Three government schemes are meant to help you buy your first home in Melbourne. But here’s the part nobody tells you upfront: they don’t compete with each other — they each open a different door. One gets you in with a tiny deposit but hands the government a slice of your future profit. One keeps all your growth but means a much bigger loan. One only works if you’re buying brand new.
Pick the wrong one for your situation, and you could end up locked out of the suburb you actually wanted — or giving away growth you didn’t need to. So before you fill out a single form, it’s worth fifteen minutes to understand what each scheme really does, what it costs you, and — most importantly — which Melbourne suburbs each one actually puts within reach. That’s what this guide breaks down, in plain English, with real numbers.
The Four Numbers That Matter Most
Before anything else, here’s the whole story in four numbers:
- First Home Guarantee: 5% deposit, no mortgage insurance, and since October 2025 — no income limit and no cap on how many people can use it. Price cap in Melbourne: around $950,000.
- Help to Buy: just a 2% deposit — but the government keeps up to 30–40% ownership of your home, and takes that share of the growth too.
- First Home Owner Grant (FHOG): a flat $10,000, but only if you buy a brand-new home under $750,000.
- The number that decides everything: Melbourne’s median house price is now around $958,000 — basically sitting right on top of the scheme cap. That’s why, for houses, these schemes mostly work in the outer suburbs. For units, it’s a completely different story — way more of the city opens up.
So Which One Should You Actually Use?
Short answer: it depends on your income and what you’re buying.
- Steady income, buying an established home? → First Home Guarantee is usually your best bet.
- Lower income, want the smallest possible loan? → Help to Buy gets you in the door for less, but you’ll share your growth.
- Buying brand new under $750K? → Stack all three together for the cheapest possible entry.
Let’s go through each one properly.
The three numbers that carve up Melbourne — $600K, $750K, $950K — and where the median house sits today.
| Price Band | Stamp Duty | Schemes You Can Use | What You’ll Find Here |
| Under $600,000 | None | All three (grant = new builds only) | Units across the middle and outer suburbs; houses in the far outer growth areas |
| $600,000–$750,000 | Reduced | All three (grant = new builds only) | Popular middle-ring units (Brunswick, Preston, Coburg); outer houses (Tarneit, Werribee, Craigieburn) |
| $750,000–$950,000 | Full | First Home Guarantee + Help to Buy | Established houses in the outer-middle ring; inner-city units |
| Over $950,000 | Full | None — you’re over the cap | Most established middle-ring houses |
Scheme 1: The First Home Guarantee — the easiest one to understand
This is the most flexible of the three, and probably the one most people should look at first.
You buy with just a 5% deposit, and the government guarantees the rest — meaning you skip Lenders Mortgage Insurance (LMI) completely. That alone can save you tens of thousands of dollars. Since October 2025, there’s also no income limit and no cap on how many people can use it — the two big restrictions that used to shut people out are gone.
It works on established homes, which is what most buyers actually want. The catch? You’re taking out a 95% loan. That means bigger repayments and more exposure if interest rates move. With the cash rate sitting at 4.35% in 2026, it’s worth stress-testing your repayments before you commit — could you still manage if rates went up another percent or two?
If you’ve got a stable job and a small deposit and want an established home, this is usually your strongest option.
Watch: RBA Hikes 4.35% on 8-1 Vote — Melbourne Property Just Split in Two
Scheme 2: Help to Buy — smaller deposit, but you share the house
Help to Buy is for buyers whose deposit or income can’t quite stretch to the First Home Guarantee.
Here’s how it works: you put in as little as a 2% deposit, and the government becomes a part-owner of your home — up to 30% of an established property, or 40% of a new one. Because the government owns part of it, your loan is much smaller and your repayments drop a lot.
That’s the upside. Here’s the trade-off: when you sell (or when you buy the government out), they take their share of the sale price — including their share of any growth in value. For some buyers, that’s a brilliant deal. For others, it’s not worth it — it really comes down to your circumstances.
Scheme 3: The First Home Owner Grant — the $10K that only works on new builds
This is the oldest scheme, and honestly, the most limited one today.
It’s a flat $10,000 cash grant — but in Victoria, it only applies to new homes: a newly built house, an off-the-plan apartment, or a substantially renovated home, and only if it’s valued under $750,000. Buy an established home, and you get nothing from this one.
But if you’ve got your heart set on a period unit in Brunswick or an old weatherboard in Reservoir, this grant simply won’t help — you’re choosing between the other two schemes instead.
All Three, Side by Side
| First Home Guarantee | Help to Buy | First Home Owner Grant | |
| Minimum deposit | 5% | 2% | N/A (flat $10K) |
| Income cap | None | ~$100K single / $160K couple | None |
| Melbourne price cap | ~$950,000 | ~$950,000 | $750,000 (new only) |
| Works on established homes? | Yes | Yes | No |
| Avoids mortgage insurance? | Yes | Yes | N/A |
| Government shares your growth? | No | Yes (30–40%) | No |
| Best for | Steady income, established home | Lower income, max reach | New builds only |
Watch: Melbourne First Home Buyers Just Borrowed $560K — Most Will Regret It
Why This Is Really a “Units” Story?
Here’s the honest reframe most articles skip. Melbourne’s median house price (~$958,000) sits basically right on top of the $950,000 cap. That means for houses, these schemes mostly work in the outer growth corridors — not the middle-ring suburbs everyone actually wants.
Units are a totally different story. Unit prices sit comfortably under the caps across huge parts of the city — including popular middle-ring suburbs families usually think they can’t afford.
So here’s the mindset shift: stop asking “which suburb’s houses can I afford?” and start asking “which suburb’s units can I afford?” That single question opens up places like Brunswick, Preston, Coburg, Northcote and Richmond — suburbs where houses are out of reach, but units are absolutely in play.
| Threshold | Unit Suburbs in Range | House Suburbs in Range |
| New build, under $600K | Footscray, Sunshine, Dandenong, Box Hill | Melton, Wyndham Vale, Mickleham, Donnybrook |
| $600K–$750K | Brunswick, Preston, Coburg, Northcote, Reservoir | Tarneit, Truganina, Werribee, Craigieburn, Cranbourne |
| $750K–$950K | Richmond, Carlton, South Yarra, Hawthorn | St Albans, Sunshine, Reservoir, Glenroy, Frankston |
| Over $950K | Rare for units | Most middle-ring houses — out of reach |
Watch: Melbourne’s Cheap Suburbs Are Eating the Blue Chips Alive
Two Real Examples
A single buyer earning $90,000 with a 5% deposit:
Using the First Home Guarantee, they could realistically buy around $560,000–$590,000 — enough for a middle-ring unit or an outer-corridor house. Switch to Help to Buy, and the government’s equity share can stretch their buying power toward $700,000+, with lower repayments — but they’ll give up roughly 30% of future growth.
A couple earning $150,000 combined:
They’re just under the Help to Buy income cap but might still prefer the First Home Guarantee for its simplicity and full ownership of growth. With no income limit and a 5% deposit, they could target something up to $950,000 — an outer-middle house or a solid middle-ring unit. If they’re open to buying new, stacking the grant, the duty exemption and the First Home Guarantee on a sub-$600K build minimises upfront costs dramatically.
A quick way to figure out which scheme actually fits you.
The NextHouse View
Here’s the honest takeaway: the choice between these three schemes matters less than people think, because they’re built for different people, not competing with each other. New build under $750K? Stack all three — it’s the best deal on the table. Established home with steady income? The First Home Guarantee’s recent expansion has quietly made it the default best option for most buyers. Tight income and need every dollar of reach? Help to Buy is genuinely powerful — just go in knowing you’re trading future growth for present-day affordability.
But the bigger point is this: because Melbourne’s median house sits right at the cap, these schemes are mostly a pathway into units and outer-corridor houses — and that’s not a downgrade. A well-located middle-ring unit, bought with a 5% deposit and no mortgage insurance, is genuinely one of the smartest ways into this market right now. Stop chasing houses you can’t afford. Start looking at the units you can.
FAQs
- Which scheme is best in Melbourne?
It depends on your situation. Steady income + established home → First Home Guarantee. Lower income, need max reach → Help to Buy. New build under $750K → the grant, stacked with the others. - Can I use more than one scheme at once?
Yes, in the right situation. On a new build, you can often stack the $10K grant, the stamp duty exemption, and the First Home Guarantee’s 5% deposit together. Help to Buy is usually used on its own instead. - What’s the actual catch with Help to Buy?
The government part-owns your home. In exchange for a tiny deposit and small loan, they take up to 30–40% of your home’s value — and that share of your growth when you sell. - Why do these schemes mostly help with units?
Because Melbourne’s median house price is basically sitting on the scheme cap. Units, on the other hand, are priced well below it across most of the city. - Is a 5% deposit risky?
It means a bigger loan and higher repayments, and more exposure if interest rates rise. It’s worth stress-testing your budget at a higher rate before committing.
Disclaimer
General information only. This article does not constitute financial, credit, investment, tax or legal advice, and is not a recommendation to use any scheme or purchase any property. Scheme rules, income caps, price caps and dates change regularly — always confirm current settings directly with Housing Australia and the State Revenue Office Victoria, and speak with a licensed mortgage broker, financial adviser, and conveyancer before making a decision. Suburb examples are illustrative based on 2026 median data (Cotality/CoreLogic, REIV, Domain) and are not a guarantee of availability. NextHouse does not accept paid placement from developers, agents, brokers or lenders.
