The First Home Guarantee Scheme allows eligible first-time home buyers to purchase a property with just a 5% deposit, avoiding the need for Lenders Mortgage Insurance (LMI).
Backed by the government, this scheme eases entry into the property market by reducing upfront costs.
This article explains how the scheme works, covering eligibility requirements, property price caps, and the application process.
Understanding the First Home Guarantee Scheme
The First Home Guarantee Scheme helps first-time buyers get onto the property ladder with only a 5% deposit, without needing Lenders Mortgage Insurance (LMI).
The scheme is administered by Housing Australia, which guarantees up to 15% of the property’s value, letting buyers borrow with lower deposits.
With 35,000 places available for 2024-25, this scheme makes homeownership accessible to many who might otherwise struggle with the deposit.
For those seeking additional strategies to enter the market, check out how to buy a house with no money in Australia to explore innovative options.
Eligibility Criteria for First Home Buyers
To qualify for the First Home Guarantee Scheme, applicants need to meet specific eligibility requirements. These criteria ensure the scheme supports genuine first-time buyers who could benefit most.
1. Age Requirement
- Applicants must be at least 18 years old.
2. Income Limits
- For single applicants, the income limit is $125,000 per year.
- For joint applicants, such as couples, the combined income limit is $200,000.
These income limits help ensure that the scheme targets buyers who need financial assistance to enter the market.
3. Citizenship Requirements
- Applicants must be either Australian citizens or permanent residents when applying. This ensures the scheme supports those committed to living in Australia long-term.
4. Prior Property Ownership
- Applicants cannot have owned any property in Australia in the past ten years, ensuring the scheme is reserved for genuine first-time buyers.
Property Price Caps and Types
The First Home Guarantee Scheme includes property price caps, which vary by location to reflect regional property market differences. These caps keep the scheme focused on affordable housing options.
To view the exact cap for your area, use the Property Price Cap Tool, which provides a breakdown based on suburbs and postcodes.
Eligible Property Types
The scheme covers various property types, allowing buyers flexibility to choose based on their needs:
- Existing houses
- Off-the-plan apartments
- Newly built homes
- Vacant land designated for residential development under a building contract
This variety offers eligible buyers options that suit their lifestyle and future goals. For more on eligibility and updated qualifications, see more will qualify for the First Home Loan Guarantee Scheme.
Benefits of the First Home Guarantee Scheme
The First Home Guarantee Scheme provides significant benefits for first-time buyers:
- Reduced Deposit Requirements: Purchase a home with a 5% deposit, lowering the initial barrier to entry.
- Savings on LMI: Avoiding Lenders Mortgage Insurance (LMI) can save buyers up to $30,000 or more.
- Better Interest Rates: Buyers with larger deposits often receive more favorable interest rates, adding further financial relief.
These benefits make it possible for more Australians to buy a home sooner, especially in competitive markets where saving for a deposit can take years.
How to Apply for the Scheme
Applying for the First Home Guarantee Scheme requires going through a Participating Lender. Here’s a quick guide to the process:
- Find a Participating Lender: Only lenders authorized by Housing Australia can process these applications.
- Prepare Necessary Documents: Applicants must provide a Notice of Assessment (NOA) from the Australian Taxation Office for income verification.
- Meet Genuine Savings Requirements: Make sure your deposit meets the genuine savings requirements set by your lender.
By consulting with a participating lender, you’ll receive guidance through the application process and confirmation of your eligibility.
For more on available options, explore our detailed guide to government first-home buyer grants and schemes.
Participating Lenders:
Housing Australia has approved specific lenders to streamline applications for the scheme. These Participating Lenders can verify eligibility, assist with documents, and provide guidance on next steps.
Additional Government Support for Home Buyers
Apart from the First Home Guarantee Scheme, other government initiatives are available to support first-time buyers:
- First Home Super Saver Scheme: Allows buyers to withdraw voluntary super contributions to fund a home deposit.
- Stamp Duty Concessions: Various states offer reduced stamp duty for first-time buyers, lowering upfront costs.
These additional supports can make a substantial difference in affordability. Learn more about buying a house with government scheme support to understand how these programs can complement the First Home Guarantee Scheme.
Summary
The First Home Guarantee Scheme is a valuable opportunity for eligible first-time buyers, enabling them to buy with only a 5% deposit and avoid Lenders Mortgage Insurance (LMI).
Understanding the eligibility requirements, property caps, and application steps can help you make the most of this government initiative.
Combined with other government support programs, this scheme makes homeownership achievable for many Australians.
If you’re thinking about buying your first home, these options could make the journey much easier and more affordable.
Frequently Asked Questions on ‘First Home Guarantee Scheme’
What is the first home guarantee scheme 2023 2024?
The First Home Guarantee Scheme (FHBG), formerly known as the First Home Loan Deposit Scheme, enables eligible buyers to purchase a home with only a 5% deposit and avoid paying lender’s mortgage insurance.
This scheme is a great opportunity for first home buyers to get into the property market without having to save a large deposit. It also helps to reduce the cost of buying a home, as Lender’s Mortgage Insurance can be expensive.
The FHBG is available to eligible buyers who meet the criteria.
Who is eligible for the FHG scheme?
Eligible applicants for the FHG scheme must be individuals, single parents or single legal guardians of at least one dependent, and Australian citizens or permanent residents.
All applicants must have been an Australian citizen or permanent resident at their Home Loan Date of 1 July 2023.
How long does the first home guarantee last?
The First Home Guarantee is valid until 30 June 2025, offering eligible applicants in regional areas the chance to purchase a first home with a deposit of as low as 5%.
This is an incredible opportunity for first home buyers to get into the property market with a much lower deposit than usual. With the help of the First Home Guarantee, first home buyers can purchase their dream home with a much smaller financial commitment.
What is the main goal of the First Home Guarantee Scheme?
The main goal of the First Home Guarantee Scheme is to help eligible first home buyers purchase their property by providing government-backed guarantees, reducing deposits and eliminating lenders mortgage insurance.
This scheme is designed to make it easier for first home buyers to enter the property market and to help them build their financial security.
It provides a range of benefits, including access to lower deposits, reduced lenders mortgage insurance and access to government-backed guarantees.
What are the three types of guarantees offered under the scheme?
The First Home Guarantee Scheme offers three types of guarantees: the First Home Guarantee, the Family Home Guarantee, and the Regional First Home Buyer Guarantee.
Disclaimer: The information provided is based on data available as of the publication date. While we strive to present accurate and comprehensive information, there may be information not covered in this article, and the details mentioned are subject to change.
