From July 1 2023, the home guarantee will expand to include permanent residents, friends & family members.
In an effort to combat the housing crisis, the Albanese federal government has announced some much-needed changes to the criteria for the home guarantee scheme. These changes will allow more people than ever – including permanent residents, single guardians and cohabiting friends or family members to enter the property market with a small deposit.
What is the home guarantee scheme?
The home guarantee scheme (HGS) is an initiative that helps people to buy or build their first home. Generally, if you want to buy a home in Australia, you need a deposit of at least 20% to enter the market without incurring lenders mortgage insurance (LMI). With the home guarantee scheme, you only need to have a 2-5% deposit – and the government will cover the remaining 15-18%.
The home guarantee scheme has three different guarantees:
- The first home guarantee – which enables eligible first home buyers to buy a home with a 5% deposit.
- The family home guarantee – which enables eligible single parents to buy a home with a 2% deposit.
- The regional home buyer guarantee – which enables regional buyers to buy a home with a 5% deposit.
A summary of the new changes
The government has expanded the eligibility criteria for all aspects of the scheme, which will make getting a home much easier for millions of Australians. The main home guarantee scheme changes that have been announced include:
- Permanent residents can now access the scheme
- Friends, siblings & other family members can now apply as joint applicants
- More single guardians can access the family guarantee
- Previous homeowners who have endured financial hardship/not owned a home for at least 10 years can access the scheme
Australian permanent residents are now eligible!
All three guarantees are currently limited to Australian citizens, which excludes migrants and permanent residents from accessing the support they need when purchasing their first home. Thankfully, from the 1st of July onward, all these guarantees will also be available to eligible Australian Permanent Residents!
Friends siblings & family members can apply
From the 1st of July onwards, family members and friends will be eligible for joint applications with as little as a 5% deposit. The government will cover the remaining 15% of the deposit, so the applicants won’t have to pay the lenders’ mortgage insurance that usually applies to those with a deposit of less than 20%. Previously, these guarantees were only available to eligible couples (married or de facto) or singles.
Single legal guardians can apply
Currently, the family home guarantee scheme supports eligible single natural or adoptive parents with at least one dependent child to buy a home with a 2% deposit. From the 1st of July onwards, the scheme will be expanded beyond just single natural or adoptive parents with dependents, to include single legal guardians such as aunts, uncles, or grandparents.
Previous homeowners can apply
The home guarantee schemes are currently only available to first-home buyers. But in the final change announced, previous property owners who haven’t owned a home in 10 years will be able to apply. This is great news for those who have experienced financial hardship or relationship breakdown.
What are the eligibility requirements for the home guarantee scheme?
The specific eligibility requirements will depend on the type of guarantee you apply for. In general, to be eligible for the new home guarantee scheme, you will have to be able to meet the following criteria:
- You must be an Australian permanent resident and at least 18 years old
- You must have a minimum 2-5% deposit, depending on the guarantee type
- You must be a first-home buyer, or you must not have owned a home in the last 10 years
- You must earn no more than $125,000 for individuals or $200,000 for joint applicants
- You must intend to be the owner-occupier of the property
To find out more about eligibility requirements, you can use the government’s Eligibility Tool or chat with an expert.
How to apply
To apply for the home guarantee scheme, you will need to check your eligibility, book an appointment with a mortgage broker, and then complete and submit your application. Applications can only be made with a participating lender or their authorised representative (i.e. a mortgage broker).
Questions about your eligibility?
If you want to find out more about accessing the home guarantee scheme or what these changes could mean for you, don’t hesitate to get in touch with our experienced mortgage brokers. We work with individuals and joint applicants to make their dream of owning a home a reality. We offer first home buyer loans, regional home loans, family home loans and more.
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