For many first-time home buyers, the biggest challenge when it comes to buying a home is saving up enough cash to fund a 20% deposit. Property prices have risen dramatically in recent years, as has the cost of living, making saving a very slow process.
To help remedy this issue, the Federal Government introduced the Home Guarantee Scheme to help aspiring homeowners purchase a home sooner. This Scheme includes three different Guarantees that are targeted at specific home buyers.
Let’s take a look at the different Guarantees that are currently on offer and some of the other assistance programs available to Australian home buyers.
What is the First Home Guarantee?
The Home Guarantee Scheme (HGS) is an Australian Government initiative that’s managed by Housing Australia. This program is designed to help eligible home buyers enter the property market sooner.
Under the Scheme are three separate Guarantees, including:
The First Home Guarantee (FHBG),
The Regional First Home Buyer Guarantee (RFHBG), and
The Family Home Guarantee (FHG).
How does the Home Guarantee Scheme work?
Under the HGS, Housing Australia works with participating lenders to provide loans to eligible home buyers who don’t have the 20% deposit typically required to take out a home loan. Eligible home buyers then apply for a loan directly from the participating lender.
From here, Housing Australia provides a Guarantee to the Participating Lender covering up to 15% of the home loan value for the First Home Guarantee and Regional First Home Buyer Guarantee, and up to 18% for the Family Home Guarantee. This allows home buyers to purchase a home without needing to pay Lenders Mortgage Insurance (LMI). It’s worth noting that the Guarantee isn’t a cash payment or a substitute for a deposit.
What is the Home Guarantee Scheme eligibility criteria?
The HGS isn’t available to everyone. To receive the HGS, home buyers must meet eligibility criteria. The specific criteria differs depending on the individual Guarantee.
The HGS allows home buyers to purchase a variety of residential properties, including:
Existing houses, townhouses, or apartments
Land with a separate building contract
Off-the-plan apartments or townhouses
That said, there are price caps that apply depending on the location.
How to apply for the Home Guarantee Scheme
HGS applications can only be made with a Participating Lender or their authorised representative, including an Aussie Broker.
If you’re considering applying for the HGS, it could be worth chatting with an Aussie Broker to check that the loan, property and terms of the Scheme suit your financial goals and personal circumstances. Be sure to familiarise yourself with how changing interest rates, house prices or your own personal situation could impact your ability to service a loan.
Let’s take a closer look at the different Guarantees that fall under the HGS.
What is the First Home Guarantee?
The First Home Guarantee (FHG) helps eligible borrowers with a deposit of as low as 5% enter the property market sooner. There are currently 35,000 places available nationwide for FY2024-25.
Most lenders like to see a deposit of at least 20%. Given the current economic climate, saving together enough to cover a deposit of that size is incredibly challenging for many first-home buyers. While some lenders are flexible on this, obtaining a home loan with a deposit under 20% will likely incur Lenders Mortgage Insurance (LMI) charges.
This is yet another cost you would have to consider, on top of other upfront property expenses like:
Home loan application or establishment fees
In a hot market, by the time you’ve saved up a 20% deposit, your dream house could have already been snapped up or house prices could have risen again. But with the FHG, you could get into the market sooner with a small deposit.
The First Home Guarantee allows eligible first-home buyers to buy a home with a deposit as low as 5%. The government guarantees the remaining 15%, which means that lenders can approve buyers for loans without charging them LMI.
What are the eligibility criteria for the First Home Guarantee?
Here are the general requirements for purchasing a home under the guarantee:
Prior home ownership: Applicants must be first-home buyers or not have owned property over the past 10 years.
Individual or joint application: Applicants can apply as an individual or as a joint application with one other person (for example, a partner, friend or family member).
Income tested: Single applicants may have an annual taxable income of no more than $125,000 and joint applicants must have a combined annual taxable income of no more than $200,000, as shown on the Notice of Assessment (issued by the Australian Taxation Office).
Intended for owner-occupier: Applicants must intend to be owner-occupiers of the property rather than using the property for investment purposes.
Proof of age and citizenship: Applicants must be Australian citizens or permanent residents who are at least 18 years of age.
The FHG is best suited to first-time home buyers with a small deposit (as low as 5%).
What type of home can you buy under the First Home Guarantee?
The FHG allows you to buy any type of residential property, provided it falls under the price cap thresholds for your state or territory (see table below). This means you could purchase:
An existing house, apartment or townhouse
A house and land package
An off-the-plan townhouse or apartment
Land and a building contract to construct the home.
Check out the table below or use the postcode search tool to check property price caps in your area.
What are the property price caps for the First Home Guarantee?
State | Capital City and Regional Centre* | Rest of State |
NSW | $900,000 | $750,000 |
VIC | $800,000 | $650,000 |
QLD | $700,000 | $550,000 |
WA | $600,000 | $450,000 |
SA | $600,000 | $450,000 |
TAS | $600,000 | $450,000 |
ACT | $750,000 | |
NT | $600,000 | |
Jervis Bay Territory & Norfolk Island | $550,000 | |
Christmas Island and Cocos (Keeling) Islands | $400,000 |
Source: First Home Guarantee and Family Home Guarantee Property Price Cap Table
*Regional centres are Newcastle and Lake Macquarie, Illawarra, Geelong, Gold Coast and Sunshine Coast.
How to apply for the First Home Guarantee
Check eligibility: Ensure you meet the criteria for the relevant Home Guarantee Scheme (HGS).
Contact a participating lender or mortgage broker: Applications can only be submitted through a Participating Lender or their authorised representative (e.g., a mortgage broker).
Seek independent financial and legal advice: Consult a financial advisor and legal expert to assess whether the HGS, the property and the home loan terms suit your personal circumstances and objectives.
Discuss loan terms with your lender or broker: Speak with your lender or broker about how changes in interest rates or house prices could impact your financial situation.
Submit your HGS application: Work with your lender or broker to complete and submit the application.
Finalise the home loan agreement: Carefully review the loan agreement before signing to ensure all terms align with your needs.
What is the Family Home Guarantee?
The Family Home Guarantee (FHG) is a scheme designed to support eligible single parents and single legal guardians in securing a home loan. It’s worth noting that applicants don’t have to be first-home buyers to apply for this Guarantee, so long as they meet the other eligibility criteria.
This home loan scheme helps eligible single-parents and guardians to purchase a home with a deposit of as low as 2%, with the government guaranteeing the remaining 18%.
From 1 July 2024 to 30 June 2025, 5,000 places are available across the country.
What are the eligibility criteria for the Family Home Guarantee?
Here are some of the key requirements to apply for the Family Home Guarantee:
Parental status: Applicants must be single parents or single legal guardians of at least 1 dependent child
Income tested: Applicants must have an annual taxable income of up to $125,000
Current home ownership: Applicants can be first home buyers or previous property owners but must not currently own a home
Proof of citizenship: Applicants must be permanent residents or Australian citizens
Property type: Applicants must buy an eligible residential property, which includes:
An existing house, apartment or townhouse
A house and land package
An off-the-plan townhouse or apartment
Land and a building contract to construct the home
Eligible properties and property price caps for the Family Home Guarantee are the same as those for the First Home Guarantee. You can also use the postcode search tool to find out the price threshold for your location.
The FHG is ideal for single parents or single legal guardians with dependent children, allowing a deposit as low as 2%.
What is the Regional First Home Buyer Guarantee?
The Regional First Home Buyer Guarantee (RFHBG) works in a similar way to the First Home Guarantee. This guarantee allows eligible participants to buy a home with a deposit of as little as 5% and the government will guarantee up to 15%.
However, unlike the First Home Guarantee, you don’t have to be a first home buyer to participate in the Regional Home Guarantee scheme. However, you can’t have owned land in the last 10 years.
With regional property markets experiencing significant growth in recent years, it’s hoped this Guarantee encourages Aussies to look beyond the cities when considering their next place to live.
From 1 July 2024 to 30 June 2025, 10,000 places are available for the Regional Home Guarantee.
What are the eligibility criteria for the Regional First Home Buyer Guarantee?
To be eligible for this guarantee, applicants must:
Individual or joint application: Applying as an individual or two joint applicants.
Proof of age and citizenship: Applicants must be Australian citizens or permanent residents who are at least 18 years of age.
Income tested: Single applicants may have an annual taxable income of no more than $125,000 and joint applicants must have a combined annual taxable income of no more than $200,000, as shown on the Notice of Assessment (issued by the Australian Taxation Office).
Intended for owner-occupier: Applicants must intend to be owner-occupiers of the property rather than using the property for investment purposes.
Prior home ownership: Applicants must be first-home buyers or not have owned property over the past 10 years.
The RFHBG has been designed to help first-time home buyers in regional areas buy a home sooner, encouraging local living and regional development.
What are the property price caps for the Regional First Home Buyer Guarantee?
State | Regional Centre* | All Other Regional Areas |
NSW | $900,000 | $750,000 |
VIC | $800,000 | $650,000 |
QLD | $700,000 | $550,000 |
WA | $450,000 | |
SA | $450,000 | |
TAS | $450,000 | |
ACT | Not applicable | |
NT | $600,000 | |
Jervis Bay Territory & Norfolk Island | $550,000 | |
Christmas Island and Cocos (Keeling) Islands | $400,000 |
Source: Regional First Home Buyer Guarantee Property Price Cap Table
* Regional centres are Newcastle and Lake Macquarie, Illawarra, Geelong, Gold Coast and Sunshine Coast.
Alternative home buyer assistance programs
If you don’t qualify for the HGS, it can be helpful to know there are a number of other first-home buyer programs, subsidies and concessions available to first-time home buyers.
First Home Owner Grant (FHOG): A one-time grant for eligible first-home buyers purchasing or building a new home.
Stamp Duty Concessions: Discounts or exemptions on stamp duty for first-home buyers, varying by state.
First Home Super Saver Scheme (FHSSS): Allows buyers to save for a deposit using superannuation tax benefits.
State-Based Shared Equity Schemes: Government co-ownership to reduce upfront costs, e.g., WA’s Keystart or VIC’s Homebuyer Fund.
There’s also the federal government’s Help to Buy scheme, which was recently passed into law on 27 November 2024. Housing Australia will manage this national shared equity scheme on behalf of the government. Under the Help to Buy scheme, the government will contribute up to 40% of the purchase price for new homes or 30% for existing homes as an equity share.
If you want to learn more about the different schemes or figure out your home loan options, book an appointment with your local Aussie Broker today.
