What Does the Family Home Guarantee Mean for You?
The Federal Government’s Family Home Guarantee will support up to 10,000 single parents with children from July 1, 2020 to secure a home with just a 2% deposit. Announced in the 2021 Federal Budget, the scheme will qualify an estimated 125,000 single parents. Find out if you’re eligible and what it can mean for you.
How does it work?
With Australian property prices increasing, the sooner you can get into the property market the better. Enter the Family Home Guarantee, where the Federal Government will guarantee 18% of the initial deposit, meaning you only need to come up with 2%. This allows parents to avoid costly Lenders Mortgage Insurance (LMI), which is a compulsory and expensive additional expense.
So for example, if you wanted to buy a $600K two-bedroom apartment, your contribution would look something like this:
Your 2% deposit: $12,000
Family Home Guarantee at 18%: $108,000
Am I eligible?
To see if you’re eligible for the scheme, we’ve outlined the requirements you’ll need to meet:
- You must be a single parent with at least one dependent
- You must have an annual taxable income below $125,000
- Both first-home buyers and those re-entering the market can apply
- You must be an Australian citizen aged over 18
- The maximum loan can’t be longer than 30 years
- You must have between a 2% to 20% deposit saved
There are around 30 lenders who are participating in the scheme, including Westpac, Commonwealth Bank, NAB and ANZ.
Are there property price caps?
Depending on where you buy, there are various property thresholds allowed under the Family Home Guarantee. However, in Victoria and other states, you’ll find that capital cities and large regional centres will have higher price caps than small regional areas.
Property price caps
| State | Capital city and regional centres | Rest of state |
|---|---|---|
| NSW | $700,000 | $450,000 |
| VIC | $600,000 | $375,000 |
| QLD | $475,000 | $400,000 |
| WA | $400,000 | $300,000 |
| SA | $400,000 | $250,000 |
| TAS | $400,000 | $300,000 |
Property price caps in Australian territories
| State | All areas |
|---|---|
| ACT | $500,000 |
| NT | $375,000 |
Any other factors I should consider?
Like all loans, it’s smart to do some research. The Family Home Guarantee can help you secure a home with a low deposit, but you will still need to pay back the deposit shortfall as part of your mortgage. Other things you should keep in mind are:
Interest rates: While interest rates for home loans are at their lowest in years, they will at some point rise again. So be sure to do some planning based on your income and life of the loan.
Participating lenders: With plenty of lenders to choose from, it’s important to do your research to find out what loan is right for you. Make sure you compare home loan options from a variety of vendors, to ensure you’re getting a deal that best suits your lifestyle.