The Family Home Guarantee

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Single parents struggling to save for a house deposit could get a leg up onto the property ladder through the federal government’s Family Home Guarantee.

The Family Home Guarantee can be used to purchase a new or existing home with a deposit of as little as 2%. Picture: Getty.

The scheme, announced in the 2021 federal budget, allows eligible single parents to buy a property with a deposit as low as 2%, without having to pay lenders mortgage insurance.

Ten thousand places are available over four years, however there are restrictions on who can access the program.

Here’s what you need to know.

How the Family Home Guarantee works

Under the Family Home Guarantee, single parents could build a new home or purchase an existing home with a deposit of as little as 2%, plus costs, with the government guaranteeing up to 18% of the value of the property.

Usually, buyers who haven’t saved up a full 20% deposit, on top of other upfront costs, will generally need to pay for lenders mortgage insurance.

This could help single parents to enter, or re-enter, the housing market much sooner and save thousands of dollars in LMI costs.

How it could help a single parent family

To explain how it may help, let’s look at an example:

A single parent hoping to purchase a $460,000 home would typically need to save a 20% deposit of $92,000 to avoid paying lenders mortgage insurance.

Under the Family Home Guarantee, and on the success of their application with a lender, they could secure the property with a 2% deposit of $9200 – on top of other upfront costs, such as stamp duty and conveyancing fees.

Who is eligible?

Single parents with at least one dependent child can access the scheme regardless of whether they’ve owned a property before or not, however there are restrictions on income and property value.

You may be eligible for the Family Home Guarantee if:
  • You’re an Australian citizen who is at least 18 years of age.
  • You’re a single parent with at least one dependent child.
  • You didn’t earn more than $125,000 in the previous financial year, excluding child support payments.
  • You have a deposit of at least 2% to put towards the property, on top of other upfront costs such as stamp duty.
What types of properties are eligible?

The Family Home Guarantee is limited to residential properties, and you must live in the property you intend to purchase. The scheme cannot be used for an investment property.

Eligible properties under the Family Home Guarantee

They must be residential properties, including:

  • 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.
Price caps for the Family Home Guarantee in each state and territory

There are also price thresholds for properties that can be purchased under the Family Home Guarantee, which vary in each state and territory.

State or Territory Capital city and regional centres Rest of state
NSW $800,000 $600,000
Victoria $700,000 $500,000
Queensland $600,000 $450,000
Western Australia $500,000 $400,000
South Australia $500,000 $350,000
Tasmania $500,000 $400,000
Australian Capital Territory $500,000
Northern Territory $500,000
How to apply for the Family Home Guarantee

Applications for the Family Home Guarantee can be made through participating lenders or mortgage brokers.

A full list of participating lenders can be found on the National Housing Finance and Investment Corporation’s website.

There are no costs or repayments associated with the guarantee, however eligible single parents are responsible for meeting all costs and repayments for the home loan associated with the guarantee.

This article was written by Sarah Dowling (Banking and Finance journalist) RealEstate.com.au 🔗

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