Saving for a deposit is often the biggest hurdle that aspiring homeowners face, as the amount – typically set at 20% of the property’s value – can easily exceed six figures, especially with home prices soaring today. This business is even more difficult for households living on only one income.
This is what the government’s latest government push is attempting to address. Launched earlier this month, the Family Home Guarantee program aims to help single parents achieve their dreams of home ownership, even with a low deposit.
Below you will find everything you need to know about this new initiative.
How does the First Accommodation Guarantee work?
The Family Home Guarantee program allows single parents with dependents to apply for a mortgage even with a down payment of just 2%, helping them speed up their entry into the real estate ladder.
In total, 10,000 places are available over four fiscal years or until June 30, 2025. The program is accessible not only to first-time buyers, but also to single parents who wish to re-enter the housing market.
The program is administered by the National Housing Finance and Investment Corporation (NHFIC) on behalf of the Australian government. The NHFIC guarantees buyers real estate loans contracted as part of the initiative with down payments of between 2% and 20%, allowing them to avoid paying mortgage loan insurance (LMI).
Depending on their situation and their childcare arrangements, the mother and father can access the government incentive separately. Single parents can choose to buy an existing house or build a new one. The initiative, however, is not available for investment property.
What are the eligibility conditions?
NHFIC published a fact sheet detailing the eligibility conditions for those who wish to apply for the guarantee of the first housing. To be eligible, a candidate must:
- Be a single parent with at least one dependent
- Be an Australian citizen and be at least 18 years old
- Demonstrate that they are legally responsible for the daily care, well-being and development of the child
- Have annual taxable income of $ 125,000 or less from the previous fiscal year, excluding child support payments
- Be the only applicant listed on the loan and certificate of title
- Live on the house they intend to buy
- Not currently hold an interest in freehold property, including commercial and investment properties, land or corporate title to land in Australia
Read more: Are you eligible for single-parent housing credit?
What types of properties can you buy?
Similar to the First Home Loan Deposit Scheme (FHLDS), the Family Home Guarantee program only allows the purchase of residential properties, meaning that investment property is not covered. Eligible properties include:
- Existing house, townhouse or apartment unit
- House and land package
- Land and a contract to build a new house
- Off-plan apartment or townhouse
Another similarity to the FHLDS is the price threshold on properties. The table below details the ceiling price in each state and territory:
State / Territory
Capital / regional center
Rest of state
House under construction or newly built
House under construction or newly built
New South Wales
Australian Capital Territory
N / A
N / A
N / A
N / A
How to apply for the plan?
Eligible single parents must apply for the Family Home Guarantee from around 30 participating lenders, which are the same as the FHLDS. The NHFIC says it does not welcome, assess or approve applications, or maintain waiting lists for places in the program.
Applicants for places from July 1, 2021 to June 30, 2022 must provide a tax notice for their previous year tax returns from the Australian Taxation Office (ATO).
Participating lenders have been allowed to process applications until the pre-approval stage for those without a notice of assessment until August 31, but NHFIC advises applicants to discuss with their lenders the risks of signing a sales contract. before obtaining a notice of assessment. .
The Family Home Guarantee is accessible with other state incentives, including the First Home Owner Grant (FHOG) and the First Home Super Saver (FHSS). However, it is not accessible with FHLDS as both have the same goal of helping buyers with a low deposit.
Here is the list of lenders participating in the government’s Family Home Guarantee program.
- Australian military bank
- Bank Australia
- Bank first
- Heritage Island Bank
- Bank of us
- Bendigo Bank
- Border bank
- Commonwealth Bank
- Community First Credit Union
- Defense Bank
- Mutual Bank of Firefighters
- Mutual Bank G&C
- Gateway bank
- Bank of Healthcare Professionals
- Aboriginal Business Australia
- My State Bank
- Police Bank
- Bank Q
- Regional Bank of Australia
- Mutual Bank for Teachers
- Mutual Bank
Read more: How to apply for a single-parent housing loan
What are the advantages and disadvantages of the Premier Logement Guarantee?
The main benefit of the Family Home Guarantee is that it allows single parents to buy a home with a low deposit without having to pay LMI, which helps them access the home ownership ladder faster. This is particularly advantageous given that house prices are expected to rise further in the future. Having their own home also allows single parents to put money they would otherwise have spent on rent toward their mortgage.
Buying a property, however, involves a myriad of costs that go beyond the 2% deposit, so buyers should also be aware of the other expenses that come with owning a home. Another thing to remember is that although the government guarantee covers 18% of the loan amount, it does not mean that they will pay for it. Single parents will continue to pay this amount as it will be added to their loan.
When applying for a home loan, it’s always best to speak to a professional mortgage broker before taking any action. An experienced broker can help you assess your financial situation, allowing you to make informed buying decisions.