Using FHBG, FHSS and Grants Properly: What a Good Broker Does

Buying your first home with the First Home Guarantee (FHBG), the First Home Super Saver (FHSS) scheme and state grants can easily save you tens of thousands of dollars. But each scheme has its own rules, caps and timing traps — and you still have to pass a lender’s credit policy and APRA’s 3% buffer.

A good mortgage broker sits in the middle of all of this. They don’t just “find a rate”; they help you combine federal schemes, state concessions and lender policies in a way that’s legal, realistic and safe for your budget this year — not just on paper.

1. The three rule sets your plan must satisfy

Before you even look at properties, your broker’s job is to line up three separate rule books that all have to say “yes” at the same time.

1.1 The federal schemes: FHBG and FHSS

Key federal schemes most first-home buyers consider are:

• First Home Guarantee (FHBG) – lets eligible first-home buyers purchase with as little as 5% deposit without paying Lenders Mortgage Insurance (LMI). It’s administered by Housing Australia, but delivered via participating lenders.
• First Home Super Saver (FHSS) scheme – allows you to make voluntary contributions into super and then withdraw them later for your first home deposit, with concessional tax treatment (ATO‑administered).

Each has strict rules: price caps, income caps, contribution limits, withdrawal processes and definitions of “first home”. Your broker doesn’t give tax or legal advice on these, but a triple-credential broker (CPA + Tax Agent + Broker) can join the dots so the loan structure actually works with your FHBG spot or FHSS release.

1.2 State grants and stamp duty concessions

Every state and territory has its own mix of:

• First home owner grants (FHOG)
• Stamp duty discounts or exemptions
• Different price and income caps for each

As shown in the state guide on borrowing power, stamp duty and concessions can change your feasible price range as much as a moderate rate move.[2] Your broker models how those cost changes affect your deposit needs and borrowing power for your specific state and target suburbs.

For a deep state-by-state look, see: Stamp Duty And First‑Home Concessions: State‑By‑State Borrowing Power Guide.

1.3 Lender credit policies and APRA rules

Even if you tick every government box, a lender can still say no. Lenders must apply:

• APRA’s serviceability buffer (usually current rate + 3%)
• Internal rules on minimum deposit, genuine savings, postcode risk and property type
• Income verification rules (especially harsh for self‑employed)

Roy Morgan’s recent research shows around 28% of mortgage holders are already ‘At Risk’ of mortgage stress.[6] Regulators are very aware of this. A good broker makes sure you don’t just scrape in under a bank’s maximum; you also pass a personal safety test – typically capping repayments at 30–35% of after‑tax income when modelled 3% above today’s rates.[10]

2. What a good broker actually does with FHBG

The FHBG sounds simple – 5% deposit, no LMI – but the details are where people lose their spot or over‑stretch themselves.

2.1 Checking FHBG eligibility the right way

Your broker will run through:

• Income caps – based on your last financial year’s taxable income
• Price caps – different for each region and property type
• First home status – whether you’ve owned before, or in some cases, only owned land
• Citizenship and residency – Australian citizens, some schemes allow permanent residents under specific rules

They’ll also check if you’re better off using FHBG now, or waiting to build a bigger deposit and keep more flexibility on property type and lender choice.

2.2 Matching FHBG lenders to your situation

Not all lenders participate in FHBG, and among those that do, policies differ. A broker helps with:

• Shortlisting FHBG lenders that match your income type (PAYG vs self‑employed), property type (apartment vs house) and postcode
• Checking which lenders allow additional schemes (e.g. state grants) to form part of the deposit
• Comparing how each lender treats overtime, bonus, commission, trust distributions or company profits

They’ll also check how the higher LVR (95%) interacts with the property you’re buying. For example, inner‑city high‑density apartments can trigger stricter limits; we cover these kinds of issues in the high‑rise case study: How a Sydney First‑Home Buyer Safely Settled a High‑Rise Off‑the‑Plan Unit.

2.3 Worked example: FHBG versus saving longer

Assume you’re buying a $700,000 unit.

• Scenario A – FHBG now: 5% deposit = $35,000. No LMI. Loan = $665,000.
• Scenario B – wait, no FHBG: 10% deposit = $70,000. No LMI if under lender’s 90% LVR cap. Loan = $630,000.

Indicative P&I repayments over 30 years at 6.5% p.a. (rate for illustration only):

• Scenario A: $665,000 → about $4,210 per month
• Scenario B: $630,000 → about $3,990 per month

Difference ≈ $220/month. A broker will:

1. Model these repayments at 9.5% (current + 3%) in line with a conservative buffer.[10]
2. Compare each scenario to 30–35% of your after‑tax income.[6][10]
3. Help you decide if starting sooner with FHBG is still safe, or whether waiting keeps you out of stress territory.