Since 2021-22, the Australian Government has facilitated a scheme called the Family Home Guarantee.
Let’s find out what it is and whether you can benefit from it.
What is the Family Home Guarantee?
Under the scheme, a single parent with dependants can build a new home or purchase an existing one with as little as 2% of the property value, 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 through 30 June 2025.
There were initially 10,000 total places under the scheme. As of 1 July 2022, the government is adding 5,000 additional cases a year.
50,000 Places From 1 July 2022
Beginning in financial year 2022-23, the government will provide a total of 50,000 places each year under the various schemes:
- 35,000 total places a year under the First Home Guarantee; this is an increase from the 10,000 currently available
- 5,000 additional places a year under the Family Home Guarantee, from 1 July 2022 to 30 June 2025
- 10,000 places under the new Regional Home Guarantee from 1 October 2022 to 30 June 2023; this scheme would be open to first-home buyers and anyone who has not owned property within the last five years. The legislation has not passed yet.
What are the eligibility criteria?
The Family Home Guarantee is for single parents with dependants.
The government estimates that around 125,000 single parents are eligible, with 84% of them being single mothers.
| Requirements | Eligibility criteria |
|---|---|
| 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 not 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
|
As more information is announced, we will update the eligibility criteria.
What are the price caps for the scheme?
| Region | FY 2021-22 | FY 2022-23 |
|---|---|---|
| NSW – Sydney & regional centres (Newcastle, Lake Macquarie & Illawarra) |
$800,000 | $900,000 |
| NSW – rest of state | $600,000 | $750,000 |
| VIC – Melbourne & regional centre (Geelong) |
$700,000 | $800,000 |
| VIC – rest of state | $500,000 | $650,000 |
| QLD – Brisbane & regional centres (Gold Coast & Sunshine Coast) |
$600,000 | $700,000 |
| QLD – rest of state | $450,000 | $550,000 |
| WA – Perth | $500,000 | $600,000 |
| WA – rest of state | $400,000 | $450,000 |
| SA – Adelaide | $500,000 | $600,000 |
| SA – rest of state | $350,000 | $450,000 |
| TAS – Hobart | $500,000 | $600,000 |
| TAS – rest of state | $400,000 | $450,000 |
| ACT | $500,000 | $750,000 |
| Northern Territory | $500,000 | $600,000 |
Where are the regional centres?
The regional centres apply to cities with a population over 250,000:
- Newcastle & Lake Macquarie
- Illawarra (Wollongong)
- Geelong
- Gold Coast
- Sunshine Coast
What are the price caps for territories?
| Territory | FY 2021-22 | FY 2022-23 |
|---|---|---|
| Jervis Bay Territory Norfolk Island |
$550,000 | $550,000 |
| Christmas Island and Cocos (Keeling) Islands | $400,000 | $400,000 |
How do I apply?
You will need to apply via the National Housing Finance and Investment Corporation (NHFIC).
If you’re successful, you will need to apply for a home loan with a participating lender.
There is no waiting list for the scheme.
Which lenders are participating?
NAB and CBA are the two major banks participating in the Family Home Guarantee Scheme.
As names of other banks and lenders become available, we will update this page.
FAQs: Family Home Guarantee
Is the scheme available for investment properties?
No. The Family Home Guarantee is not available for investment properties.
You must buy a residential property.
Can both parents apply for it?
Yes. Both parents (divorced or separated) can individually apply for the Family Home Guarantee.
Only one name of the single parent must be on the home loan and certificate of title.
However, if one parent has sole custody of the dependant, then he/she is not eligible for the scheme.
Should I apply for the scheme?
The Family Home Guarantee is aimed at single parents who want to buy a property sooner without paying LMI.The biggest benefit is the thousands of dollars saved by avoiding LMI, since the government is acting as a guarantor and backing the borrower.
However, the scheme has some disadvantages:
- You’ll be borrowing more; the bigger the loan, the more you’ll be affected when interest rates rise.
- You will have a high loan-to-value ratio (LVR), which makes falling into negative equity (when your loan amount is higher than property value) more likely.
- Repayments can be higher when you’re borrowing with a higher LVR.
- Only a small fraction of single parents satisfy the strict eligibility criteria.
- 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.
Super Home Buyer Scheme
The Coalition proposed the Super Home Buyer Scheme ahead of the federal election in May 2022. It is designed to help first-home buyers purchase a home sooner by using part of their super as a deposit. The plan will go into effect only if the Coalition wins re-election. You can get all the details of the scheme here.
We’re here to help
Home Loan Experts can help you lodge an application for the Family Home Guarantee.
We have other options available if you don’t qualify for the scheme:
- If this is your first home, there are grants and schemes available for first-home buyers.
- A guarantor home loan helps you borrow up to 105% of the property value.
- There are also no-deposit and low-deposit home loans available.
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.
