Two federal schemes help first-home and lower-income Victorian buyers enter the market: the Home Guarantee Scheme (a deposit guarantee that eliminates Lenders Mortgage Insurance) and Help to Buy (a federal shared-equity scheme that complements Vic Homebuyer Fund). The two schemes have different mechanics, different eligibility, and very different long-term economics. Many buyers qualify for one but not the other.
This guide compares the federal Home Guarantee Scheme and Help to Buy alongside the Vic Homebuyer Fund, covers eligibility, and explains which scheme is best for which buyer profile.
The three schemes — head-to-head
| Feature | Federal Home Guarantee | Help to Buy (federal) | Vic Homebuyer Fund |
|---|---|---|---|
| Type | Deposit guarantee (no LMI) | Shared equity | Shared equity |
| Government share | Guarantee only — no equity | 30% (new) / 40% (existing) | 25% (35% First Nations) |
| Buyer deposit | 5% (FHBG) / 2% (Family) / 5% (Regional) | 2% | 5% |
| Capital gain shared? | No | Yes (proportional) | Yes (25% / 35%) |
| Property price cap (Melbourne) | $800,000 | $950,000 | $950,000 |
| Income cap — single | $125,000 | $90,000 | $135,155 |
| Income cap — couple | $200,000 | $120,000 | $202,733 |
| First home only? | FHBG yes; FHBG-Family yes | No (eligible second-time buyers) | No |
| Annual places | ~50,000 (FHBG + Family + Regional) | ~10,000 (Vic share) | No formal cap |
| Best for | Higher-income FHB with 5% deposit | Lower-income FHB / second-time buyer | Mid-income across Vic |
The Home Guarantee Scheme variants
The federal Home Guarantee Scheme is administered by Housing Australia and has three sub-schemes:
- First Home Buyer Guarantee (FHBG). 5% deposit. Government guarantees the next 15% of the loan, eliminating LMI. For first home buyers earning under the income caps.
- Family Home Guarantee. 2% deposit. Government guarantees the next 18%. For single parents (and from 2024, also eligible single applicants) buying a home.
- Regional First Home Buyer Guarantee. 5% deposit for regional areas. Same mechanics as FHBG but with regional property requirements.
The buyer takes a normal mortgage. The government’s guarantee is invisible to the buyer in day-to-day terms — there’s no equity, no shared capital gain. The benefit is the LMI saving, which on a $700,000 property with 5% deposit is typically $25,000–$35,000.
Help to Buy — federal shared equity
Help to Buy (commencing 2025) is the federal equivalent of Vic Homebuyer Fund:
- 2% deposit (lower than Vic Homebuyer Fund’s 5%)
- 30% government equity for new homes / 40% for existing homes
- Tighter income caps than VHF — single $90k, couple $120k
- 10,000 places per year initially, distributed across states
Help to Buy can be combined with Stamp Duty exemptions for first home buyers but cannot be combined with Vic Homebuyer Fund (they target overlapping cohorts).
Choosing between schemes — decision framework
Question 1: Are you a first home buyer?
- If yes — all three schemes potentially available
- If no — only Help to Buy and Vic Homebuyer Fund (if eligible)
Question 2: What’s your household income?
- Under $90k single — all three. Help to Buy gives biggest deposit relief
- $90k–$125k single — FHBG and Vic Homebuyer Fund
- $125k–$135k single — Vic Homebuyer Fund only
- Over $135k single — none of these schemes; standard mortgage only
Question 3: How long do you plan to hold?
- 5 years or less — Home Guarantee preserves all capital gain (best)
- 5–15 years — Vic Homebuyer Fund or Help to Buy can be cheaper if you don’t buy out government early
- 15+ years — Buy out government share early to avoid sharing major capital gains
The capital gain math — illustrative
For a $700,000 property held 8 years, sold at $1m. Capital gain: $300k. Comparison of net buyer position (ignoring annual repayment differences for simplicity):
- Standard mortgage with LMI: gain $300k − LMI $30k = net $270k
- Federal Home Guarantee: gain $300k − $0 = net $300k
- Help to Buy (30% gov): gain $210k (70%)
- Vic Homebuyer Fund (25% gov): gain $225k (75%)
The Home Guarantee is the “keep all gain” option, making it best for hold-and-grow buyers. The shared equity schemes are best for buyers prioritising lower repayments and accepting capital-gain sharing.
Application timing and contract conditions
Federal schemes process through participating lenders, not directly with government. Contract conditions to consider:
- Special condition making contract conditional on scheme approval
- Long-stop date for approval (typically 21–35 days)
- Right to rescind if approval declined
- Confirmation that participating lender will lend on the proposed scheme structure
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