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A guide to the government’s Home Guarantee schemes

By ,| 4 min read

Saving up for a home deposit is no easy feat – especially with housing affordability being an issue across Australia.

To avoid being charged Lenders Mortgage Insurance (LMI), it’s generally advisable to save a deposit of at least 20%. This 20% deposit is in addition to numerous other upfront costs, such as stamp duty, conveyancing fees and more.

While you wait for your deposit to grow, your dream home could pass you by. This is where the Home Guarantee schemes could help.

In this article we’ll discuss more about the First Home Guarantee, the Regional Home Guarantee and the Family Home Guarantee.

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What is the First Home Guarantee?

Previously known as the First Home Loan Deposit Scheme (FHLDS), the First Home Guarantee is a government scheme designed to help first home buyers enter the property market with a low deposit.

Under this scheme, eligible first home buyers are able to purchase a home with a minimum deposit of just 5%. The government guarantees up to the remaining 15% allowing lenders to approve LMI-free home loans for low deposit borrowers.

The scheme has increased its number of places to 35,000 per year, up from 10,000 in 2021.

Who is eligible for the First Home Guarantee scheme?

The general eligibility criteria for the First Home Guarantee is as follows:

  • Applicants must be first home buyers – this extends to your partner, if you intend to buy the home as a couple
  • Applicants must be Australian citizens who are at least 18 years old
  • Applicants should intend to be owner occupiers of the property – this scheme is not for those wanting to purchase an investment property
  • Applicants can apply as a single person or a couple (couples must be married or in a de-facto relationship)
  • Single applicants can have an annual taxable income of no greater than $125,000
  • Couples can have a combined annual taxable income of no greater than $200,000.

What property types does the First Home Guarantee cover?

Under the First Home Guarantee, buyers can purchase any type of residential property including:

  • A new or established house, townhouse or apartment
  • A house and land package
  • An off-the-plan apartment or townhouse
  • Land and a building contract for construction of the home.

However, the property you purchase must fall under the relevant price cap threshold for your state/territory. Here are the price caps for the 2022-2023 financial year:

State/territoryCapital city/regional centresRest of state
NSW$900,000$750,000
VIC$800,000$650,000
QLD$700,000$550,000
WA$600,000$450,000
SA$600,000$450,000
TAS$600,000$450,000
ACT$750,000-
NT$600,000-

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What is the Regional Home Guarantee?

The Regional Home Guarantee is very similar to the First Home Guarantee in that it helps rural Aussies with low deposits buy property sooner.

One key difference, however, is that you don’t have to be a first home buyer to apply for the scheme – although you can’t have owned land in the past 5 years. The scheme is available to both Australian citizens and permanent residents.

The Regional Home Guarantee is a new initiative set to provide 10,000 places to regional home buyers. With interest in regional housing markets on the rise, this could help more home buyers consider a move away from the cities.

What is the Family Home Guarantee?

The Family Home Guarantee is a government program helping eligible single parents with dependent children buy a home with a low deposit.

Under this scheme, eligible applicants can buy a home with a deposit as low as 2%, with the government guaranteeing up to 18%.

Like the Regional Home Guarantee, applicants don’t need to be first home buyers to qualify.

When it was first introduced in the 2021 budget, the government announced 10,000 places over a period of 4 financial years. A further 5,000 places are set to be added in the upcoming financial year.

Who is eligible for the Family Home Guarantee?

The general eligibility criteria for the Family Home Guarantee is as follows:

  • Applicants must be single – they cannot be married or have a de-facto partner. Those who are separated, but not divorced are not considered to be single
  • Applicants must have at least 1 dependent child
  • While applicants do not have to be first home buyers, they must not currently own property
  • Applicants must have a taxable income of up to $125,000
  • Residential properties are eligible under the scheme, including new and existing houses, townhouses and apartments, off-the-plan homes, house and land packages, as well as land and build contracts.

Property price thresholds apply and are the same as the First Home Guarantee. See the table above for more information or use the postcode search tool to find out how much you can spend on a home.

These 3 guarantees could help you own your dream home sooner. If you’d like to find out more about these schemes or your home loan options, book an appointment with a Lendi Home Loan Specialist today.

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Tags: home loan, saving, lmi (lenders mortgage insurance), deposit, low deposit, no deposit home loan, first home, first home buyer, new purchase

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