Everything You Need to Know About the New Home Guarantee Scheme

You may have heard about the New Home Guarantee recently. Under the Scheme, eligible first-time buyers can purchase or construct a new home with as little as a 5% down payment (lenders criteria apply). This is due to the fact that the National Housing Finance and Investment Corporation (NHFIC) guarantees up to 15% of the purchase price of a property financed by a first-time homebuyer mortgage to a participating lender.

This article will cover everything you need to know about the New Home Guarantee Scheme, including eligibility requirements and how to apply.

What is the New Home Guarantee Scheme?

The New Home Guarantee Scheme is a government programme that allows first-time homebuyers to purchase an existing or new residence with as little as a 5% down payment and without paying Lenders’ Mortgage Insurance (LMI). LMI is an insurance premium that protects the lender if you default on your mortgage payments. With the New Home Guarantee, the government will underwrite your home loan and act as a guarantor, ensuring that you will not be required to pay LMI. There are several ‘expansions’ to the New Home Guarantee scheme, including the First Home Guarantee for first-time homebuyers, the Family Home Guarantee for single parents, and the Regional Home Guarantee for eligible participants who have not owned a home for at least five years and wish to purchase a new home in a regional area.

What types of homes can I purchase through the programme?

There are several types of eligible properties under the New Home Guarantee Scheme.

These include newly-built homes, pre-construction homes, house-and-land packages, and land with a separate contract to build a new home.

How does New Home Guarantee work?

In a nutshell, the New Home Guarantee offers eligible homebuyers the chance to build or purchase a new home with as little as a 5% down payment through a participating lender, with up to 50,000 spots per year until 30 June 2025. The guarantee can be combined with other government programmes such as the First Home Super Saver Scheme, state and territory First Home Owner Grants, and stamp duty exemptions for eligible borrowers. The guarantee is neither a monetary payment nor a house down payment. Under the New Home Guarantee Scheme, the government will guarantee your loan, with the NHFIC guaranteeing up to 15% of the purchase price of the property to a participating lender. This eliminates the requirement for eligible homebuyers to apply for and pay Lenders Mortgage Insurance (LMI).

What are the New Home Guarantee’s timeframes?

Depending on the type of home you are purchasing or constructing, different timeframes apply to this scheme.

Before the 90-day pre-approval period expires, a contract of sale and/or eligible building contract must be executed for all types of eligible properties for the New Home Guarantee to apply.

Who qualifies for the New Home Warranty?

To qualify for the New Home Guarantee Scheme, applicants must be:

An Australian citizen who is at least 18 years old. Permanent residents are ineligible.

A single applicant with an annual taxable income of up to $125,000 or a couple with an annual taxable income of up to $200,000 may qualify for the New Home Guarantee.

Only couples who are married or in a common-law relationship are eligible for the New Home Guarantee. Other relationships of people purchasing a home together, including siblings, parents and children, and friends, do not qualify for the New Home Guarantee.

Under the New Home Guarantee Scheme, you must move into your home within six months of purchasing it and continue to live there for as long as your home loan is guaranteed.

How do I submit a New Home Guarantee application?

Two methods exist for applying for the programme.

First, by submitting your application directly to one of the participating lenders.

We do, however, recommend that you work with a reputable mortgage broker to determine how this programme and its participating lenders will work best for your particular situation.

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