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How does the 2022 budget affect home buyers and housing affordability?

By ,| 3 min read

On Tuesday night, treasurer Josh Frydenberg announced the federal government budget for the 2022-2023 financial year.

This year’s budget comes just a few months out from a federal election, and prioritises factors such as the rising cost of living, flood recovery and home ownership.

With property prices remaining sky high in many areas across the country, buying a home can seem like an out of reach dream.

In this article, we’ll outline the measures included in the federal budget that could help aspiring home buyers get into the property market, as well as what the government is doing to address Australia’s housing affordability problem.

First Home Guarantee expanded for first home buyers

The government’s Home Guarantee Scheme – which includes the First Home Guarantee (formerly known as the First Home Loan Deposit Scheme), the Family Home Guarantee and a new Regional Home Guarantee – has been given a significant boost in this year’s budget.

Across the three guarantees, $8.6 million will be spent over 4 years starting from the 2022-2023 financial year.

The places available under the First Home Guarantee have more than doubled, from 10,000 up to 35,000 per year.

The First Home Guarantee allows first home buyers to purchase a home with a deposit as low as 5%, with the government guaranteeing up to 15% of the property’s purchase price.

The guarantee helps buyers avoid paying Lenders Mortgage Insurance (LMI), which would otherwise typically be charged on deposits below 20%.

The First Home Guarantee is available on any type of residential property, including:

  • An existing house, apartment or townhouse
  • A newly built home
  • An off the plan property
  • A house and land package.

Applicants must have an annual taxable income of up to $125,000 for singles and $200,000 for couples. The price caps are the same as when the First Home Guarantee was known as the First Home Loan Deposit Scheme. Check out this table to see the price caps for where your area:

State/territoryCapital city/regional centresRest of stateOther
NSW$800,000$600,000
VIC$700,000$500,000
QLD$600,000$450,000
WA$500,000$400,000
SA$500,000$350,000
TAS$500,000$400,000
ACT$500,000-
NT$500,000-
Jervis Bay Territory & Norfolk Island--$550,000
Christmas Island and Cocos (Keeling) Islands--$400,000

You can also use the postcode search tool to find the property price cap for your area.

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Family Home Guarantee extended for single parent families

Introduced in last year’s federal budget, the Family Home Guarantee has been expanded with an additional 5,000 places available per year until 2025.

The Family Home Guarantee helps single parents with dependent children buy a property with a deposit as low as 2%. The federal government can guarantee up to 18% of the home’s purchase price.

You don’t have to be a first time buyer to access this guarantee, meaning you’re still eligible if you’ve owned a property in the past, but you do not currently own one.

To be eligible for the Family Home Guarantee, you must be a single parent with at least one dependent child and an Australian citizen with an annual taxable income of no more than $125,000.

The types of eligible properties and property price caps for the Family Home Guarantee are the same as those for the First Home Guarantee.

You can check the postcode search tool to find out the price cap for your area.

Regional Home Guarantee introduced for regional home buyers

The COVID-19 pandemic has seen a rise in demand for housing in Australia’s regions, which has in turn pushed up regional housing prices.

The government has responded by introducing the Regional Home Guarantee in this year’s budget, which assists those wanting to buy or build a new property in a regional area.

Like the First Home Guarantee, the Regional Home Guarantee allows borrowers to buy a newly built home or build their own with a deposit as low as 5%. The government then guarantees up to 15% of the property’s purchase price.

However, unlike the First Home Guarantee, the Regional Home Guarantee is open to anyone who hasn’t owned a home in the last 5 years, meaning the scheme isn’t restricted to first time buyers.

The scheme begins in the 2022-2023 financial year, and will have 10,000 places available per year. It’s open to Australian citizens and permanent residents.

At the moment, there isn’t information available about property price caps and other eligibility criteria.

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Boost to National Housing Finance and Investment Corporation

Housing affordability has become a significant issue in Australia, especially since the onset of COVID-19 and with the cost of living rising.

As part of this year’s budget, the government has announced it will contribute $2 billion to the National Housing Finance and Investment Corporation (NHFIC).

The funding boost will increase the liability cap for low-cost loans that the NHFIC supplies to community housing providers. These loans then help community housing providers to offer more affordable and social housing options.

With this latest funding increase, 10,000 dwellings should be supported by the NHFIC.

Funding for National Housing and Homelessness Agreement

The government has pledged $1.64 billion to the National Housing and Homelessness Agreement (NHHA) in 2022-2023, in another funding increase aimed at making housing more affordable and preventing homelessness.

This is in line with the $1.6 billion the government provided for the NHHA last financial year.

The NHHA began in 2018 in a bid to improve Australians’ access to affordable, secure housing and to reduce homelessness in Australia.

If you want to know more about accessing these government schemes or you just want to explore your home loan options, our Home Loan Specialists are here to help. Book an appointment 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.

Tags: federal budget, home loan, first home buyer, first home, family home

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