Buy a home with a 2% or 5% deposit and pay no LMI under the Home Guarantee Scheme. Speak to a Loan Market broker to see if you are eligible.
Saving for a deposit is often the biggest hurdle to owning your own home. But what if you didn’t have to wait years to get into the market?
Guarantor home loans are also commonly referred to as a ‘Family Pledge,’ ‘Security Guarantee,’ or ‘Family Guarantee.’ While the names differ, the core concept remains the same: using family equity to secure your future.
A guarantor loan lets a family member (usually a parent or close relative) use the equity in their own home to help secure yours. It’s a powerful way to get the keys to your first home sooner, often with little to no cash deposit required.
Here is how it helps you make it yours:
Essentially, your guarantor helps “top up” your deposit using their property equity. This means you might only need a small cash contribution (in some cases no deposit) to reach the 20% deposit threshold. By bridging this gap, you can qualify for your loan sooner and avoid the extra cost of lenders mortgage insurance (LMI).
Becoming a guarantor is a significant way to help a family member get into the market sooner. Generally, a guarantor is a family member who owns a property with sufficient equity.
It’s important to understand the commitment. As a guarantor, you are legally responsible for the portion of the loan you’ve guaranteed. If the borrower misses payments, you could be liable, and in extreme cases, the security property could be at risk. This is why we recommend all guarantors seek independent legal advice – we want both you and the borrower to feel confident and secure before moving forward.
It doesn’t have to be forever. A guarantor arrangement is a bridge, not a permanent tie. Once the borrower builds sufficient equity in their property, they can refinance to release the guarantor from the loan contract. We can also explore ‘limited guarantees’, where your liability is capped at a specific percentage.
No. The Home Guarantee Scheme is not a shared-equity program. The Australian Government acts as a guarantor for up to 15% of the property value so you can avoid Lenders Mortgage Insurance (LMI). You maintain 100% ownership and equity in your property.
Yes. You can combine the guarantee with state-based assistance like the First Home Owner Grant (FHOG), stamp duty concessions or exemptions, and the First Home Super Saver (FHSS) scheme, as long as you meet the eligibility criteria for each program in your state or territory.
The government guarantee remains active only while you occupy the property as your primary residence and stay with your original lender. If you refinance to a non-participating loan, sell the home, convert it into an investment property, or your loan-to-value ratio drops below 80%, the government guarantee ceases.
The Australian Government has announced it will expand its Home Guarantee Scheme to eliminate caps on number of places and income for first-home buyers. The changes are effective from 1 October 2025.
The Home Guarantee Scheme is an initiative introduced by the Australian Government to help buyers enter the property market sooner. It enables eligible buyers to purchase property with a deposit size of 2% or 5% (depending on the guarantee) without having to pay for lenders mortgage insurance (LMI), which is an additional cost often charged for deposits under 20%. The guarantees are:
For the Home Guarantee Scheme, Housing Australia guarantees the loans of eligible buyers. This guarantee enables the buyer to borrow up to 95% or 98% (depending on the guarantee) of the property value through participating lenders without having to pay LMI. This helps reduce the upfront costs for buyers.
Keep in mind you will still be responsible for additional costs such as stamp duty, legal fees and loan application fees where applicable.
Eligibility criteria varies depending on the guarantee, but includes the following:
– Citizenship: must be an Australian citizen or permanent resident
– Owner-occupier: must live in the property (investment properties are not included)
– Deposit: have a minimum 5% deposit for the First Home Guarantee, or 2% for the Family Home Guarantee
– Age: Must be at least 18 years old
– Type of applicant: for the First Home Guarantee, applications can be from an individual or two applicants (with a friend, family member or partner). Applicants for the Family Home Guarantee must be a single parent or legal guardian of one or more dependent children
– Loan: the loan must be through a participating lender. It must be an owner-occupier loan paying principal and interest for a loan term of up to 30 years.
– Previous ownership: the First Home Guarantee is only available to applicants who have not owned a property in the last 10 years. The Family Home Guarantee requires the applicant to not have any other property interest once the new home is settled.
– Income: income caps do apply for first-home buyers until 1 October when these will be removed. Before this time the caps are $125,000 for individual applicants and $200,000 for joint applicants (based on taxable income from the previous financial year).
The scheme is open to new and existing residential properties in Australia, including:
Property price caps
The property prices caps will change 1 October 2025 to the following:
| Location | Current Property Price Cap | Property Price Cap effective 1 October 2025 |
| NSW – capital city and regional centre | $900,000 | $1,500,000 |
| NSW – other | $750,000 | $800,000 |
| VIC – capital city and regional centre | $800,000 | $950,000 |
| VIC – other | $650,000 | $650,000 |
| QLD – capital city and regional centre | $700,000 | $1,000,000 |
| QLD – other | $550,000 | $700,000 |
| WA – capital city | $600,000 | $850,000 |
| WA – other | $450,000 | $600,000 |
| SA – capital city | $600,000 | $900,000 |
| SA – other | $450,000 | $500,000 |
| TAS – capital city | $600,000 | $700,000 |
| TAS – other | $450,000 | $550,000 |
| ACT | $750,000 | $1,000,000 |
| NT | $600,000 | $600,000 |
| Jervis Bay Territory and Norfolk Island | $550,000 | $550,000 |
| Christmas Island and Cocos (Keeling) Islands | $400,000 | $400,000 |
Source: Housing Australia
Speak to your broker to confirm your eligibility. They can then help you find the right participating lender for your circumstances and walk you through your loan application.
Find your local broker to discuss your journey to homeownership.
