Consider these instead
- Single parent with dependents: The Family Home Guarantee is almost always better than either of the above, 2% deposit, no LMI, no income cap, you own 100%, and you do not need to be a first home buyer.
- Western Australian buyer: Look at Keystart (state-backed lender, 2% deposit, no LMI) alongside Help to Buy, which is now available in WA.
- Saving the deposit is the blocker, not the LMI: The First Home Super Saver Scheme lets you save up to $50,000 inside super at concessional tax rates. Pair it with either FHG or HtB.
Can I use the First Home Guarantee AND Help to Buy together?
No. You can only use one or the other on a single property purchase. The two schemes are mutually exclusive because they apply to the same purchase moment, the FHG removes the LMI premium at settlement, and Help to Buy reduces the loan principal at settlement. Lenders cannot process both stacks against the same title. [source: housingaustralia.gov.au]
However, you can combine each of them with most other first home buyer assistance:
- FHG + FHSSS: Use the First Home Super Saver Scheme to build your 5% deposit in super at the concessional tax rate. [source: ato.gov.au]
- FHG + state First Home Owner Grant + stamp duty exemption: If you are buying a new build, the FHG stacks with your state's $10,000 to $50,000 grant and the state stamp duty concession. See our 2026 grants guide for state-by-state amounts.
- Help to Buy + state stamp duty concession: Most states still apply their first home buyer stamp duty exemption to the buyer's share of the property under Help to Buy, which on a $700K Sydney purchase is worth $20,000 to $31,000 in saved stamp duty.
- Help to Buy + FHSSS: Yes, the FHSSS withdrawal can fund your 2% deposit and any settlement costs.
The one combination that genuinely stacks is Help to Buy + state grants + FHSSS, which can get a young couple into a Sydney apartment with as little as $5,000 to $10,000 of true out-of-pocket cash after all concessions land. Run the numbers carefully with a first home buyer broker before committing, Help to Buy applications are processed through a separate Housing Australia queue that adds 2 to 6 weeks to your settlement timeline.
How to apply, both schemes
You do not apply to Housing Australia or Treasury directly. Both schemes are accessed through participating lenders. The process is similar:
- Check eligibility. Confirm your income, citizenship, property-cap and deposit position fit. A broker can do this in one phone call.
- Get pre-approved with a participating lender. Most major banks are on both panels, but not every smaller lender is on both, your broker will know which lender clears applications fastest for your chosen scheme.
- Reserve your place. For the FHG there is no need to "reserve" anything (unlimited places). For Help to Buy, your lender lodges the reservation with Housing Australia when you submit your full application, first come, first served on the annual 10,000 quota.
- Find a property within the price cap. Don't assume both caps are the same, check the FHG cap and the Help to Buy cap separately for your postcode.
- Sign the loan + (for HtB only) the shared-equity agreement. Your conveyancer or solicitor reviews both documents. Settlement proceeds with you as the sole registered owner and Housing Australia's second mortgage registered on title as a security interest behind your lender's first mortgage for HtB, or with the FHG guarantee already in place behind the scenes.
Indicative timelines: FHG adds zero days to a standard settlement (about 30 to 45 days). Help to Buy typically adds 2 to 6 weeks because the shared-equity agreement and Housing Australia verification run in parallel with finance approval. Plan accordingly if you are buying at auction with a tight settlement.
Frequently asked questions
What is the difference between Help to Buy and the First Home Guarantee?
The First Home Guarantee is a loan guarantee, the government promises your lender they will cover 15% of the loan if you default, which lets you buy with a 5% deposit and no LMI. You own 100% of the home. Help to Buy is shared equity, the government contributes up to 30% (existing home) or 40% (new build) of the purchase price in cash, in exchange for an equity share of the property's value. You are the sole registered owner, and Housing Australia holds a second mortgage as a security interest behind your lender's first mortgage. You repay the government's equity percentage of the current value on sale or voluntary buy-back. Repayment may also be required after your income exceeds the cap for two consecutive financial years, once you can afford it.
What is the Help to Buy income cap for 2026?
$103,000 for singles and $165,000 for couples and single parents from 1 July 2026, based on taxable income from your most recent Notice of Assessment. These caps are set by Treasury and indexed each 1 July (they rose from $100,000 and $160,000). If you are over the cap by even a small amount, you are ineligible for Help to Buy, but the 5% Deposit Scheme has no income cap at all, so most over-cap buyers default to that.
Can I use the First Home Guarantee and Help to Buy together?
No. You can only use one or the other on a single property purchase. The two schemes are mutually exclusive at the lender level, they both apply to the same settlement moment and cannot be stacked. Choose one based on your income, deposit and growth strategy. You can, however, combine either scheme with the First Home Super Saver Scheme, state First Home Owner Grants, and state stamp duty concessions.
Is a 2% deposit better than a 5% deposit?
Not automatically. A 2% deposit means a smaller upfront outlay, but under Help to Buy it also means the government contributes up to 30% for an existing home or up to 40% for a new build in exchange for an equity share of the home's value. You remain the sole registered owner. A 5% deposit under the First Home Guarantee means you save more upfront but you own 100% of the home and keep every dollar of capital growth. For high-income earners with strong borrowing power, the 5% FHG usually wins on long-term wealth. For income-constrained buyers, the 2% HtB usually wins on getting in the door at all.
Do I have to pay back the government under Help to Buy?
Yes. You repay the government's equity share when you sell or voluntarily buy it back. Repayment may also be required if your income exceeds the cap for two consecutive financial years, once you can afford it. The amount repaid is the relevant equity percentage of the property's current value, so it grows or shrinks with that value. There is no rent, no interest, and no annual charge while you live there. Voluntary buy-backs can be made in 5% minimum increments at the property's then-current valuation.
Is Help to Buy available in Western Australia and Tasmania?
Yes. Help to Buy is now available in every state and territory: Western Australia is live and Tasmania came on board on 9 June 2026, completing the national rollout (Housing Australia, as at September 2026). Property price caps are published for each state and territory. WA and Tasmania first home buyers can also weigh the First Home Guarantee, the Family Home Guarantee if they are single parents, or in WA the state-backed Keystart loan.
Can permanent residents use Help to Buy?
No. Help to Buy is citizen-only. Permanent residents are eligible for the First Home Guarantee but not for Help to Buy, this is one of the few areas where the FHG is materially more accessible than HtB.
Does the First Home Guarantee still have income caps in 2026?
No. Income caps were removed from 1 October 2025 as part of the May 2025 federal budget reforms. Previously the FHG had $125,000 single and $200,000 couple caps. From October 2025 onwards there are no income caps and unlimited places, this makes the FHG accessible to almost every first home buyer who can save a 5% deposit and stay under the state property price cap.
What happens to my Help to Buy stake if my income goes up over the cap later?
Housing Australia reviews your income at least every five years and earlier when your circumstances change. If your income exceeds the cap for two consecutive financial years, you may be required to repay part or all of the government's equity share once you can afford it. Repayment is based on the property's current value, so the amount can grow or shrink. You can also make voluntary buy-backs in minimum 5% increments at the property's then-current valuation.
Next steps
Before you commit to either scheme, run three numbers: your borrowing power on each deposit size, your stamp duty after first home buyer concessions, and your true deposit-plus-costs total. The right scheme is the one that gets you into a home you actually want, with monthly repayments you can carry through an interest-rate cycle.
Want a quick read on which scheme suits your numbers? Talk to a first home buyer broker, free, no obligation. A specialist broker can model both schemes against your real income, deposit and target suburb in one sitting, and will know which participating lender is currently processing each scheme fastest.
