Buying a house with only 2% deposit? The Family Home Guarantee scheme is aims to make easier for Australian single parents to own their own home.
It’s hardly news that property in Australia is expensive. As a result, that makes saving up for a deposit difficult and time-consuming, even more so if you’re doing it on a single income.
That’s the issue the Family Home Guarantee scheme is trying to address. It’s designed to make purchasing a home easier and quicker by giving single parents with dependents the chance to purchase a new or existing home with a low deposit.
What is a lower deposit? Typically it’s one below 20% (of the total property price), which is the minimum amount generally required of borrowers to avoid having to take out lenders mortgage insurance (LMI) – an added expense which can run into the thousands of dollars.
Instead, the government will guarantee home loans taken out under the Family Home Guarantee scheme for buyers with deposits between 2% and 20%, meaning single parents will potentially be able to purchase a home faster, and without that added cost of LMI.
As you’d expect, the Family Home Guarantee scheme has quite a few requirements that prospective applicants will need to meet:
Like the FHLDS, the Family Home Guarantee program will also come with specific price thresholds depending on where you intend to buy. In fact, they’re the same as the FHLDS. For example, you’ll find that capital cities and regional centres with a population of more than 250,000 come with higher price caps than other regional areas, given they tend to be more expensive.
| State | Capital city and regional centres | Rest of state |
| NSW | $700,000 | $450,000 |
| VIC | $600,000 | $375,000 |
| QLD | $475,000 | $400,000 |
| WA | $400,000 | $300,000 |
| SA | $400,000 | $250,000 |
| TAS | $400,000 | $300,00 |
| Territory | All areas |
| ACT | $500,000 |
| NT | $375,000 |
While the Family Home Guarantee is one of the newest housing initiatives launched by the government, there are also a number of other existing schemes, programs, rebates and incentives first home buyers in particular can take advantage of.
As mentioned above, the government has an existing initiative for first home buyers with lower deposits called the First Home Loan Deposit Scheme (FHLDS). This allows first-time buyers to get a home loan without LMI with a deposit as low as 5%, and the government has just announced 10,000 new spots which will open from July 1, 2021.
There’s also the First Home Super Saver Scheme for Australians saving up for their first home. Essentially, this scheme allows young Australians to make additional contributions to their superannuation of up to $15,000/year to a total cap of $50,000. These can then be withdrawn to put towards a home deposit.
Last but not least, there are still a number of stamp duty rebates and other incentives offered by various state and territory governments around Australia that first home buyers can also make use of.
Source From: Mozo.com.au “Family Home Guarantee: How does it work and an I eligible?”
Author: Tom Watson