15 May 2026 First Home Guarantee in South East Melbourne: Your 2026 Guide

In 2026, the First Home Guarantee gives South East Melbourne buyers a genuine path to homeownership with just 5% down. The scheme guarantees up to 15% of your loan value, which means no lenders mortgage insurance on purchases up to $950,000 – a saving that can exceed $30,000 on properties at the price cap.

The scheme works particularly well in South East Melbourne’s unit market, where several suburbs offer quality options within the cap. Whether you’re looking in St Kilda – South Yarra or Windsor, understanding which properties qualify and which lenders offer the strongest terms makes a significant difference to your outcome.

EverLend helps South East Melbourne first home buyers navigate the First Home Guarantee process across our 60+ lender panel, completely free of charge.

Here’s what you need to know about the First Home Guarantee before you apply in 2026.

What is the First Home Guarantee and how does it work in South East Melbourne?

The First Home Guarantee lets eligible buyers purchase with a 5% deposit by having the federal government guarantee up to 15% of the loan value. This eliminates lenders mortgage insurance, which typically costs $20,000-$35,000 on purchases near the $950,000 Melbourne price cap. Your lender treats the purchase as if you had a 20% deposit, giving you standard variable rates rather than low-deposit premiums.

In South East Melbourne, this matters because quality units across inner suburbs like St Kilda ($490,000), Windsor ($536,375), and South Yarra ($547,500) sit well within the scheme’s reach. The combination of 5% deposit, no LMI, and access to competitive rates makes homeownership achievable on incomes that would otherwise require years of additional saving.

Which properties qualify for the First Home Guarantee in South East Melbourne?

New and established homes both qualify, up to the $950,000 price cap in Melbourne. The property must become your primary residence within 12 months of settlement.

• Units across inner South East Melbourne: most one and two-bedroom units in St Kilda, Windsor, South Yarra, Prahran, and Port Melbourne qualify comfortably under the cap.
• New builds and off-the-plan: eligible regardless of location, provided the final price stays under $950,000.
• Houses: limited options in South East Melbourne due to median prices ranging from $1.29M in Cheltenham to $5.8M in Toorak.
• Investment properties: not eligible – the scheme applies to owner-occupiers only.

How do mortgage brokers help South East Melbourne buyers get First Home Guarantee approval?

The First Home Guarantee application process involves multiple moving parts – lender selection, eligibility verification, property compliance checks, and timing coordination between pre-approval and settlement. Getting each element right determines whether your application succeeds.

Step 1: Talk to us

Get in touch and we’ll confirm your First Home Guarantee eligibility, assess your borrowing capacity across participating lenders, and identify the property types that work best for your situation.

Step 2: Choose your participating lender

We compare terms across major and specialist lenders that participate in the scheme. Not all lenders offer identical rates or processing times for First Home Guarantee applications – lender selection affects your outcome.

Step 3: Secure pre-approval

We submit your pre-approval application with First Home Guarantee eligibility flagged from the outset. This confirms your borrowing capacity and locks in your scheme allocation before you start looking at properties.

Step 4: Find a qualifying property

Armed with pre-approval, you can focus on properties within your confirmed price range that meet scheme requirements. We verify property compliance before you make an offer.

Step 5: Lodge your formal application

Once your offer is accepted, we lodge the formal loan application with all First Home Guarantee documentation. We coordinate with your conveyancer to ensure settlement timing aligns with scheme requirements.

Step 6: Settlement and move-in

At settlement, the lender draws down your 5% deposit plus the government guarantee. You receive the keys to your home without paying lenders mortgage insurance – a saving that can exceed $30,000.

Common First Home Guarantee mistakes in South East Melbourne

The biggest mistake first home buyers make is assuming all lenders handle First Home Guarantee applications identically. Processing times vary from 2-6 weeks between participating lenders, and some offer more competitive rates for scheme participants than others. Going to your existing bank first can mean missing better terms from specialist lenders who prioritise first home buyer lending.

The second mistake is not factoring in ongoing costs when calculating affordability. Your 5% deposit covers the purchase, but you still need funds for stamp duty (if applicable), legal fees, building inspections, and moving costs. In South East Melbourne, where many qualifying properties are units, also budget for strata fees and council rates from settlement.

First Home Guarantee eligibility requirements in 2026

The scheme eligibility rules were simplified in late 2025, removing income caps and place-of-residence restrictions that previously limited access. The current requirements focus on first home buyer status and intended occupancy.

• True first home buyer: you and your partner (if applicable) must never have owned property in Australia.
• Owner-occupier only: the property must become your primary residence within 12 months of settlement.
• Australian citizen or permanent resident: temporary visa holders are not eligible.
• No income limit: removed October 2025, meaning high-income earners can now access the scheme.
• Price cap compliance: purchase price must not exceed $950,000 in Melbourne.

Frequently Asked Questions

Can I use the First Home Guarantee to buy a unit in South East Melbourne?

Yes – units are often the ideal property type for the First Home Guarantee in South East Melbourne. Quality one and two-bedroom units in St Kilda, Windsor, South Yarra, and Prahran typically sit well under the $950,000 price cap, making them accessible with just 5% deposit.

What deposit do I need for the First Home Guarantee?

Just 5% of the purchase price. The government guarantees up to 15% of the loan value, which eliminates lenders mortgage insurance and lets you access standard home loan rates rather than low-deposit premiums.

Is there an income limit for the First Home Guarantee in 2026?

No – income caps were removed in October 2025. The scheme now focuses on first home buyer status and owner-occupier intent rather than income thresholds, meaning higher earners can access the 5% deposit benefit.

Which lenders participate in the First Home Guarantee?

Most major banks and many specialist lenders participate, but their terms and processing times vary significantly. We compare participating lenders to find the one that offers the strongest combination of rate, features, and approval timeframe for your situation.

Can I buy an investment property with the First Home Guarantee?

No – the scheme applies to owner-occupiers only. You must live in the property as your primary residence within 12 months of settlement. If you want to buy an investment property first, you’ll lose First Home Guarantee eligibility for future purchases.

Should I use a mortgage broker or go direct to a bank for the First Home Guarantee?

A mortgage broker, every time. While all participating lenders offer the same government guarantee, their rates, processing times, and application requirements differ meaningfully. We identify which participating lender gives first home buyers the strongest outcome for their specific situation and income profile.

Can I use the First Home Guarantee with other first home buyer schemes?

Yes – the First Home Guarantee stacks with the Victorian First Home Owner Grant ($10,000 for new homes under $750,000) and stamp duty exemptions (up to $600,000). This combination can save over $40,000 on an eligible new unit purchase in South East Melbourne.

Your Next Steps

Getting your First Home Guarantee application right in South East Melbourne requires understanding which properties qualify, which lenders offer the best terms for scheme participants, and how to coordinate the timing between pre-approval and property purchase. The scheme offers genuine savings – potentially over $30,000 in avoided LMI costs – but only when applied correctly.

Ready to find out if the First Home Guarantee is right for your South East Melbourne purchase? Contact Evelyn Clark for a free consultation or call 03 7036 3356. We’ll assess your eligibility across our 60+ lender panel and identify the property types and price ranges that work best for your deposit and income.