How to buy your first home with a 5% deposit

For many first-home buyers in Sydney, saving a 20% deposit feels impossible, especially as property prices keep rising. The good news? The First Home Guarantee (FHBG) is making it easier for eligible buyers to get into the market sooner with just a 5% deposit and no Lenders Mortgage Insurance (LMI).

Here’s everything you need to know about the scheme in 2025 and how it can help you buy your first home in Sydney.

The First Home Guarantee is designed to help first home buyers purchase a property with a minimum 5% deposit. Normally, if you have less than 20% deposit, you’re required to pay LMI – which could cost you thousands. With the FHBG, the government guarantees up to 15% of the loan, meaning you don’t pay LMI.

Eligibility:

To qualify for the First Home Guarantee, you must:

• Be an Australian citizen or permanent resident

• Be a first-home buyer or not have owned property in the past 10 years

• Intend to live in the home

• Have a deposit of at least 5% (but less than 20%)

• Meet the income criteria

• If your buying in Sydney you must check the Property Price Cap Tool

Only 35,000 First Home Guarantee places are available nation wide each financial year. They’re released from 1 July and are first come, first served.