More Australians (and permanent residents!) will soon be eligible for a leg up into the property market under an expanded First Home Guarantee Scheme. Today we’ll run you through all the upcoming changes to the low deposit, no lenders mortgage insurance scheme.
Officially unveiled as part of the 2023 federal budget, the expanded Home Guarantee Scheme will have broader eligibility criteria from 1 July 2023.
So if you’re a single parent or guardian, first home buyer, haven’t owned property for a decade, permanent resident, or looking to buy a home with your friend or sibling – be sure to read on to find out if you’re eligible.
What is the Home Guarantee Scheme?
Getting a deposit together can be a massive hurdle when buying a home.
And if your deposit is lower than 20%, you can get stung with lenders mortgage insurance (LMI), which can cost you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.
But through the NHFIC, the federal government has three low deposit, no LMI schemes.
Which means if you’re eligible, you won’t need to wait until you’ve reached the standard 20% deposit.
The First Home Guarantee and Regional First Home Buyer Guarantee support eligible buyers to purchase a home with a low 5% deposit and no LMI.
And the Family Home Guarantee assists eligible single parents to buy a home with a deposit of just 2% and no LMI.
Access to these schemes can, on average, bring forward the home-buying process by five years!
It’s worth noting there is an eligibility criteria, which covers property types, locations and prices.
But an experienced broker (that’s us!) will be across all the ins and outs to help you work out if you qualify.
What are the upcoming changes?
Good news if you are among the increasing number of Australians joining with friends, siblings, and other family members to buy a home.
Come 1 July 2023, you may be eligible to lodge a joint application under the First Home Guarantee and Regional First Home Buyer Guarantee; previously you could only apply as an individual or married/de facto couple.
Meanwhile, the Family Home Guarantee is set to expand to include single legal guardians, such as an aunt, uncle or grandparent. Previously it was only for eligible single natural or adoptive parents.
All three schemes will expand to eligible borrowers who are Australian permanent residents, in addition to citizens.
And all three guarantees will include eligible borrowers who haven’t owned a property in Australia in the last ten years.
What you need to know
The Home Guarantee Scheme can be a great way to fast-track getting into the property market.
But you’ll have to get in quick because places are strictly limited.
That includes 35,000 places per financial year across the First Home Guarantee, 10,000 places per financial year under the Regional First Home Buyer Guarantee, and 5,000 places per financial year under the Family Home Guarantee.
Also, not all lenders are involved with the scheme. But we can help you to identify and compare participating lenders.
So give Soho Home Loans a call today to get the ball rolling.
More on the First Home Guarantee Scheme
How does the First Home Guarantee Scheme work?
The First Home Guarantee Scheme is a government initiative that helps eligible first home buyers purchase a home with a deposit as low as 5%. The scheme is administered by the National Housing Finance and Investment Corporation (NHFIC) on behalf of the Australian Government.
Under the First Home Guarantee, part of an eligible first home buyer’s home loan from a Participating Lender is guaranteed by NHFIC. This enables an eligible home buyer to purchase a home with as little as 5% deposit without paying Lenders Mortgage Insurance (LMI).
What are the disadvantages of first home guarantee?
The First Home Guarantee is a great way to get into the property market if you don’t have a large deposit. However, there are a few disadvantages to be aware of.
- The First Home Guarantee is only available for new or established homes with a purchase price of less than $750,000 (metropolitan areas) or $600,000 (regional areas). This means that you may not be able to use the scheme if you want to purchase a more expensive home.
- The First Home Guarantee is only available for first home buyers. This means that you cannot use the scheme if you have owned a home before.
- The First Home Guarantee is only available for a limited time. The scheme is currently available until 30 June 2025.
What is the new home guarantee 2023?
If you’re a first home buyer, there’s this awesome thing called a home loan guarantee. Basically, it’s like a safety net from the government that can cover up to 15% of your property’s value, as determined by the lender. But hey, it’s not like they’re handing out bags of cash or making a deposit for you. Nope, it’s just a guarantee that gives you a leg up in getting that dream home.
Now, here’s the cool part. Starting from July 1st, 2022 until June 30th, 2023, there are a whopping 35,000 spots up for grabs! Yep, that’s right, 35,000 lucky first home buyers can get in on this opportunity. But of course, there are some eligibility requirements to meet. So if you’re ready to take the plunge into homeownership, make sure to check if you qualify for this fantastic First Home Buyer Grant.
