The Federal Government has announced a significant expansion to its Home Guarantee Scheme, with the aim of helping more people achieve home ownership sooner.
Typically potential homeowners need a 20 per cent deposit to secure a home loan. While you can buy a home with lower deposit, you will have to pay Lenders Mortgage Insurance (LMI) or a Low Deposit Premium (LDP). If someone is willing to act as a guarantor you may be able to get a loan with a lower deposit and avoid LMI or a LDP.
The Federal Government’s Home Guarantee Scheme (HGS) effectively acts as a guarantor.
There are currently three schemes available:
- The First Home Guarantee provides a guarantee for eligible first home buyers on low and middle incomes so that they can purchase a home with a deposit of as little as 5 percent, with 35,000 places available per year until 30 June 2025.
- The Regional First Home Buyer Guarantee works under the same principle, providing specific assistance for regional buyers, with 10,000 places available per year until 30 June 2025.
- The Family Home Guarantee provides a guarantee for eligible single parents on low and middle incomes so that they can purchase a home with a deposit of as little as 2 percent, regardless of whether the single parent is a first home buyer or a previous homeowner, with 5,000 places available per year until 30 June 2025.
From 1 July 2023, there will be a range of changes to the eligibility requirements, making it easier for more buyers to make use of the schemes.
One of the most significant changes will be the expansion of eligibility to allow joint applications for friends, siblings, and other family members under the First Home Guarantee and the Regional First Home Buyer Guarantee. Currently these guarantees are restricted to single applicants and people that are married or in a de‑facto relationship. This will help more people buy a property with the support of others.
The First Home Guarantee and the Regional First Home Buyer Guarantee will also be available to non-first home buyers who haven’t owned a property in Australia in the last ten years. This will provide support to those who may have fallen out of home ownership and are now seeking to re-enter the property market.
Eligibility will also change for the Family Home Guarantee, expanding it from single natural or adoptive parents with dependents to eligible borrowers who are single legal guardians of children such as aunts, uncles and grandparents.
All three guarantees will become available to eligible borrowers who are Australian Permanent Residents, in addition to Australian citizens.
Sourced from REIWA