Since 2021-22, the Australian Government has facilitated a scheme called the Family Home Guarantee.
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.
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.
Home Guarantee Scheme Expands Eligibility For 2023-24
The federal government has announced changes to the Home Guarantee Scheme. The changes will greatly expand the number of people eligible to participate in the scheme. From 1 July 2023:
- Friends, siblings and other groups of family members can jointly apply for the First Home Guarantee and Regional First Home Buyer Guarantee.
- Non-first-home buyers who have not owned property during the last 10 years can also apply.
- Borrowers who are single legal guardians of children – such as their aunts, uncles and grandparents – can apply for the Family Home Guarantee.
- Australian permanent residents are eligible to apply for all three schemes: First Home Guarantee, Regional First Home Guarantee and Family Home Guarantee.
With the expansion of the eligibility criteria, owning a home could be within reach for many more buyers. To find out if you can apply, call us on 1300 889 743 or complete our free assessment form today.
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
What Are The Eligibility Requirements?
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 |
|---|---|
| Age | 18 years or older |
| 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
|
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 through a participating lender.
The National Housing Finance and Investment Corporation (NHFIC) does not accept applications and does not maintain a waiting list for scheme places.
Once you apply, your lender will tell you if you were successful in reserving a place for the Family Home Guarantee
What Is The Process To Reserve A Place?
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.
Which Lenders Are Participating?
NAB, CBA and Westpac are the three major banks participating in the Family Home Guarantee Scheme.
The non-major lenders are:
- Australian Military Bank
- Auswide Bank
- BankSA
- Bank Australia
- Bank First
- Bank of Melbourne
- Bank of us
- Bendigo Bank
- Beyond Bank Australia
- Community First Credit Union
- CUA
- Defence Bank
- Gateway Bank
- G&C Mutual Bank
- Indigenous Business Australia
- Mortgageport
- MyState Bank
- People’s Choice Credit Union
- Police Bank (including the Border Bank and Bank of Heritage Isle)
- P&N Bank
- QBANK
- Queensland Country Credit Union
- RAMS
- Regional Australia Bank
- St.George
- Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank Ltd)
- Teachers Mutual Bank Limited (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank)
- The Mutual Bank
- WAW Credit Union
FAQs: Family Home Guarantee
No. The Family Home Guarantee is not available for investment properties.
You must buy a residential property.
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.
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.
- At least 16 years but under 22 years old
- The young person is wholly or substantially dependent on the single parent
- The young person’s income in the financial year does not exceed $6,403.
No, owning land qualifies as owning property in Australia. You cannot use the guarantee to build on it.
If you turn your home into an investment property, your home loan is no longer eligible for the Family Home Guarantee. Your lender might require you to take certain actions, including paying fees or charges for LMI.
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.
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.
