The Family Home Guarantee Scheme was released on 1 July 2021 to help single-parent families get into (or back into) the property market. In very simple terms, the scheme allows single parents to purchase an existing house or build a new one with a 2% deposit. Banks and lenders require a minimum of 5% deposit normally, but they also require borrowers to pay lender’s mortgage insurance if they haven’t saved a 20% deposit.
Let’s look at an example of how the Family Home Guarantee Scheme could help a single-parent family living in Queensland. If the family wanted to purchase an existing home valued at $500,000, they would normally need to save a deposit of 20% plus costs to avoid paying lender’s mortgage insurance.
20% of $500,000 is $100,000, so the family would have to save this before purchasing a home. Under the scheme, the family would only need to save a 2% deposit, with the scheme covering the other 18%. This means the family now needs a $10,000 deposit plus other costs such as conveyancing and stamp duty.
The great thing about the Family Home Guarantee Scheme is that eligibility is open to so many Australians. Single parents with one or more dependents can access the scheme, even if they have owned a home in the past. You could be eligible for the scheme if:
You’re an Australian citizen over the age of 18
You’re a single parent with one or more dependent children
Your income for the previous financial year was less than $125,000
You have saved 2% of the property’s value, plus other upfront costs such as stamp duty
You intend to live in the house you’re buying
You don’t currently own a home, investment property or other land titles
The great news is the Family Home Guarantee Scheme is available for most property types in Australia, provided you intend to live in the property. The properties you can buy or build include:
A house, townhouse or apartment
A house and land package
An off-the-plan apartment or townhouse
Land, provided you have a separate contract to build a home on the land
Along with the other eligibility requirements, there are price thresholds for houses that can be purchased. These limits are different for each state, based on general market conditions. The table below shows you the price caps for purchasing an existing property in capital cities and regional centres, and also for the rest of the state.
|STATE or TERRITORY||CAPITAL CITY AND REGIONAL CENTRES||REST OF STATE|
There are also caps on the price of building new homes under the Family Home Guarantee Scheme, however these figures are a bit higher depending on which state you’re in.
If you want to apply for the Family Home Guarantee Scheme, you need to do it through a participating lender. Because the scheme is being administered through the National Housing Finance and Investment Corporation, there are 27 participating lenders throughout Australia. The best way to find out which lenders are participating and how you can get the best deal on a home loan is to contact BrokerCo today. Our personalised mortgage broker service is here to help you save time and money while finding your new home.