What is the Regional Home Guarantee Scheme?

The Regional Home Guarantee Scheme is designed to help people in regional areas get into the property market without the burden of saving a 20% deposit. While most banks technically only require a 5% deposit, if you haven’t saved 20% of the property price, you would need to pay Lender’s Mortgage Insurance as well. These costs can be prohibitive to many Australians, so the Regional Home Guarantee Scheme has been introduced to ease the pressure.

The government will act as guarantor for part of the loan, meaning you can purchase a new home with just a 5% deposit and you don’t have to pay LMI. There are 10,000 guarantees available, so let’s see if you meet the eligibility criteria.

Eligibility criteria for the Regional Home Guarantee Scheme

There are a few rules associated with the Guarantee, with the main one being that it applies to regional parts of Australia only. It also only applies to new homes, not purchasing existing ones. Here are the main criteria:

  • · Must be an Australian citizen or permanent resident

  • · The home must be newly built

  • · You must be a first home buyer or you haven’t owned a home in the past 5 years

  • It’s important to note that this guarantee is part of the First Home Guarantee, a larger scheme that aims to address housing affordability. As such, there are some additional eligibility requirements:

  • · Singles must have had an income of under $125,000 in the previous financial year

  • · Couples must have had an income of under $200,000 in the previous financial year

  • · Couples must be in a married or de-facto relationship

  • · You must move into the home within 6 months and remain there while the home is guaranteed

  • There are 10,000 guarantees available nationwide, so now is the time to act if you want to take advantage before the scheme expires on 30 June 2025.

How it could help you

The main benefit of the Regional Home Guarantee Scheme is that it allows you to avoid paying Lender’s Mortgage Insurance (LMI) if you haven’t saved a 20% deposit. The amount of insurance you would normally pay can vary depending on a number of factors, but this scheme could potentially save you thousands. Not to mention the fact you don’t need to save a full 20% deposit.

For example, if you want to build a new home in Queensland for $500,000, you’d normally need to save $100,000 to avoid paying LMI. Now, you could build this home with a $25,000 deposit and you wouldn’t need to pay LMI.

Price caps by state

The scheme has set some caps on the property purchase price in each state. This has mainly been done so that it can help low-middle income earners, rather than those looking to purchase million-dollar properties. Here are the price caps by state.

 

STATE OR TERRITORY CAPITAL CITY/REGIONAL CENTRE REST OF STATE
Queensland $650,000 $500,000
NSW $950,000 $600,000
Victoria $850,000 $550,000
Tasmania $550,000 $400,000
South Australia $550,000 $400,000
Western Australia $550,000 $400,000
ACT $600,000
Northern Territory $550,000

How BrokerCo can help

BrokerCo is a convenient online service that provides you with a real mortgage broker to assist in making your new home dreams a reality. As experts in home loans, we don’t just find the best deal for you. We also help guide you through the process, particularly if you are eligible for any Government schemes like the Regional Home Guarantee.

Contact the friendly team at BrokerCo today. We offer a personalised service that’s all about your needs.

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