Regional First Home Buyer Guarantee Sydney | 5% Deposit, No LMI in Sydney

Saving a 20% deposit in Sydney can easily take a decade. The Australian Government's Regional First Home Buyer Guarantee — now merged into the expanded First Home Guarantee — was designed to change that. Eligible buyers across Sydney and regional NSW can now purchase with just a 5% deposit, with the government guaranteeing the rest, and no Lenders Mortgage Insurance (LMI) to pay.

At RyRo Loan Centre, we've helped hundreds of first home buyers across Sydney and regional NSW use this scheme, often in combination with NSW stamp duty exemptions and the First Home Owner Grant. This page explains what the (former) Regional Guarantee was, how the current First Home Guarantee works, which areas and price caps apply, and how to combine it with other schemes to maximise your savings.

The Regional First Home Buyer Guarantee (RFHBG) was a federal initiative administered by Housing Australia. It helped eligible first home buyers in designated regional areas buy a home with as little as 5% deposit and no LMI. The government guaranteed up to 15% of the property's value to the lender, so loans at 95% LVR were treated as if they were at 80% LVR.

From 1 October 2025, the RFHBG was merged into the expanded First Home Guarantee (FHG). There is no separate "regional" guarantee any more — instead, both metropolitan and regional buyers use the same scheme, with different price caps by area:

• $1,500,000 cap for Sydney and NSW regional centres (Illawarra, Newcastle, Lake Macquarie)
• $800,000 cap for the rest of regional NSW

Key expansions from October 2025:

• No place limits: the old annual cap of 10,000 places was removed — every eligible buyer with a 5% deposit can apply.
• No income caps: previous income limits ($125k singles / $200k couples) were abolished. Higher-income buyers can now use the scheme.
• Higher price caps: Sydney and key regional centres now share a $1.5M cap, bringing a much larger slice of the market within reach.
• Regional residency requirement removed: the old 12‑month requirement to live in the regional area before purchase no longer applies.

The expanded First Home Guarantee (which now covers what was previously the RFHBG) is open to more buyers than ever.

• Citizenship / residency: Australian citizens and permanent residents aged 18+.
• First home or 10‑year rule: either you have never owned property in Australia, or you have not owned property in Australia in the last 10 years.
• Applicants: singles, couples, and joint applicants (friends, siblings, other family members).
• Income: no income caps from 1 October 2025.
• Use: property must be your principal place of residence (investment properties aren't eligible).
• Deposit: minimum 5% genuine savings; maximum 20% deposit.
• Price cap: property must be under the cap for its area — $1.5M (Sydney and key regional centres) or $800k (rest of regional NSW).

Tip: if you owned a home many years ago but have been out of the market for at least 10 years, you may now qualify again under the new rules. Many “returning buyers” are pleasantly surprised when we check this.

Under the old RFHBG, only designated regional areas were covered and metropolitan Sydney was excluded. Under the current First Home Guarantee, Sydney is fully covered and so are regional NSW areas — but under different caps.

Price caps from 1 October 2025

Examples of regional centres (treated like Sydney for caps): Wollongong, Shellharbour, Kiama, Newcastle, Lake Macquarie, Maitland, Cessnock (inner areas).

Examples of “rest of regional NSW” ($800k cap): Central Coast, Hunter Valley outer, Blue Mountains, Southern Highlands, Shoalhaven, Riverina, New England, Northern Rivers, Mid‑North Coast, Snowy Mountains, Murray and many more.

The official definition uses ABS SA4 regions. We always run your suburb or postcode through Housing Australia’s postcode search tool so you know exactly which cap applies before you commit to a contract.

LMI can easily cost between $15,000 and $55,000+ at common Sydney and regional NSW price points. The guarantee removes that cost entirely for eligible buyers.

• Sydney apartment — $850,000: 5% deposit $42,500, 95% LVR. Indicative LMI without the scheme: ~$25,000–$32,000. With the guarantee: $0 LMI.
• Regional NSW home — $600,000: 5% deposit $30,000, 95% LVR. Indicative LMI without the scheme: ~$15,000–$20,000. With the guarantee: $0 LMI.
• Sydney house — $1,300,000: 5% deposit $65,000, 95% LVR. Indicative LMI without the scheme: ~$40,000–$55,000+. With the guarantee: $0 LMI.

Exact LMI premiums depend on lender, loan size and profile. We calculate the “with vs without scheme” figures for your exact scenario so you can see the real dollar impact before you decide.

The First Home Guarantee removes LMI, but stamp duty (transfer duty) is a separate cost. NSW first home buyers can usually combine the guarantee with the NSW First Home Buyers Assistance Scheme (FHBAS) for powerful savings.

Current FHBAS rules for homes:

Example: stacking in Newcastle (regional centre) at $750,000:

• First Home Guarantee: 5% deposit, no LMI (saving ~$20,000–$28,000).
• FHBAS: $0 stamp duty (saving roughly $27,000).

Total upfront saving vs a buyer without schemes: $47,000–$55,000+. This is why getting the stacking right matters.

The guarantee is just one part of the puzzle for many buyers.

• First Home Owner Grant (FHOG): $10,000 cash for eligible buyers purchasing or building a new home under the NSW caps. Can be stacked with the guarantee and FHBAS.
• First Home Super Saver Scheme (FHSS): lets you withdraw up to $50,000 per person of voluntary super contributions (plus earnings) to boost your deposit, taxed more favourably than ordinary income.
• Help to Buy (shared equity): cannot be used on the same purchase as the First Home Guarantee, but may be an alternative for buyers who want a smaller loan and are comfortable with co‑ownership and income caps.
• Guarantor loans: where family contribute equity instead of the government guarantee — another route to 5% (or lower) deposit purchases.

We model each option for you — including “no scheme”, guarantee, and Help to Buy — so you can see the impact on repayments, total interest and long‑term equity.

1. Confirm eligibility: check the 5% deposit, 10‑year rule, price cap and owner‑occupier requirements, plus which schemes you can stack.
2. Speak with a broker: we assess your full situation, run your postcode and price caps, and identify the right participating lender for your profile.
3. Get pre‑approval: your chosen lender reserves a guarantee place and issues pre‑approval, typically valid for 90 days (with a possible 90‑day extension).
4. Find a property: you search within your approved price range and scheme caps in Sydney or regional NSW.
5. Sign contracts & settle: once you sign a contract, your guarantee reservation is tied to that property and carried through to settlement, where the guarantee is activated and LMI is removed.

• 50+ lenders, 33 scheme participants: we have access to all major banks that participate (CBA, NAB, Westpac and brands) plus regional banks and customer‑owned lenders.
• No broker fees: you don’t pay us. We are paid by the lender at settlement.
• Sydney & regional coverage: we regularly help buyers in the Hills District, Greater Western Sydney, Hunter, Illawarra, Newcastle, Lake Macquarie and across regional NSW.
• Scheme stacking expertise: we know how to combine the guarantee with FHBAS, FHOG and FHSS without accidentally disqualifying you from any program.
• Honest borrowing capacity advice: we stress‑test your repayments so a 5% deposit purchase is sustainable, not just technically approved.

If you're considering buying in Sydney or regional NSW using a 5% deposit, a free conversation with our team will show you exactly what's possible.