What is the First Home Guarantee?

In May 2023 the following changes have been announced:

Eligibility criteria for all elements of the scheme – including the First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee – will be expanded as the Government continues to address Australia’s housing challenges.

Among the main changes are:

an expansion to incorporate permanent residents into the guarantee schemes
broadened eligibility criteria for joint applications
an expansion to allow more single guardians use the Family Guarantee, and
a change that enables those who have previously owned properties to join the scheme.

Permanent residents to be eligible

While the three guarantees - the First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee - are currently limited to Australian citizens, all three guarantees will also become available to eligible borrowers who are Australian Permanent Residents from 1 July 2023.

Joint applicant eligibility expanded

From 1 July 2023, friends, siblings, and other family members will also become eligible for joint applications under the First Home Guarantee and the Regional First Home Buyer Guarantee.

Single legal guardian expansion for Family Home Guarantee

Other changes announced by the federal government over the weekend include changing the Family Home Guarantee eligibility criteria.

The scheme currently supports eligible single parents with at least one dependent child to buy a home with as little as 2 per cent deposit without paying Lenders Mortgage Insurance. The government guarantees a maximum amount of 18 per cent of the value of the property (as assessed by the participating lender).

From 1 July, the government will expand the eligibility criteria from single natural or adoptive parents with dependents to eligible borrowers who are single legal guardians of children such as aunts, uncles and grandparents.

Previous home owners to be given access

The final change involves tweaking the guarantees to allow previous property owners to enter the scheme.

While the Home Guarantee Schemes are currently only available to first home buyers, the new financial year will enable former property owners to enter the scheme. However, this will be limited to those who haven't owned a property in Australia in the last ten years.

The change aims to support those who have "fallen out of homeownership", for example, those who may have experienced financial crisis or relationship breakdown.

Introduction - before July 2023

Usually as a first home buyer with less than a 20 per cent deposit, you need to pay lenders mortgage insurance (LMI). This could amount to thousands of dollars. Under the First Home Guarantee, you can purchase a home with a deposit of as little as 5 per cent without the big cost of (LMI).

LMI is a one-insurance payment that protects the lender in the event that you default on your home loan repayments. It is usually applicable when borrowing over 80% of the value on the property, however, with the First Home Guarantee, the Government will underwrite your home loan and act as a guarantor to ensure you don’t have to pay LMI.

To find out more or assess your eligibility, talk to us.

Eligibility for the First Home Guarantee

Income test

Singles with a taxable income less than $125,000, couples less than $200,000 for the previous financial year. Please note when applying for a place in this scheme, you will need to provide the relevant Notice of Assessment from the ATO for the previous financial year.

Joint applications

Couples are only allowed to apply if they are married or in a de-facto relationship. Other joint applicants (siblings, friends, parent/child, etc) are not eligible.

Prior Ownership

You must provide proof you have never owned or held interest in property in Australia before. This includes commercial property, investment or company title properties.

Citizenship

All applicants must be Australian Citizens, aged 18 years or over.

Owner Occupied

You need to move into the property within six months of owning your home and continue to live in that property for so long as your home loan has a guarantee under the Scheme.

The First Home Guarantee (FHBG) is an Australian Government initiative to help you purchase your 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.

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