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 First Home Guarantee (sometimes still called the 5% Deposit Scheme) 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 makes the government your co-owner.
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%) | Co-owner — takes 30% on existing homes, 40% on new builds |
| Do you own the home outright? | Yes — 100% | No — you share equity with the government |
| LMI | None | None |
| Income caps (2026) | None (removed 1 Oct 2025) | $100,000 single, $160,000 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 % share of the sale price (or buy them out) |
| 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 slashes your monthly repayments and capital outlay at the cost of giving up future capital gain. The right answer depends on your income, your borrowing power, and how much you care about owning 100% of the home you live in. [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 nationwide on 5 December 2025. It is a shared-equity scheme — fundamentally different to the FHG. Instead of guaranteeing your loan, the federal government becomes your co-owner. You put down a 2% deposit. The government contributes up to 30% of the purchase price for an existing home, or 40% for a new build. You borrow the remaining 58–68% from a standard lender.
You only pay a mortgage on your share. There is no rent or interest on the government's share. But when you sell — or whenever you choose to buy them out — you owe back their percentage of the sale price, not the dollar amount they originally contributed. If the home grew in value, so does what you repay. [source: firsthomebuyers.gov.au; source: treasury.gov.au]
The scheme runs for four years with 10,000 places per year — 40,000 places total. Tasmania has opted out. Western Australia is still finalising its agreement and is expected to come online in mid-2026; in the meantime WA buyers should look at the Family Home Guarantee or the FHG.
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: $100,000 single, $160,000 couples and single parents (assessed on taxable income from your most recent Notice of Assessment). [source: treasury.gov.au]
- You must be able to service the loan on your share of the property.
- 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 co-owner) |
| Minimum deposit | 5% | 2% |
| Government contribution | 15% guarantee (no money changes hands) | 30% existing / 40% new build (cash contribution) |
| Loan size on $700K home | $665,000 (95%) | $476,000 existing / $406,000 new (68% / 58%) |
| Income cap — single | No cap | $100,000 |
| Income cap — couple | No cap | $160,000 |
| Citizenship | Citizen or PR | Citizen only |
| Places per year | Unlimited | 10,000 (caps fill fast) |
| Available states | All 8 states/territories | NSW, VIC, QLD, SA, ACT, NT (WA pending, TAS opted out) |
| Property types | New or established, house/unit/townhouse/H&L | New or established, house/unit/townhouse |
| Capital gain on resale | You keep 100% | Government takes 30% or 40% of the sale price |
| Repayment trigger | Never (no equity claim) | Sale, end of agreement, or voluntary buy-back |
| 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 (they own equity) |
| 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 (state legislation pending) |
| WA — regional | $600,000 | $600,000 (state legislation pending) |
| SA — Adelaide | $900,000 | $900,000 |
| SA — rest of state | $500,000 | $500,000 |
| ACT | $1,000,000 | $1,000,000 |
| NT — territory-wide | $700,000 (Darwin) / $500,000 (rest) | $600,000 |
| TAS — Hobart | $700,000 | $700,000 (state legislation pending) |
| TAS — rest of state | $550,000 | $550,000 (state legislation pending) |
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 (under the $160,000 couples cap). [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: ~$22,000
- Monthly repayment (P&I, 30 years, 6.05%): $4,005
- Annual repayments: $48,060
- Government owns: 0%
- Your share of future capital growth: 100%
Option B — Help to Buy on an existing home (2% deposit, 30% government equity)
- Purchase price: $700,000
- Deposit (2%): $14,000
- Government's share: $210,000 (30%)
- Your loan amount: $476,000 (68%)
- LMI saved: ~$15,000
- Monthly repayment (P&I, 30 years, 6.05%): $2,866
- Annual repayments: $34,392
- Government owns: 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 | ~$777,000 | ~$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 $160,000 | FHG gives you $160,000 more growth |
This is the crux of the trade-off. Help to Buy gives the couple ~$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 $100,000 single or $160,000 couples (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 buying in Western Australia or Tasmania until those states finalise their Help to Buy legislation (federal caps are published but state participation is pending).
- 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 under $100,000 single or $160,000 couples.
- 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 40% equity contribution gives you the best leverage HtB offers.
- 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 a co-owner on your title and the long-term equity-share repayment when you sell.
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) until Help to Buy launches 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–$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–$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–$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 2–6 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 the government's stake recorded on title for HtB, or with the FHG guarantee already in place behind the scenes.
Indicative timelines: FHG adds zero days to a standard settlement (~30–45 days). Help to Buy typically adds 2–6 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 equivalent ownership stake in the property. You only own 60–70% of the home, and you owe back the government's percentage when you sell.
What is the Help to Buy income cap for 2026?
$100,000 for singles and $160,000 for couples, based on taxable income from your most recent Notice of Assessment. These caps are set by Treasury and reviewed annually. If you are over the cap by even a small amount, you are ineligible for Help to Buy — but the First Home Guarantee 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 takes a 30–40% equity stake in your home. 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 — but only when you sell the home, or when you choose to voluntarily buy back their share. You repay the government's percentage of the sale price (30% or 40%, depending on what they contributed), not the dollar amount they originally put in. 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?
Help to Buy property price caps are published for every state and territory. Tasmania and Western Australia are still passing the state legislation needed to allow the federal scheme to operate locally — final go-live dates were not confirmed in the May 2026 budget. First home buyers in WA and TAS should plan around the First Home Guarantee in the interim. WA and TAS first home buyers can use 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?
Nothing automatic. The income test applies at the point of application, not annually. If your income rises above the cap after you have settled, the government does not force you to buy them out — you simply continue under the original shared-equity agreement. However, once your income lifts you above the threshold to refinance at a normal LVR, many buyers voluntarily buy out the government's share over time to capture more of their future capital growth.
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.
