Last month the federal government announced the federal budget for the 2021-2022 financial year, which contained a whole host of measures designed to boost Australia’s recovery from the impacts of the COVID-19 pandemic.
One of these measures was the Family Home Guarantee (FHG), a government program to help eligible single parents with dependent children buy a home.
In this article we break down the details of the FHG, including the eligibility criteria and property price thresholds across the country.
Under the FHG, eligible single parents with dependent children can apply for a home loan with a deposit as little as 2%, without paying Lenders Mortgage Insurance (LMI). The government then guarantees up to 18% of the home’s purchase price to the participating lender. This means that deposits of 20% or higher are not covered by the program.
Even though the government guarantees a portion of the purchase price of the property, eligible applicants are still required to show that they can service the loan. This means that participating lenders will still assess the borrower’s capacity to pay back the mortgage over the loan term.
Ultimately, the government has recognised that it can be more difficult for single parent families to get into the property market, because it can be harder to save for a deposit with only one income. So, the FHG is designed to overcome this hurdle that often stops these families from buying a home.
There are 10,000 places available in the program - 2,500 per year for the next four years, starting 1 July 2021.
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Properties covered by the FHG can only be owner-occupier and residential. This includes:
As for the conditions of the loan taken out to pay for the property, the FHG requires loans to consist of principal and interest repayments, and a loan term of no more than 30 years. Also, the single parent must be the only name listed on the loan and the certificate of title.
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The FHG sets out the maximum prices of properties that can be purchased under the program. See the table below for the price thresholds for different locations in Australia:
|State||Capital cities and regional centres||Rest of state|
The program conditions stipulate that regional centres are those with populations over 250,000: Newcastle and Lake Macquarie and Illawarra (Wollongong) in NSW; Geelong in Victoria; and the Gold Coast and Sunshine Coast in Queensland.
Applications can be made directly through the lenders participating in the scheme. The National Housing Finance and Investment Corporation, the government body that oversees the scheme, does not take applications directly.
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Single parents who want to apply will have to do so through the participating lenders, which are the same as the lending panel for the First Home Loan Deposit Scheme (FHLDS).
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If you have questions about applying for a home loan with the Family Home Guarantee, speak to one of our friendly Home Loan Specialists at a time that suits you.
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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.
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