Back to Inspire Home

Finance

The Regional Home Guarantee – buy a home with a 5% deposit

By ,| 3 min read

Want to buy a home in a regional area of Australia? Well, help with that hefty deposit is on the way.

The Regional Home Guarantee is a government initiative launching in the upcoming financial year. Its aim is to help Aussies purchase a home in regional areas with a low deposit.

In this article, we’ll explain what the Guarantee is, how it works, who is eligible, as well as the pros and cons.

Read more about the other Home Guarantee schemes.

What is the Regional Home Guarantee and how does it work?

Announced as part of the 2022/23 Federal Budget, the Regional Home Guarantee is a scheme under the same umbrella as the First Home Guarantee and Family Home Guarantee.

The scheme is designed to help regional buyers purchase a home with a low deposit and avoid paying Lenders Mortgage Insurance (LMI). Under the scheme, you can buy a home with a deposit as low as 5%, with the government guaranteeing up to 15%.

For example, let’s say you’re interested in buying a property selling for $600,000. A 20% deposit would cost $120,000 – a huge sum of money! With the Regional Home Guarantee, you’d only need a minimum deposit of $30,000 and the government would guarantee the rest.

Typically, buyers with deposits under 20% are required to pay LMI which can add thousands onto your home loan costs. With the Regional Home Guarantee, the government acts as your guarantor meaning that you can avoid LMI.

With house prices being sky high across most of the country, a 20% deposit can be a lot of money and take a long time to save up.

For example, Sydney’s median house price was listed at around $1.6 million in January 2022. To reach a 20% deposit for a property at this price, you’d have to save up around $320,000.

It’s also important to remember that while your home deposit will likely be your largest upfront home buying cost, it’s not the only one. Home buyers should also think about saving up for:

  • Stamp duty
  • Legal and conveyancing costs
  • Moving costs
  • Home loan application and establishment fees.

How many places are available for the Regional Home Guarantee?

According to the 2022/23 Federal Budget, there will be 10,000 places per year in the scheme until 30 June 2025.

If you miss out on a place in the Regional Home Guarantee, you may still be eligible to apply for another Home Guarantee scheme.

And don’t forget to check if you’re eligible for other home buyer assistance programs and concessions.

Have you checked interest rates lately?

We search over 25 major Australian lenders in seconds.

Get today's rate

Who is eligible for the Regional Home Guarantee?

The eligibility criteria for the Regional Home Guarantee is as follows:

  • Applicants must be an Australian citizen or permanent resident
  • While applicants do not need to be a first home buyer, they can’t have owned property in the past 5 years
  • You need to build or buy a new home in regional Australia – established homes are not covered by the scheme
  • Applicants should intend to be owner-occupiers, rather than use the home as an investment property
  • There will be income thresholds limiting eligibility, but details have not yet been released.

Property price thresholds for the Regional Home Guarantee

In addition to the number of eligibility requirements, there are property price caps in place. 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-

How to apply for the Regional Home Guarantee

As the Regional Home Guarantee has not officially launched yet, we don’t have specific details on the application process. However, it’s likely that you will need to apply through a participating lender.

What are the benefits of the Regional Home Guarantee?

Regional Aussies are in luck with this scheme that helps eligible buyers skip the pain of saving up a significant deposit.

Here are some of the benefits of the scheme:

  • Own a home sooner: since you don’t need to wait until you’ve saved enough money for a 20% deposit, you can find your dream home in regional Australia sooner
  • Avoid paying LMI: the scheme allows you to have a deposit as low as 5% and avoid paying LMI
  • Build equity and avoid rent: owning a home can be the greatest source of wealth for many Australians. Plus, your repayments will go towards building home equity, rather than to the pockets of your landlord
  • Relief for cities: while many areas of Australia have experienced recent property price growth, housing affordability is a major issue in Australia’s big cities. This scheme could relieve some pressure and encourage movement towards regional areas.

Get a free property report in seconds

Search an address for price estimates and sales history.

Search a property

What are the drawbacks of the Regional Home Guarantee?

There aren’t many drawbacks to the Regional Home Guarantee as it has the potential to greatly assist many regional home buyers.

However, the strict and specific eligibility criteria could limit a number of buyers from applying to the scheme. For example, the fact that you can only access the scheme if you are buying or building a newly constructed home.

If you have home loan questions or want to learn more about your mortgage options, book a free appointment with a Home Loan Specialist today.

What could your home loan repayments look like?

Calculate your loan repayments

$
%
years

Got a home loan question? Just ask!

We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a Home Loan Specialist here

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

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates
Home loan repayment saver tool

Home loan repayment saver tool

Enter a few details about your home loan and see how much you could save on your repayments

Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.

# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.

Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 25 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.

*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.

IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria. Top rates include lenders who are on our panel and are then defined by the circumstances provided by the borrower.

The Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.

Made with love at Circular Quay in Sydney, Australia. © 2022. All rights reserved.