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The Family Home Guarantee Explained


While the cost of living certainly isn’t getting any cheaper, the Federal Government has released the Family Home Guarantee as a means to provide a leg up. As house prices continue to rise, so too does the ideal 20% deposit that is required in order to get the all important pre-approval for a home loan. Without it, potential borrowers can expect to face thousands of dollars in extra costs thanks to Lenders Mortgage Insurance. Thus, it can be all too easy to feel deflated if you’re facing a blowout on the timeline linked to saving for a house deposit. Thankfully, the Federal Government is also acutely aware of how hard it can be for Australians to save enough funds for a home loan deposit. Along with a range of other grants, funding and schemes introduced such as the First Home Owners Grant, HomeBuilder Grant, and even the First Home Owners Deposit Scheme, the Family Home Guarantee is a new measure introduced to help single parent families, the majority of whom are women, get a leg up onto the property ladder, or to re-enter the property market – so how does it all work?

Understanding The Family Home Guarantee 

Aimed at getting single parents into their first home, the newly introduced Family Home Guarantee will allow eligible participants to build or purchase an existing home with a deposit of as little as 2%, and isn’t restricted to first home buyers. In order for applicants to avoid paying Lenders Mortgage Insurance, the government essentially acts as a ‘guarantor’ to back the remaining percentage of the deposit, and can be as high as 18%.  While 10,000 Family Home Guarantees will be made available over four financial years from 1 July 2021 to 30 June 2025 – or 2,500 spots per year – applicants will still need to prove their ability to comfortably pay back a mortgage on their own and to meet the criteria of individual lending providers. 

To qualify for the Family Home Guarantee, the key factors include that the applicant must be a single parent with at least one dependent child, and must have a taxable income that does not exceed $125,000 per annum for the previous financial year. For a property to be eligible under the Family Home Guarantee, it must be a residential property. This term has a particular meaning, and is consistent with the First Home Loan Deposit Scheme.

  • 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 or mortgage must have a term of no more than thirty years.
  • Applicants must intend to be owner-occupiers of the purchased property. In the case of an active Australian Defence Force member applicant, 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 owners 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. 

Eligible residential properties generally include an existing house, townhouse or apartment, a house and land package, land and separate contract to build a home, or an off-the-plan apartment or townhouse. If an applicant’s home loan is covered by the scheme, they can also access other government programs such as the First Home Super Saver Scheme, Home Builder Grant or First Home Owner Grant and other relevant concessions that may be offered by state or territory governments.

However, these other programs apply their own criteria and conditions, and it’s up to the applicant to make their own enquiries to see if they potentially qualify for multiple grants.  However, if you aren’t quite sure as to what the best approach is if you’re considering getting a pre-approval for a home loan, it’s always a good idea to consult with the professionals to ensure you’re putting your best financial foot forward. The right mortgage broker can help guide you as to which programs you may qualify for, as well as the best loan products to fit your individual set of circumstances – but where do you find one?

Get The Right Advice The First Time 

With a background in banking, finance, business development and project management, there’s no better advocate to have on your team than Nikki Berzin. As a fully qualified mortgage broker and director of Cherry Lending & Finance, Nikki is passionate about all things finance, and empowering her clients with the tools to hit their property goals is what she does best. If you’re looking to get into your first home, purchase an investment property or even want to look at your options for refinancing, the first step is starting the conversation. Get in touch with Nikki today, or call her directly on 0427 374 155 to bring your mortgage dreams to life. Disclaimer: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.  Subject to lenders terms and conditions, fees and charges and eligibility apply. Interest Rates are correct as at 17/08/2021 and subject to change at any time. Different terms, fees or other loan amounts might result in a different comparison rate. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply. Your full financial situation would need to be reviewed prior to acceptance of any offer or product.