If you are a first home buyer or your child is looking at purchasing their first property, there is financial support available through the federal government’s First Home Guarantee Scheme. From 1st July 2023, the government will expand the eligibility criteria, making it easier to buy a first home.
An overview of the scheme
This Government Guarantee Scheme enables eligible first home buyers to:
- qualify for a home loan with a deposit of as little as 5% (or 2% for eligible single parents or legal guardians with dependents)
- avoid the cost of lenders’ mortgage insurance (which can save them tens of thousands of dollars on a large home loan).
Normally, lenders charge lenders’ mortgage insurance for any home loan property where a borrower cannot provide a deposit of at least 20%.
Effectively, this scheme means that the federal government will act as a guarantor for lenders to ensure that borrowers with less than a 20% deposit do not have to pay for lenders’ mortgage insurance.
What are the recent changes
The First Home Guarantee was previously known as the First Home Deposit Scheme. The federal government confirmed in the recent Federal Budget that 35,000 places would be available in the scheme for the 2023/24 financial year (the same allocation as the 2022/23 financial year). Nearly 100,000 first home buyers are already participating in the scheme. Additional changes were:
- the expansion of eligibility from singles and de-facto couples to any two people, including family members, siblings and friends that can jointly apply
- can include non-first home buyers that have not purchased a property in the last 10 years
- applicants are no longer required to be Australian Citizens and is now available to Australian Permanent Residents
To be eligible for the First Home Guarantee Scheme, singles or couples must meet all the following eligibility criteria:
- at least 18 years of age
- Australian citizen/s or permanent resident
- a taxable income of less than $125,000 (individual applicants) or less than $200,000 (couple applicants)
- applicants must be intending to live in the property as their primary residence (i.e., the scheme is not available for the purchase of investment properties)
- the property to be purchased must fall within specific price caps (listed in the table below).
|State/Territory||Price Cap of Capital City/ Major Regional Centres||Price Cap for All Other Areas|
|New South Wales||$900,000 (Sydney, Newcastle, Lake Macquarie and Illawarra)||$750,000|
|Australian Capital Territory||$750,000 (all areas)|
|Queensland||$700,000 (Brisbane/Gold Coast/Sunshine Coast)||$550,000|
|Northern Territory||$600,000 (all areas)|
How to apply
You can apply for the First Home Buyer Guarantee through a mortgage broker or one of 32 participating lenders across Australia.
However, it is advised to get independent, professional advice on the best home loan for your specific needs. Even small variations in the terms and conditions of different home loans can make a significant difference to your home loan repayments. A mortgage is also a big commitment, and you should check that you are in the position to buy a property.
How we can help
Our lending and finance team at Wilson Pateras has established relationships with participating lenders in the First Home Guarantee scheme. However, we work for our clients, not lenders, so we strive to find the home loan that is most suitable for each of our client’s individual needs.
Contact us today to find out if you are eligible for this Scheme.
*This content has been prepared by Wilson Pateras to further our commitment to proactive services and advice for our clients, by providing current information and events. Any advice is of a general nature only and does not take into account your personal objectives or financial situation. Before making any decision, you should consider your particular circumstances and whether the information is suitable to your needs including by seeking professional advice. You should also read any relevant disclosure documents. Whilst every effort has been made to verify the accuracy of this information, Wilson Pateras, its officers, employees and agents disclaim all liability, to the extent permissible by law, for any error, inaccuracy in, or omission from, the information contained above including any loss or damage suffered by any person directly or indirectly through relying on this information. Liability limited by a scheme approved under Professional Standards Legislation.