What the Coalition's proposed changes mean for permanent residents buying their first home
The Liberal leader Angus Taylor has proposed cutting permanent residents from Australia’s First Home Guarantee scheme. If this policy becomes law, it will affect thousands of people who live and work here but have not yet applied for citizenship.
Right now, permanent residents are eligible for the same first home buyer programs as Australian citizens. That could soon change. Here is what the proposal means, who it affects, and what steps you can take today to protect your home buying plans.
The proposal
Angus Taylor has announced a Coalition policy to restrict the First Home Guarantee to Australian citizens only. Permanent residents, who currently qualify alongside citizens, would be excluded if the Coalition wins the next federal election and passes the required legislation.
The idea has its origins in fringe political commentary and was amplified by One Nation leader Pauline Hanson before being adopted by the Coalition as a formal housing policy position.
The First Home Guarantee is one of the federal government’s most popular first home buyer programs. It lets eligible buyers purchase a property with as little as a 5% deposit, with the government guaranteeing the remainder so you avoid paying Lenders Mortgage Insurance (LMI). Avoiding LMI can save buyers tens of thousands of dollars and allows you to enter the market years sooner than if you had to save a full 20% deposit.
Current eligibility
Under current rules, the First Home Guarantee is open to both Australian citizens and permanent residents. To qualify, you also need to meet these conditions.
Permanent residents who meet these criteria can currently buy with a 5% deposit and no LMI. Use our borrowing power calculator to understand how much you can borrow under current conditions.
What would change
If the Coalition wins the election and passes this policy, permanent residents would no longer be able to use the First Home Guarantee. The practical impact is significant.
Without the scheme, most lenders require a 20% deposit before waiving LMI. For a median-priced Sydney property, that could mean needing hundreds of thousands of dollars more in savings before you qualify. Alternatively, you could purchase with a smaller deposit and pay LMI out of pocket.
LMI on a $700,000 property with a 10% deposit typically costs between $12,000 and $20,000. At a 5% deposit the premium is higher still. LMI is usually added to your loan balance, so you pay interest on it over the life of the loan.
The change would also affect the Regional First Home Buyer Guarantee and potentially the Family Home Guarantee, depending on how any legislation is drafted.
Your options now
If you are a permanent resident with plans to buy your first home, here are the practical paths available to you.
A mortgage broker will assess your deposit, income, and visa status to find the most practical path for your situation.
Broader housing debate
This proposal sits within a wider conversation about housing, immigration, and affordability. The Coalition’s 2026 immigration policy has attracted attention for its potential effect on housing demand. Restricting first home buyer schemes is a related but distinct lever.
Housing affordability is a real challenge for many Australians. Supply constraints, rising construction costs, and a shortage of affordable stock all contribute. Critics argue that removing permanent residents from the First Home Guarantee does little to address these root causes while creating barriers for people who are committed, long-term contributors to Australian society.
This policy has not yet passed. An election must be won and legislation introduced. But if you are a permanent resident with home buying plans, understanding your current entitlements and acting while they remain in place is the smart strategy. Our team at Serres Property Finance is ready to help you plan your next step.
Common questions
Q: Can permanent residents currently use the First Home Guarantee?
Yes. Under current rules, Australian permanent residents are eligible alongside citizens, provided they meet income caps, price thresholds, and other criteria. The Coalition has proposed restricting this to citizens only, but no legislation has passed.
Q: When would permanent residents lose access?
Only if the Coalition wins the next federal election and passes legislation changing eligibility requirements. As of April 2026, permanent residents can still apply for the guarantee.
Q: If I buy before the rules change, am I protected?
Yes. If you purchase and settle under current rules, future changes to eligibility do not affect your completed purchase. The guarantee applies based on the rules in place at the time you buy.