25 Jul HOWZD VS FIRST HOME BUYER GUARANTEE
YOU COULD BE $67,500 BETTER OFF UNDER ONE OF THEM.
With the refreshed First Home Buyer Guarantee (FHBG) launching on 1 October 2025, many aspiring homeowners are weighing their options. But not all buyers will benefit equally — and not all homes are eligible.
That’s where HOWZD comes in. It’s a modern, flexible path to homeownership that doesn’t require any deposit at all. So how do the two compare?
Let’s break it down.
FIRST, A QUICK REFRESHER:
FHBG (2025 version) allows eligible buyers to purchase a home with as little as 5% deposit. The federal government guarantees up to 15% of the loan, allowing you to avoid LMI (Lenders Mortgage Insurance).
It’s open to:
- First home buyers
- People who haven’t owned a home in 10+ years
- Applicants buying their principal place of residence (PPR)
There are no income limits and no caps on the number of places, but property price caps apply, and they vary by state and region.
HOWZD: NO DEPOSIT, NO CATCH
HOWZD helps you buy a brand-new apartment or townhouse with zero deposit.
The platform facilitates a 20% interest-free loan for the first five years*. You secure the remaining 80% through a standard bank mortgage.
There are no income caps, property caps, or restrictions on who can apply — as long as you can afford to service the mortgage.
From day one, you get full ownership. After five years, if the 20% isn’t repaid, interest begins to accrue and an extension fee is payable.
REAL-WORLD EXAMPLE: BUYING A $1.5M HOME
Let’s say you’re buying a $1.5 million brand-new home. Here’s how the numbers stack up:
Under FHBG:
- You provide a 5% deposit = $75,000 (your own savings)
- The bank lends you $1,425,000 (95%), including a 15% government guarantee, so you can avoid LMI
- But you still pay interest on the full $1,425,000 (95%) loan from day one
If you look at that additional 15% deposit you are borrowing from the bank, you’re paying an average 6% interest on that over five years, that means:
- $225,000 × 6% = $13,500 per year in interest
- Over 5 years: $67,500 in interest paid on that portion alone
Also, your $75,000 deposit is tied up and can’t be used in an offset account, where it could have reduced the interest paid on your main loan.
Under HOWZD:
- You contribute $0 deposit
- HOWZD facilitates a $300,000 interest-free loan (20%)*
- Your mortgage is $1.2 million (80%), which you service normally
- No interest is paid on the $300,000 for five years*
Better off with HOWZD over 5 years:
- You avoid paying $67,500 in interest on that equivalent 15% portion
- Your $75,000 isn’t locked into a deposit and can be used to off-set your interest repayments on your Main Bank Loan.
Note – this is an example only for illustrative purposes.
WHICH ONE IS BETTER?
Use HOWZD if:
- You’re a first-home buyer looking for a brand-new apartment or townhouse
- You want to avoid paying interest on a large loan component
- You don’t want to tie up your savings as a deposit
- You need flexibility or are looking to buy above your state’s FHBG property cap
- You’re an investor or a second home buyer or looking to ‘rentvest’
Use FHBG if:
- You can’t find the home you want on HOWZD
- You’re buying a second-hand home below the price cap in your state or region
For most first home buyers looking to buy a new build, HOWZD leaves you significantly better off over five years.
SIDE-BY-SIDE COMPARISON
| Feature | HOWZD | FHBG (2025) |
|---|---|---|
| Deposit Required | 0% | Minimum 5% |
| Interest-Free Funding | Yes, 20% for 5 years* | No |
| LMI Avoidance | Yes | Yes |
| Full Ownership | Yes | Yes |
| Capital Growth Limitations | None | None |
| Eligibility | Open to all buyers | First home buyers + 10-year returnees |
| Income Caps | None | None |
| Property Type | Brand-new homes only | New or existing homes |
| Property Price Caps | None | Yes (state-based) |
| Investor Use | Yes | No |
| Availability | Unlimited | Unlimited |
THE VERDICT
FHBG is a solid option for buyers within capped price brackets who want to buy second-hand homes. But for homes over the cap, new builds, buyers without savings, or those wanting a faster, interest-free path in, HOWZD is the clear winner.
Whether you’re a first-time buyer or returning after a decade, compare both options carefully.
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