First Home Guarantee

What is the First Home Guarantee?

The First Home Guarantee (FHBG) is an Australian Government initiative to support eligible first home buyers purchase their first home sooner. It is administered by the National Housing Finance and Investment Corporation (NHFIC) under the Home Guarantee Scheme (Scheme) on behalf of the Australian Government. Usually, first home buyers with less than a 20 per cent deposit need to pay lenders mortgage insurance. Under the First Home Guarantee, eligible first home buyers can purchase a modest home with a deposit of as little as 5 per cent (lenders criteria apply). This is because NHFIC guarantees to a participating lender up to 15 percent of the value of the property purchased that is financed by an eligible first home buyer’s home loan.

How does the First Home Guarantee work?

Eligible first home buyers can apply for an eligible loan to purchase an eligible property through a participating lender. The First Home Guarantee supports up to 35,000 guaranteed loans per financial year. Eligible borrowers can use the FHBG in conjunction with other government programs like the First Home Super Saver Scheme or state and territory first homeowner grants and stamp duty concessions. The guarantee is not a cash payment or a deposit for your home loan.

What is the Family Home Guarantee?

The Family Home Guarantee (FHG) is an Australian Government initiative that aims to support eligible single parents with at least one dependent child in purchasing a family home. It is administered by the National Housing Finance and Investment Corporation (NHFIC) under the Home Guarantee Scheme (Scheme) on behalf of the Australian Government.

How does the Family Home Guarantee work?

Eligible single parents with at least one dependent child looking to build a new home or purchase an existing home can apply for a loan to purchase an eligible property through a participating lender.

NHFIC guarantees to a participating lender up to 18 per cent of the value of the property, provided the borrower has a minimum 2 per cent deposit, and is eligible for the Family Home Guarantee.

This will enable single parents with at least one dependent child to enter, or re-enter, the housing market sooner.

What type of property can be bought / eligible?

For a property to be eligible it must be a ‘residential property’ – this term has a particular meaning under the First Home Guarantee and participating lenders can assist if there is any doubt. Eligible residential properties include:

• an existing house, townhouse, or apartment

• a house and land package

• land and a separate contract to build a home

• an off-the-plan apartment or townhouse.

Specific dates and requirements apply for the different property types. Participating Lenders require your land to be titled prior to the issuance of a NHFIC guarantee, therefore the land will need to be titled before the end of the 90-day pre-approval period. If you are considering entering into contracts relating to purchasing land and for the construction of a home, you may wish to discuss with your participating lender (and broker, if applicable) all of the potential risks that may be associated with these transactions. It is worth noting that you are required to sign a fixed price building contract, and that any amendments to this after signing, may impact the validity of your Scheme place and your bank may require you to pay Lenders Mortgage Insurance (LMI) or fund these additional costs yourself.

Who is eligible for First Home Guarantee?

• Australian citizens who are at least 18 years of age. Permanent residents are not eligible.

• Single applicants with a taxable income of up to $125,000 per annum for the previous financial year and couples with a taxable income of up to $200,000 per annum for the previous financial year, as shown on the Notice of Assessment (issued by the Australian Taxation Office). For all FHBG applications made from 1 July 2022 to 30 June 2023, the relevant financial year assessed will be 2021-22.

• Couples are only eligible for the First Home Guarantee if they are married or in a de-facto relationship with each other. Other persons buying together, including siblings, parent/child or friends, are not eligible for the First Home Guarantee.

• The First Home Guarantee assists single (individual) applicants and couples (together) who have at least 5 per cent of the value of an eligible property saved as a deposit. If 20 per cent or more is saved, then the home loan will not be covered by the First Home Guarantee.

• Loans under the First Home Guarantee require scheduled repayments of the principal and interest of the loan for the full period of the agreement (with limited exceptions for interest only loans, which mainly relate to construction lending).

• Applicants must intend to be owner-occupiers of the purchased property. Investment properties are not supported by the First Home Guarantee.

• Applicants must be first home buyers who have not previously owned, or had an interest in, a property (including owning, or having owned land) in Australia, either separately or jointly with someone else (this includes residential strata and company title properties).

Who is eligible for Family Home Guarantee?

The same criteria as for First Home Guarantee and the following

• Must be a single parent with at least one dependent child. A parent is not a single parent if they are married or in a de facto relationship. NB: a person who is separated but not divorced is not single.

• The single parent must have a taxable income that does not exceed $125,000 per annum for the previous financial year as shown on the Notice of Assessment (issued by the Australian Taxation Office). NB: Child support payments are not included as income for the purpose of the income cap. • The single parent must be the only name listed on the loan and the certificate of title.

• It is expected that the single parent demonstrate that they are the natural or adoptive parent of a dependent child within the meaning of s.5 of the Social Security Act 1991 (Cth). In a general sense, this means that the person must show that they are legally responsible (whether alone or jointly with another person) for the day-to-day care, welfare and development of the dependent child and the dependent child is in their care.

• Alternatively, the single parent must show that they are the natural or adoptive parent of a child between 16 and 22 years of age, who receives a disability support pension and lives with them.

• Individuals must have at least 2 per cent of the value of the property available as a deposit. If the borrower has a deposit of more than 20 per cent, then the home loan cannot be covered by the Family Home Guarantee.

• Loans under the Family Home Guarantee require scheduled repayments of the principal and interest of the loan for the full period of the agreement. The loan agreement must have a term of no more than 30years.

• Applicants can be either first home buyers or previous owners who do not currently own a home. That is, the applicant must not currently have a freehold interest in real property (this includes land) in Australia, a lease of land in Australia or a company title interest in land in Australia.

• Applicants must intend to be owner-occupiers of the purchased property. In the case of an active Australian Defence Force member applicant, the Family Home Guarantee is not subject to the owner-occupier requirement after entering into the loan if they cannot meet this requirement because of their duties.

What property price thresholds apply?

The FHBG assists in the purchase or construction of a modest home and the value of the residential property must not exceed the relevant price cap for the area in which it is located. The price caps for large regional centres and regional areas (Mackay and surrounding areas) is $550,000

How to apply

• Eligible first home buyers can apply for FHBG through a participating lender. The full list of participating lenders is at www.nhfic.gov.au

• For the 2022-23 financial year, 35,000 FHBG places will be available through participating lenders from 1 July 2022.

• There are no costs or repayments associated with the FHBG. However, first home buyers are responsible for meeting all costs and repayments for the home loan associated with the FHBG.

• NHFIC will not accept applications directly and does not maintain a waiting list for places under the FHBG

From 1 July 2022, 5,000 Family Home Guarantees will be made available each financial year (up until 30 June 2025) to eligible single parents with at least one dependent child, subject to their ability to service a loan.

The Family Home Guarantee can be used to build a new home or purchase an existing home with a deposit of as little as 2 per cent, regardless of whether that single parent is a first home buyer or a previous home owner. Investment properties are not supported by the Family Home Guarantee.