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Family Home Guarantee Explained

As part of the 2021-2022 Federal Budget, the government will introduce a new Family Home Guarantee that aims to give 10,000 single parents with dependants the opportunity to build a new home or purchase an existing home with a deposit of 2 per cent without having to pay lender’s mortgage insurance (LMI) regardless of whether that single parent is a first home buyer or previous owner-occupier.

These places will be rolled out over the next 4 years.

Starting on 1 July 2021, the government will guarantee up to a maximum of 18 per cent of the property purchase price, allowing the applicant to get a loan without paying lender’s mortgage insurance.

Applicants must be Australian citizens, at least 18 years of age and have an annual taxable income of no more than $125,000. 

Lender’s Mortgage Insurance is a policy that protects the lender in the event you default on your mortgage repayments. It is a one-off payment that is typically required for home loans where you’re borrowing more than 80% of the purchase price.

How Does It Work?

Eligible single parents with dependants looking to build a new home or purchase an existing home are able to apply for a loan to purchase an eligible property through a participating lender.

The Family Home Guarantee program is administered by the National Housing Finance and Investment Corporation (NHFIC) on behalf of the Australian Government. NHFIC guarantees to a participating lender up to 18 per cent of the value of the property, provided the borrower has a minimum 2 per cent deposit, and is eligible for the program.

This will enable single parents with dependants to enter, or re-enter, the housing market sooner.

What Type of Property Can Be Bought Under the Scheme?

  • an existing house, townhouse or apartment
  • a house and land package
  • land and separate contract to build a home
  • an off-the-plan apartment or townhouse

Who Is Eligible?

Australian citizens who are at least 18 years of age. Permanent residents are not eligible.

  • Must be a single parent with at least one dependant.
  • The single parent must have a taxable income that does not exceed $125,000 per annum for the previous financial year. NB: Child support payments are not included as income for the purpose of the income cap.
  • The single parent must be the only name listed on the loan and the certificate of title.
  • It is expected that the single parent demonstrate that they are the natural or adoptive parent of a dependent child within the meaning of s.5 of the Social Security Act 1991 (Cth). In a general sense,
    this means that the person must show that they are legally responsible (whether alone or jointly with
    another person) for the day-to-day care, welfare and development of the dependent child and the
    dependent child is in their care. Depending on the terms of any shared custody arrangement, this may enable both individuals in a former couple to separately access the Family Home Guarantee.
  • Individuals must have at least 2 per cent of the value of the property available as a deposit. If the borrower has a deposit of more than 20 per cent, then the home loan cannot be covered by the Family Home Guarantee.
  • Loans under the Family Home Guarantee require scheduled repayments of the principal and interest of the loan for the full period of the agreement. The loan agreement must have a term of no more than 30 years.
  • Applicants must intend to be owner-occupiers of the purchased property. In the case of active Australian Defence Force member applicant(s), the guarantee is not subject to the owner occupier requirement after entering into the loan if they cannot meet this requirement because of their duties.
  • Applicants can be either first home buyers or previous owner-occupiers who do not currently own a home. That is, the applicant must not currently have a freehold interest in real property in Australia, a lease of land in Australia or a company title interest in land in Australia.

Property Price Thresholds - UPDATED!

For the next 10,000 places issued under the FHLDS and the new Family Home Guarantee in the new financial year, property price caps will be as follows:
First Home Loan Deposit Scheme
Trying to save while renting can pose a significant challenge for single parents so this new scheme will be a great support in helping them get back into or enter the property market.
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