The Home Owner Guarantee Scheme (HGS) is an Australian Government initiative to support eligible home buyers to purchase a home sooner.

It does this by making it possible for a buyer to purchase a home with a deposit as low as 5% without being required to pay Lenders Mortgage Insurance. It was introduced in 2019 and is administered by the National Housing Finance and Investment Corporation (NHFIC) on behalf of the Australian Government.

The HGS includes:  

  • The First Home Guarantee (FHBG) – to support eligible first home buyers to buy their first home sooner, with a deposit as little as 5%. 35,000 places are available each financial year
    • The Regional First Home Buyer Guarantee (RFHBG) – to support eligible regional first home buyers to buy a home in a regional area. From 1 October 2022, 10,000 places are available each financial year to 30 June 2025
    • The Family Home Guarantee (FHG) – to support eligible single parents with at least one dependent child to buy a home, with a deposit as little as 2%. 5,000 places are available each financial year to 30 June 2025

How the HGS Works

Under the HGS, part of an eligible home buyer’s home loan from a Participating Lender is guaranteed by NHFIC. This enables an eligible home buyer to purchase a home with a deposit between 2-5% (depending on which Guarantee they obtain) without paying LMI. The Guarantee is not a cash payment or a deposit for a home loan. 

Recent changes to the Home Guarantee Scheme 

The First Home Guarantee Scheme will expand its definition of a couple to allow family members or two friends living together to access to scheme. From July 1, “any two eligible individuals” can apply for the First Home Guarantee Scheme, in a move designed to address the housing crisis in Australia.

Previously, only married or de-facto couples were eligible for the First Home Guarantee. However, from July 1, other people buying together, including siblings or friends, will be eligible. The new rules also apply to the Regional First Home Guarantee, and will also be available to previous home buyers who have not owned a property in the past decade.

The Government has also announced changes to the Family Home Guarantee, which allows single parents to purchase a property with as little as 2% deposit. Under these changes, the guarantee will become available to eligible borrowers who are single legal guardians of children, such as aunts, uncles and grandparents—not just parents. All three schemes have been expanded to include permanent residents, as well as Australian citizens.

Eligibility Requirements

  • The value of the residential property must not exceed the price caps that have been set by the government in your state or regional area.
  • Eligible residential properties include:
  • an existing house, townhouse or apartment
  • a house and land package
  • land and a separate contract to build a home
  • an off-the-plan apartment or townhouse
  • Relationship Status: Both singles and couples can benefit from the scheme.
  • Loans under the First Home Guarantee require scheduled repayments of the principal and interest of the loan for the full period of the agreement. (There are limited exceptions for interest-only loans, which mainly relate to construction lending.)
  • Wage Thresholds: A single person is eligible if they earn $125,000 per year or less, as is a couple who earns a combined $200,000. This must be shown on the Notice of Assessment issued by the Australian Taxation Office.
  • Deposit Size: To be eligible for the scheme, the minimum deposit size is 5% of the total price of the property. A single parent with children can have a deposit of 2%. The maximum deposit size allowed is 20%.
  • The applicant must be an Australian citizen or permanent resident and be over 18 years of age.

Participating lenders

NHFIC has authorised a panel of 32 participating lenders to offer the scheme. The major bank lenders are the Commonwealth Bank and NAB, while some of the non-major lenders include Auswide Bank, Australian Military Bank, Bank Australia, Police Bank, Regional Australia Bank and Indigenous Business Australia.

For more information go to National Housing Finance and Investment Corporation. 

If you’re looking for one of the best mortgage broker Perth has to offer to discuss how much you can afford to borrow for your home loan, please get in touch now. 

All lending subject to status and lenders criteria. Terms & conditions apply. This document contains general information only. Your own personal circumstances have not been considered and you should seek independent financial advice prior to making any decision on a financial product.

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