What Is The Family Home Guarantee?
The Family Home Guarantee is an Australian Government initiative under the Home Guarantee Scheme.
It is designed to help eligible single parents or guardians with at least one dependent child in purchasing a home with a minimum of a 2% deposit without paying Lenders Mortgage Insurance (LMI).
LMI is often charged on deposits of less than 20%. In this scheme, if the borrower pays a 2% deposit, the government will guarantee 18% of the loan, allowing the borrower to avoid paying LMI.
The Family Home Guarantee is available until 30 June 2025.
Eligibility Requirements For Family Home Guarantee
The Family Home Guarantee in Australia has several eligibility requirements for applicants. To be eligible for the Family Home Guarantee, you must:
| Requirements | Eligibility criteria |
|---|---|
| Age | 18 years or older |
| Type of borrower | Only single applicants are accepted. You must be a single parent or legal guardian of at least one dependent child. |
| Income | Your taxable income must not exceed $125,000 Child support payments are not included in the income cap. |
| Ownership | The scheme is not limited to first-home buyers. You can be a previous home owner. You can’t currently own a property. |
| Citizenship | Applicants must be Australian citizens and 18 years or older. Permanent residents are also eligible. |
| Deposit | A minimum deposit of 2% of the property value is required. If the deposit is 20% or more, you will are not eligible for the scheme |
| Type of housing | Build a new home OR Purchase an existing home
|
Benefits of Family Home Guarantee
- You can buy a home with a deposit as low as 2% of the property value. This gets you onto the market sooner, as you don’t have to wait to save a larger deposit.
- It is a low-deposit home loan option where you save thousands of dollars on LMI as the government guarantees 18% of the value of the property with participating lender.
- You can use the guarantee to build a new home or purchase new and existing properties like houses, townhouses, apartments, house and land packages and off-the-plan properties.
While the Family Home Guarantee offers a lot of benefits for single parents, there are also some limitations you need to consider, like property price caps for desired locations.
Property Price Caps For Family Home Guarantee
| Region | Price Cap |
|---|---|
| NSW – Sydney and regional centres (Newcastle, Lake Macquarie and Illawarra) | $900,000 |
| NSW (rest of state) | $750,000 |
| VIC – Melbourne and regional centre (Geelong) | $800,000 |
| VIC (rest of state) | $650,000 |
| QLD – Brisbane and regional centres (Gold Coast and Sunshine Coast) | $700,000 |
| QLD (rest of state) | $550,000 |
| WA | $600,000 |
| WA (rest of state) | $450,000 |
| SA | $600,000 |
| SA (rest of state) | $450,000 |
| TAS | $600,000 |
| TAS (rest of state) | $450,000 |
| ACT | $750,000 |
| NT Regional | $600,000 |
| Jervis Bay Territory and Norfolk Island | $550,000 |
| Christmas Island and Cocos (Keeling) Islands | $400,000 |
How To Apply For The Family Home Guarantee
You will go through the following process to reserve a place in the Family Home Guarantee:
Step 1: Initial home loan application
You apply for a home loan with a participating lender to make a First Home Guarantee reservation. It will take 14 days for the lender to assess your financial situation.
Step 2: Get pre-approval for a home loan
Once the lender gives you a home loan pre-approval, the reservation can be extended for a further 90 days. During this time, you have to find and sign a contract of sale for an eligible property.
Step 3: Sign contract of sale
Once you sign the contract of sale, your reservation can be extended for 30 days from the signing date.
The additional period is for you and your lender to finalise the paperwork and checks for your home loan.
To ensure the extension applies, make sure you immediately inform your lender that you’ve signed the contract of sale, so your lender can notify the NHFIC.
If you cannot finalise your home loan during this period, your reservation will expire.
Frequently Asked Questions: Family Home Guarantee
What are the participating lenders in the Family Home Guarantee? add_circle remove_circle
There are three major lenders that are participating in the Family Home Guarantee:
- CBA
- NAB
- Westpac
There are also non-major lenders that are participating in the Family Home Guarantee.
- Australian Military Bank
- Australian Mutual Bank
- Auswide Bank
- Bank Australia
- Bank First
- Bank of Heritage Isle
- Bank of us
- BCU
- Bendigo Bank
- Beyond Bank
- Border Bank
- Community First Credit Union
- CUA
- Defence Bank
- Firefighters Mutual Bank
- Gateway Bank
- G&C Mutual Bank
- Great Southern Bank
- Health Professionals Bank
- Indigenous Business Australia
- Illawarra Credit Union
- IMB Bank
- Mortgageport
- Newcastle Permanent
- P&N Bank
- People’s Choice Credit Union
- Police Bank
- QBANK
- Queensland Country Credit Union
- Regional Australia Bank
- Teachers Mutual Bank
- The Mutual Bank
- UniBank
- Unity Bank
- Bank WAW
Is the scheme available for investment properties? add_circle remove_circle
No, the Family Home Guarantee is not available for investment properties. You must buy a residential property.
Can both parents apply for the Family Home Guarantee Scheme? add_circle remove_circle
Yes. Both parents (divorced or separated) can individually apply for the Family Home Guarantee.
Only one parent’s name must be on the home loan and certificate of title.
If one parent has been granted sole custody of the dependant, the other parent is not eligible for the scheme.
I am separated but my divorce has not yet been finalised. Am I eligible? add_circle remove_circle
No. The Family Home Guarantee requires applicants to be single and not have a spouse. If you are separated but still legally married, you are not eligible.
What are the disadvantages of the Family Home Guarantee? add_circle remove_circle
What are the disadvantages of the Family Home Guarantee?
- You’ll be borrowing more; the bigger the loan, the more you’ll be affected when interest rates rise.
- Repayments can be higher when you’re borrowing with a higher LVR.
- Only a small fraction of single parents satisfy the strict eligibility requirements.
- You will need to build a strong case as a single borrower. You should have a clean credit file with few or no blemishes and stable employment.
- As you’re the sole applicant, you’re depending on a single income to service the loan. Having dependants affects your borrowing power.
- Traditionally, lenders prefer single parents with mostly PAYG income. Payments from Centrelink might not be accepted.
- There are other costs associated with buying property that the deposit does not cover, such as stamp duty and mortgage fees.
What other options are available if I can’t apply for the Family Home Guarantee? add_circle remove_circle
If you don’t qualify for the Family Home Guarantee, we can help you with other options:
- If this is your first home, there are grants and schemes available for first-home buyers.
- A guarantor home loan allows you to borrow up to 105% of the property value.
- There are also no-deposit and low-deposit home loans available.
We’re here to help
Home Loan Experts can help you apply for Family Home. Discuss your situation with our mortgage brokers today, and we’ll find you the best home loan for your scenario. Call us on 1300 889 743 or fill in our free assessment form.
