Key points in this blog 
Government announces Home Guarantee Scheme in effect on 1st July 2022
40,000 new places available to first home buyers (35,000) and single parents (5,000) every financial year.
Under the scheme, first home buyers can apply for a home loan with a deposit as low as 5%.
Single parents can apply for a home loan with a deposit of just 2%.
No requirement to pay a Lenders Mortgage Insurance.
Increased property price caps under the scheme
Read on for more info…
As we enter a new financial year, the government is making big changes to some of its home-buyer support, one of them being the introduction of the Home Guarantee Scheme, which came into effect on 1st July 2022.
What is it? Why is it important? Here we’ll be answering those questions and going into more detail so you can better understand it. So, let’s get into it.
What is the Home Guarantee Scheme?
The Home Guarantee Scheme (HGS) is an initiative of the Australian government to help home buyers get into a home sooner. The scheme is operated by the National Housing Finance and Investment Corporation (NHFIC).
The HGS currently includes two other schemes – The First Home Guarantee (FHBG), formerly known as the First Home Loan Deposit Scheme, and the Family Home Guarantee (FHG).
The New Home Guarantee will no longer be available for any new applications from 1st July 2022 onwards. However, anyone who reserved a place in the NHG on or before 30th June 2022, will still be able to progress to settlement, as long as they meet the eligibility criteria, NHG requirements and timelines.
Under the Home Guarantee Scheme:
- Australians will have access to 40,000 new places every financial year.
- Of those, 35,000 places will be available (every financial year) to eligible first-time home buyers under the FHBG.
- And 5,000 will be available (every financial year) to eligible single parents with at least one dependent child under the FHG.
Not every lender has allocations under this scheme. If you’d like to apply, be sure to speak with your Nectar mortgage broker for expert assistance in finding an appropriate lender and home loan to suit your individual circumstances.
You can find the full list of participating lenders here.
The First Home Guarantee (FHBG)
The FHBG is set up by the Government to help eligible first home buyers get their first home sooner.
Normally, first home buyers are required to pay Lenders Mortgage Insurance (LMI) if they have a deposit of less than 20% of the total property value.
However, with FHBG, eligible buyers can get their first home with a deposit as little as 5%, without paying LMI! The remaining 15% is guaranteed by the NHFIC.
Lenders Mortgage Insurance is a type of fee that banks and other lenders often charge on loans where the borrowing exceeds 80% of the property value. It’s usually a one-off payment, and it only protects the lender, not you, if you default on your loan. Not having to pay this can save buyers serious money!
For more detailed information on the FHBG, download our guide here.
Otherwise, read our eligibility guide below.
The Family Home Guarantee (FHG)
The Family Home Guarantee is set up by the Australian Government to help eligible single parents, with at least one dependent child, to buy a home for their family.
With the FHG, eligible single parents can build a new home or buy an existing home. They can do this with a deposit as low as 2% of the property value! It doesn’t matter if they have owned a property previously or if they are a first home buyer, but they can not currently own a property.
For more detailed information on the FHG, download our PDF here.
Otherwise, read our eligibility guide below.
Property types available for FHBG and FHG
The property must be a ‘residential property’ for it to be eligible. These include:
- Existing houses, apartments or townhouses
- House and land packages
- Land as well as a separate contract to build a home
- An off-the-plan apartment or townhouse
Eligibility for FHBG and FHG
| First Home Guarantee | Family Home Guarantee |
|---|---|
| Must be an Australian citizen, 18 years old at least. Permanent residents do not qualify. | Must be an Australian citizen 18 years old at least. Permanent residents do not qualify. Must be a single parent and be caring for one dependent child at least. |
| If single, must have a maximum taxable income of $125,000 per annum for the previous financial year, as shown on the Notice of Assessment issued by the Australian Taxation Office. If a couple, must have a combined taxable income of up to $200,000 for the previous financial year, as shown on the Notice of Assessment issued by the Australian Taxation Office. | Must have a taxable income of up to $125,000 per annum for the previous financial year, as shown on the Notice of Assessment issued by the Australian Taxation Office. Payments for child support are not included as part of the income. |
| Couples only qualify if they are married or in a de-facto relationship with each other. | Must be the only name listed on the loan and certified title. |
| Other persons planning to buy together such as siblings, parent and child, friends, etc. do not qualify. | Must be the natural or adoptive parent of a dependent child or children. Alternatively, they must show that they are the natural or adoptive parent of a child between the age of 16 and 22, who receives a disability support pension and lives with them. |
| Applicants who are single or couples must provide a deposit of at least 5% of the value of an eligible property. People with 20% or more funds available to them will not be eligible. | Applicants must provide a deposit of at least 2% of the value of an eligible property. Single parents with 20% or more funds available to them will not be eligible. |
| Loans need to have scheduled repayments of the principal and interest of the loan for the full period of the agreement. Some exceptions apply. | Loans must have scheduled repayments of the principal and interest of the loan for the full period of the agreement. The loan should not be any longer than 30 years. |
| Must plan to be the owner and occupiers of the property. | Must plan to be the owner and occupiers of the property. An exception may be granted if they are an active member of the Australian Defence Force. |
| Must be first home buyers, i.e. they must not have previously owned, or had an interest in, a property (including owning, or having owned land) in Australia, either separately or jointly with someone else. | They can either be first home buyers or have owned a property previously, however they must not currently own a property, own the lease of a property, own land, own the lease of a piece of land or own a company title interest in land in Australia. |
Source: The National Housing Finance and Investment Corporation (NHFIC)
Property Price Thresholds
| State | Capital city & regional centres* | Rest 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 |
| Territory | All areas |
|---|---|
| ACT | $750,000 |
| NT | $600,000 |
| Jervis Bay Territory & Norfolk Island | $550,000 |
| Christmas Island & Cocos (Keeling) Islands | $400,000 |
* The capital city price thresholds apply to regional centres with a population over 250,000 (Newcastle & Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast and Sunshine Coast), recognising that dwellings in regional centres can be significantly more expensive than other regional areas.
Source: The National Housing Finance and Investment Corporation (NHFIC)
How to apply
Think you might qualify for a FHBG or a FHG? Talk to your friendly Nectar mortgage broker for more information. Nectar brokers have access many of the participating lenders to find you the most appropriate loan* and help you with your application.
Important notes
All participating lenders will need your land to be titled before the NHFIC issue a guarantee. The land will need to be titled prior to the conclusion of the 90-day pre-approval period.
*All loans subject to suitability and lender conditions.