What is the First Home Guarantee?
The First Home Guarantee is a Government initiative that helps first home buyers purchase a house sooner, with as little as a 5% deposit (and a maximum of 20%).
Generally, home buyer’s have to provide at least a 20% deposit to obtain a loan. This deposit removes the need for Lender’s Mortgage Insurance (LMI), a one-off insurance premium on your loan, and acts as a security blanket for your lender. It also eliminates the need to have a guarantor.
However, this new scheme guarantees part of a first home buyer’s home loan, enabling them to purchase a home with a smaller deposit without paying LMI. The Government’s guarantee is capped at 15% of the value of the property.
You can apply for the First Home Guarantee as an individual or joint case. As of 1 July 2023, joint cases can be any two eligible people such as friends, siblings or family members, not just couples.
The Guarantee can be used on existing properties, house and land packages, land with a separate contract and an off-the-plan townhouse or apartment. To apply for the scheme, you need to be looking for one of these types of properties, but you cannot have already found a property or entered into a contract.
Note: Your home loan will still be subject to general mortgage considerations and approval is not guaranteed.
Are you eligible?
To be eligible for the First Home Guarantee:
- You need to be an Australian citizen or permanent resident.
- You must provide proof that you have not owned property in the last 10 years or you’re a first home buyer.
- Your individual taxable income does not surpass a yearly amount of $125,000.
- Your joint taxable income does not surpass a yearly amount of $200,000 (if you’re completing a joint application).
- You must be 18 years or older.
- You must be willing to move into the home within 6 months of settlement, and continue to live in it whilst under the scheme arrangements.
- You have to be pre-approved by a participating lender.
- You must have at least 5% of genuine savings, meaning an amount of money you have saved up over at least 3 months.
How do I apply?
- Check your eligibility against the points above.
- Check the property price caps. In Victoria, the guarantee price limit is $800,000.
- Get pre-approval from a participating lender before you apply.
- Talk to a mortgage broker (like us!). We can send your application and find the best loan for your circumstances. The National Housing Finance and Investment Corporation (NHFIC) does not accept direct applications from home buyers.
Are there other similar schemes?
Yes, there are! The Family Home Guarantee and the Regional First Home Buyer Guarantee.
The Family Home Guarantee
The Family Home Guarantee is another Government initiative for single parents with at least 1 dependent child. This gives single parents support in purchasing a family home with as little as a 2% deposit.
Click here for more information.
The Regional First Home Buyer Guarantee
The Regional First Home Buyer Guarantee is an Australian Government incentive to support regional home buyers in purchasing property in regional areas around Australia.
Learn more here.
If you’d like to enquire about the First Home Guarantee Scheme, please get in touch with our Aintree Group Finance team as there are only 35,000 places available.
Our team of mortgage brokers can apply on your behalf and find the best home loan for your needs.
Disclaimer: The information in this blog is of a general nature only, and is not a complete or definitive statement of the matters described in it. It has been prepared without taking into account your personal objectives, financial situation or needs. It should not be relied upon as a substitute for financial or other specialist advice.