First Home Guarantee South East Melbourne, Buy From a 5% Deposit in 2026
If saving a full 20% deposit feels like the finish line keeps moving, the First Home Guarantee changes the maths in a meaningful way. The scheme lets eligible buyers purchase with as little as a 5% deposit, and the government covers the gap so you don't pay lenders mortgage insurance on the difference. For first home buyers in South East Melbourne, that's a genuine shortcut into the market rather than a workaround.
The catch is that most of the property available in this part of Melbourne is houses, and every house median across the 28 suburbs we work in sits above the $950,000 price cap. The scheme is real and it works, but in South East Melbourne it's almost entirely a unit story. Knowing that before you start looking saves a lot of wasted time.
Our team works with first home buyers across South East Melbourne every week, comparing options across 60+ lenders to work out which combination of deposit, scheme and structure gets you into the market cleanest.
Key takeaways
- Buy with a 5% deposit and no LMI under the First Home Guarantee.
- The price cap is $950,000 across every approved South East Melbourne suburb.
- Every house median in the area sits above the cap — units are the practical entry point.
What is the First Home Guarantee and how does it work in South East Melbourne?
The First Home Guarantee is a federal scheme that lets eligible first home buyers purchase with a 5% deposit. The government guarantees up to 15% of the purchase price, bringing your effective LVR to 80% in the lender's eyes, which means no lenders mortgage insurance is charged. The $950,000 price cap applies across every approved postcode in South East Melbourne, confirmed for all 22 postcodes in the area.
Who can use the First Home Guarantee in South East Melbourne?
Since October 2025 the income test was removed, so eligibility is now simpler than it used to be. You need to be an Australian citizen or permanent resident, a genuine first home buyer, and intend to live in the property. The scheme has no income cap and no limit on the number of places available each year under the current structure.
What lenders check on a First Home Guarantee application:
- › First home buyer status: you must not have previously owned or held an interest in residential property in Australia.
- › Citizenship or PR: at least one applicant must be an Australian citizen or permanent resident at the time of signing the contract.
- › Owner-occupier intent: you must intend to live in the property as your principal place of residence.
- › Price cap: the purchase price must be at or below $950,000 for all approved South East Melbourne postcodes.
- › Standard serviceability: you still need to demonstrate borrowing capacity at the lender's assessment rate — the guarantee covers the deposit gap, not serviceability.
"We see a lot of buyers come in assuming they won't qualify because the scheme sounds complicated or because they've heard the cap is low. Most of them are eligible. The real question isn't eligibility — it's whether the cap-eligible stock in the suburb they want is the right fit for where they are in life."
Evelyn Clark · Director, Mortgage & Finance Broker · Chat to Evelyn →
What does the $950,000 cap actually mean for buyers in South East Melbourne?
CoreLogic data shows that not a single house median across the 28 approved suburbs falls below $950,000 — the cheapest are Moorabbin at $1,280,000 and Cheltenham at $1,298,750. The scheme essentially can't be used on a house anywhere in this part of Melbourne. Units are a different story. Twenty-two of the 28 approved suburbs have a unit median sitting under the cap.
Where unit medians sit relative to the cap:
- › Under $600,000 (full duty exemption): St Kilda ($512,000), Windsor ($530,000), Prahran ($500,000), Ripponlea ($470,000), South Yarra ($525,000), Oakleigh ($580,000).
- › $600,000 to $750,000 (partial duty concession): Elwood ($647,000), South Melbourne ($615,000), Port Melbourne ($740,000), Cheltenham ($700,000), Glen Iris ($744,000), Carnegie ($630,000), Murrumbeena ($636,250).
- › $750,001 to $950,000 (cap-eligible but no duty concession): Bentleigh ($935,000), Malvern ($785,000), Sandringham ($707,500), Moorabbin ($770,000).
- › Above the cap: Toorak, Brighton, Hampton, Albert Park, Caulfield — units in these suburbs exceed $950,000 and aren't eligible.
Source: CoreLogic (via YIP, June 2026) and Housing Australia.
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What other government schemes can first home buyers in South East Melbourne use alongside the guarantee?
The First Home Guarantee doesn't stand alone. Several other schemes apply to the same purchase, and combining them correctly is where the real deposit savings come from.
Schemes that can work alongside the First Home Guarantee:
- › Victorian First Home Owner Grant:$10,000 for new homes only, with a $750,000 price cap. Applies to new apartments and off-the-plan units — genuinely stackable with the guarantee on the right purchase.
- › First home buyer duty exemption: full stamp duty exemption on purchases up to $600,000, partial concession from $600,001 to $750,000. Applies to new and established dwellings — no distinction made in Victoria.
- › Off-the-plan stamp duty concession: available until 21 April 2027 on strata apartments, townhouses and units. Buyers can deduct construction costs incurred after contract date from the dutiable value — open to investors too, not just owner-occupiers.
- › First Home Super Saver Scheme: lets first home buyers withdraw up to $50,000 of voluntary super contributions (plus deemed earnings) toward a deposit, with $15,000 counted per financial year.
- › Help to Buy (federal shared equity): a separate pathway — the government takes an equity stake of up to 30% on an existing home or 40% on a new one, and you need only a 2% deposit. Income caps apply ($103,000 single, $165,000 joint or single parent for 2026-27). Cannot be combined with the First Home Guarantee on the same purchase.
The Victorian Homebuyer Fund is closed to new participants. Help to Buy is the only shared-equity pathway currently open to South East Melbourne buyers.
Source: State Revenue Office Victoria and Housing Australia.
When does the First Home Guarantee not make sense for a South East Melbourne buyer?
The scheme works cleanly for buyers whose target price is under $950,000 and whose savings are genuinely limited to 5%. For buyers who are close to a larger deposit, the maths shifts. A 10% or 12% deposit with no scheme attached sometimes results in a lower total cost over five years than a 5% deposit with the government guarantee, because the loan is smaller from day one and lenders often price slightly differently at 88% LVR versus 95%.
It also doesn't suit buyers who have found a property they genuinely want in a suburb where no unit under $950,000 exists. Stretching the budget or compromising on the property to stay inside the cap is rarely the right trade-off. A better answer in those cases is usually a guarantor structure, a larger deposit saved over another year, or looking at what the Family Home Guarantee offers single parents. If the cap forces you to look at property you wouldn't otherwise buy, the scheme isn't your solution.
How do mortgage brokers help first home buyers use the First Home Guarantee in South East Melbourne?
The scheme is administered by a participating lender — you can't apply through the government directly. The lender choice matters more than most buyers expect. Three policy differences move the outcome significantly, and they're not the same across every lender on the panel.
- › Genuine savings requirements: some lenders want all 5% to come from savings held for at least three months; others accept gifted funds or the FHSS scheme withdrawal toward the full amount.
- › Assessment of combined income: on a joint application, how each lender treats casual income, parental leave or a secondary income varies enough to change borrowing capacity by tens of thousands.
- › Turnaround and pre-approval timing: participation in the scheme doesn't guarantee speed. Some lenders processing guarantee applications run materially longer than standard approvals — which matters a lot when you're making an offer.
Comparing across the panel before you approach a lender is what finds the right combination of policy, speed and price for your circumstances.
"Where I see buyers get into difficulty is when they pick a lender for the guarantee without checking how that lender reads their income. The scheme places are there. The bigger issue is usually which lender's assessment of your situation gives you room to buy what you actually want, not just what fits the cap."
Evelyn Clark · Director, Mortgage & Finance Broker · Chat to Evelyn →
What can go wrong when first home buyers apply for the First Home Guarantee?
The approval challenges worth knowing before you apply:
- › Price above the cap at valuation: if the lender's valuation comes in above $950,000 on a property you're buying for $940,000, the guarantee may not apply — the dutiable value is the higher of price and market value.
- › Applying to the wrong lender first: each application generates a credit enquiry, and a decline on a guarantee application sits on your file the same as any other. Checking which participating lender suits your profile before applying matters more here than on a standard loan.
- › Combining schemes incorrectly: Help to Buy and the First Home Guarantee cannot be used on the same purchase. Buyers who have enquired about Help to Buy and then apply for the guarantee through a separate lender sometimes create delays or eligibility issues.
- › FHOG on an established property: the $10,000 Victorian First Home Owner Grant is for new homes only. Buyers who assume it stacks on every purchase alongside the guarantee are sometimes caught short at settlement.
Frequently Asked Questions
Can first home buyers use the First Home Guarantee on any property in South East Melbourne?
No — the $950,000 price cap rules out every house in the area, so eligible purchases are almost entirely units and apartments. Twenty-two of the 28 approved suburbs have a unit median under the cap.
Is the First Home Guarantee or Help to Buy better for a first home buyer in South East Melbourne?
It depends on your income. Help to Buy caps at $103,000 for singles and $165,000 jointly, and requires only a 2% deposit. The First Home Guarantee has no income test. The two can't be combined on the same purchase, so the right pathway depends on your income and how much deposit you have.
Can first home buyers stack the Victorian First Home Owner Grant with the First Home Guarantee?
Yes, on a new home or off-the-plan unit under $750,000. The $10,000 grant is for new dwellings only and has its own price cap, so both schemes apply on the right purchase but not on an established property.
Do first home buyers still pay stamp duty when using the First Home Guarantee?
Possibly not. Victoria exempts first home buyers from stamp duty on purchases up to $600,000 and gives a partial concession to $750,000 — on a unit under that threshold, the two benefits combine well. Use the State Revenue Office calculator for your exact figure.
Can first home buyers in South East Melbourne use the FHSS scheme alongside the First Home Guarantee?
Yes. Withdrawing up to $50,000 from voluntary super contributions toward your deposit is compatible with the First Home Guarantee. The withdrawal counts as part of your 5% deposit, so combining the two reduces the cash you need to save outside super.
Should first home buyers in South East Melbourne use a mortgage broker or apply directly to a lender for the guarantee?
A mortgage broker, every time. Participating lenders have different policies on genuine savings, income types and turnaround times, and a broker who has access to multiple participating lenders can match your profile to the right one before a credit enquiry is placed.
Your Next Steps
Getting the First Home Guarantee right in South East Melbourne means understanding which properties actually sit under the cap, which lender reads your income most favourably, and which combination of schemes applies to your purchase. The unit medians across most of the area put cap-eligible stock within reach — but the right lender and the right scheme stack is what makes the deposit work.
Ready to find out which lenders will work best for your first home purchase? Contact the EverLend team or call 03 7036 3356. We'll canvas our 60+ lender panel and find the most suitable options for your circumstances.
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External Resources
EverLend · South East Melbourne · Ever Lend Pty Ltd (ACN 625 080 515), authorised under Australian Credit Licence 517192 · General information only - this article does not constitute financial advice. Please consider your own circumstances and seek professional advice before making any financial decisions.
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