First-Home Buyer in Australia: Deposit, LMI, and the Grants
Published
The hardest part of buying a first home in Australia is the deposit, and the First Home Guarantee changes that maths more than any grant does. Saving the full 20% deposit that normally avoids Lenders Mortgage Insurance means finding $120,000 on a $600,000 home, whereas an eligible first-home buyer using the guarantee can buy with a 5% deposit of $30,000 and pay no LMI at all. That is $90,000 less to save, plus the LMI premium avoided, which on a high loan-to-value first-home loan typically runs from about $15,000 to $35,000. Cash grants and stamp duty concessions then sit on top, though those vary by state. The premium range is that wide because it moves with the deposit. LMI cost by deposit size shows where a given deposit lands.
How much deposit do you actually need?
There are three common routes, and they differ mostly in the deposit and the LMI. Save 20% and you put in $120,000, borrow $480,000, and pay no LMI, which is the traditional path but a slow one given how fast prices move. Put in 10%, or $60,000, and you borrow $540,000 but face an LMI premium of roughly $8,000 to $13,000. Through the First Home Guarantee you put in 5%, or $30,000, borrow $570,000, and pay no LMI because the government guarantees the gap. On that 95% loan the repayment is around $3,417 a month at a 6% rate over 30 years, which you can adjust in the mortgage calculator.
What is the First Home Guarantee, and what changed in 2025?
The First Home Guarantee is a federal scheme run by Housing Australia in which the government guarantees the portion of your loan between your deposit and 20%, up to 15% of the property value, so the lender waives LMI. From 1 October 2025 it was expanded significantly: the income caps were removed, the annual cap on places was scrapped, and the property price caps rose across the country. You still have to be an owner-occupier, buy under the price cap for your region, and hold a deposit of between 5% and 20%. It is a guarantee to your lender rather than a payment to you, so the benefit is the LMI you never pay.
How much is LMI, and why does avoiding it matter?
Lenders Mortgage Insurance protects the lender if you default, not you, and it is charged once you borrow more than 80% of the property value. The premium climbs with both the loan size and the loan-to-value ratio, so a first-home buyer at 90% or 95% can face anywhere from about $15,000 to $35,000, and it is usually added to the loan so you pay interest on it for years. Removing it is the single biggest cash saving the guarantee delivers, and you can size it for your own purchase in the LMI calculator.
What about grants and stamp duty concessions?
These are where it gets state-specific, and they stack on top of the guarantee. Each state and territory runs its own First Home Owner Grant, often worth $10,000 to $30,000 but usually limited to new builds, and its own stamp duty concession or exemption for first-home buyers up to a price threshold. Queensland, for example, has paired a $30,000 new-build grant with a stamp duty concession, though such offers change and carry deadlines. Because the rules differ so much between states, the grant and duty figures are the part to confirm with your state revenue office rather than assume.
How to put it together
A sensible order is to check the price cap for your region, confirm you meet the guarantee eligibility, then layer on any state grant and stamp duty concession you qualify for. Model the full picture before you commit, starting with the first home buyer calculator for the deposit and upfront costs, because a scheme that saves LMI still leaves you with a 95% loan and a real monthly repayment to carry. Getting in sooner with a smaller deposit is powerful, but only if the ongoing payment fits your budget.
A note on the figures
The deposit and loan figures use a $600,000 purchase, and the repayment assumes a 6% rate over 30 years, which reflects the Australian market in 2026. LMI premiums are indicative and set by the insurer and lender, and grants, concessions, and price caps vary by state and change over time. See Housing Australia and ASIC MoneySmart, and confirm your own numbers with a broker or your state revenue office.