Legal Insight from W & G Lawyers
At W & G Lawyers, we regularly assist first-home buyers with property transactions. The Federal Government’s First Home Guarantee (FHG) helps eligible buyers purchase a home with as little as a 5% deposit—but it is not without legal risks.
Many people mistakenly believe the scheme is a form of financial protection. In fact, the Guarantee is a contractual arrangement between the Government and your lender, not a safety net for you. This article sets out the core legal implications and how we, as your solicitors, can protect your interests throughout the process.
What Is the First Home Guarantee?
The First Home Guarantee is part of the Home Guarantee Scheme, administered by Housing Australia. It allows eligible first-time buyers to:
- Purchase a home with only a 5% deposit;
- Avoid expensive Lenders Mortgage Insurance (LMI), because the Government guarantees up to 15% of the property value to the lender;
- Borrow up to 95% of the property value, subject to lender approval.
It is important to understand that:
- The Guarantee is not a cash benefit, nor is it paid to you;
- The Guarantee is only triggered if you default, and even then, it applies after your property has been sold and proceeds applied to the debt;
- You are still personally liable for the full loan amount.
Key Scheme Changes from 1 October 2025
- No more income cap – Income limits will be removed from this date;
- Higher property price limits – E.g., up to $1.5 million in Sydney, $1 million in Brisbane;
- Wider eligibility – Includes couples, friends, siblings, and family members applying together;
- Earlier start – The 2025–26 financial year intake begins on 1 October 2025.
Legal Considerations You Shouldn’t Overlook
1. Joint Applications and Co-Ownership Risks
FHG allows two people to apply together (friends, siblings, partners). However, each applicant is jointly and severally liable for the full mortgage—not just their share.
We assist by:
- Drafting co-ownership agreements to clarify contributions, responsibilities, and exit strategies;
- Advising on dispute resolution clauses and resale options;
- Helping you avoid common legal issues between non-spouse co-owners.
2. Loan and Contractual Obligations
Lenders will require you to sign a loan agreement, and your eligibility must be confirmed via a Commonwealth Statutory Declaration.
We:
- Review your loan documents for risks, hidden costs, and compliance obligations;
- Explain repayment terms in plain English and Mandarin;
- Ensure your declaration is complete and compliant—false declarations can lead to rejection or legal penalties.
3. View the Declaration Form
You can view the June 2025 version of the Home Buyer Declaration form here:
🔗 Home Buyer Declaration – June 2025 (PDF)
Note: This version still refers to the income cap, which is scheduled to be removed from 1 October 2025. A further updated version may be released.
If you are unsure how the changes affect your situation, we can assist you in preparing a compliant and accurate declaration.
4. If Property Values Fall – Who Bears the Risk?
A common misconception is that the 15% Government Guarantee protects the buyer. This is incorrect.
“A Guarantee protects the Participating Lender, not you…
If you default and the sale proceeds don’t cover the debt, Housing Australia pays the shortfall—up to 15%—to the lender.”
This means:
- If your home is sold for less than your loan balance, you remain liable for the debt;
- The Government Guarantee does not stop the lender from repossessing the property or pursuing you for the shortfall;
- Even after the Guarantee is paid to the bank, your financial exposure remains.
W & G Lawyers can help you assess:
- How negative equity may impact your legal position;
- What your options are if you’re facing repayment stress or resale.
5. Off-the-Plan, House-and-Land, and Build Contracts
FHG applies to off-the-plan purchases and new builds—but strict timelines apply for contract signing, commencement, completion and moving in.
We provide:
- Contract review for sunset clauses, delay risks and valuation issues;
- Advice on staged payments, builder risks and compliance deadlines;
- Support in preserving eligibility and managing lender negotiations if things go wrong.
6. Living Requirement and Guarantee Withdrawal
To retain the Guarantee, you must:
- Move in within 6 months (or 6 months of occupancy certificate for new builds);
- Continue living in the home while the Guarantee applies.
If you move out, rent the property, or refinance with a non-participating lender:
- The Guarantee may be cancelled;
- Your lender may require you to pay LMI or refinance;
- You remain fully responsible for the loan under contract law.
Who Can You Apply Through?
You can only apply through a Participating Lender approved by Housing Australia. These include selected banks, credit unions and mortgage providers.
🔗 Search Participating Lenders
Need help reviewing your lender’s documents?
W & G Lawyers can review and explain your loan agreement, statutory declaration, and scheme compliance obligations in plain language—before you commit.
Check Your Eligibility Online
Use the official tool below to check whether you meet the eligibility criteria:
🔗 Check Eligibility Tool
This tool gives a general indication. Your final eligibility depends on full documentation and lender assessment.
Check Price Limits for Your Area
To qualify under the FHG, the property you purchase must fall within the Government’s location-based price caps. You can search using the postcode tool here:
🔗 Search Property Price Caps by Postcode
If your purchase price (or build + land cost) exceeds the cap, the Guarantee won’t apply.
How W & G Lawyers Can Help
While we do not provide financial advice, we offer comprehensive legal assistance to help you navigate the First Home Guarantee safely and effectively:
✔ Review your contract of sale, especially off-the-plan or dual-contract arrangements
✔ Draft co-ownership agreements for joint buyers
✔ Explain your loan contract obligations and default consequences
✔ Ensure your statutory declaration is accurate and compliant
✔ Provide bilingual support in English and Mandarin
✔ Advise on changes in living arrangements, refinancing, or compliance risks
Contact W & G Lawyers Today
Let our team guide you through your first home purchase with confidence.
📧 info@wglawyers.com.au
📱 07 2810 5666
🌐 www.wglawyers.com.au
Further Reading
Disclaimer
This article is for general information only and does not constitute legal or financial advice. Every buyer’s circumstances are different. We strongly recommend that you seek independent legal advice and qualified financial advice before making any property purchase or entering a shared equity arrangement.