The First Home Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS), an Australian Government initiative to support eligible home buyers to purchase a home sooner.
The HGS is administered by Housing Australia on behalf of the Australian Government.
Let's take a closer look at the First Home Guarantee and some of the requirements for first home buyers.
How does it work?
When you’re buying a home, most lenders want to see that you have a 20% deposit saved. If you don’t, you usually need to pay Lenders Mortgage Insurance (LMI), which protects the lender in case you default on the loan.
However, if you’re eligible for the First Home Guarantee, you only need to save a minimum 5% deposit. This is because the Australian Government will guarantee up to 15% of the value of the property being purchased when that purchase is financed through an eligible home loan from a participating lender. This Guarantee effectively helps you get into your home sooner by helping you avoid paying LMI and instead enabling you to put that money toward the purchase price of your home.
It's important to note the Guarantee is not a cash payment or a deposit for your home loan. It’s a guarantee made to the participating lender.
Am I eligible for the Guarantee?
Eligibility criteria apply for the Guarantee. The borrower/s must:
- be an Australian citizen or permanent resident at least at least 18 years of age;
- be either;
- single applicant with a taxable income of up to $125,000 per annum for the previous financial year, as shown on the Notice of Assessment (issued by the Australian Taxation Office); or
- joint applicants (any two applicants) with a combined income of up to $200,000 as shown on the Notice of Assessment.
- intend to live in the property they’re looking to buy. (Investment properties are not supported by the HGS);
- have saved a deposit of at least 5% – but no more than 20% – of the eligible property’s purchase price. (If your deposit is less than 5%, or 20% or more, you won’t be eligible for HGS support);
- be a first home buyer or previous homeowner who hasn’t owned a property in Australia in the past 10 years.
How do I apply for the Guarantee?
If you’re eligible (see above) you’ll need to apply for the Guarantee via a participating lender… and guess what? We are one.
One of our lenders will work with you throughout your HGS-supported loan application journey.
While you won’t be charged anything for applying for the Guarantee itself, you will be responsible for meeting all costs, fees and repayments in relation to the HGS-supported home loan provided by your lender, as well as any of the usual costs associated with purchasing a property.
What type of property can I buy?
You’re only able to purchase what’s considered ‘residential property’ under this Guarantee. This includes:
- an existing house, townhouse or apartment
- a house and land package
- land and a separate contract to build a home; and
- an off-the-plan apartment or townhouse.
Specific dates and requirements apply for the various eligible property types. Speak with your lender about these.
What else do you need to know?
Property price thresholds
The Guarantee supports eligible home buyers to purchase or build a home, but property price thresholds apply depending on where you’re looking to buy. Check this fact sheet for these price thresholds.
Other government schemes and initiatives
Even if your home loan is supported by the HGS, you may still be able to access other government initiatives such as the Australia Government’s First Home Super Saver Scheme or the First Home Owner Grant. Make sure you discuss your potential eligibility for these other initiatives with your lender.
The FHBG isn’t the only Guarantee available through the Home Guarantee Scheme. There’s also the Family Home Guarantee and Regional First Home Buyer Guarantee.
The Family Home Guarantee (FHG) is designed to help eligible single parents or guardians with at least one dependent to buy or build their home sooner, with as little as 2% deposit. Applicants needn’t be first home buyers. However they must not own separate property at the time of settling a loan under the FHG. You can find more information about the FHG and eligibility criteria on the Housing Australia website.
The Regional First Home Buyer Guarantee (RFHBG) is very similar to the FHBG, with the difference being that this specifically supports home buyers in regional areas. You can find more information about the RFHBG and eligibility criteria on the Housing Australia website.