The Commonwealth Government introduced a scheme to support eligible single-parent families to enter the housing market that came into operation on 1 July 2021. Known as the Family Home Guarantee, this scheme is administered by the National Housing Finance and Investment Corporation (NHFIC), a corporate Commonwealth entity established under the National Housing Finance and Investment Corporation Act 2018 (Cth). By guaranteeing a participating lender up to 18% of the property’s value on behalf of the purchaser, the NHFIC allows a single parent to enter the housing market sooner.
What is the Family Home Guarantee?
The Family Home Guarantee (FHG) scheme supports eligible single parents with at least one dependent child to purchase a family home with as little as a 2% deposit as part of the purchaser’s home loan from a participating lender. The FHG is for a maximum of 18% of the property’s value (as assessed by the lender).
The guarantee itself is not a cash payment nor a home loan deposit, but it means that the eligible purchaser will not need to pay lenders mortgage insurance for having less than a 20% deposit. There are no costs or repayments associated with the FHG itself. However, scheduled repayments of the principal and interest of the associated home loan are required for the full loan agreement period, which must be no more than 30 years.
Eligibility for a property purchase with this scheme
From 1 July 2021 to 30 June 2025, 10,000 FHGs will be made available to eligible single parents. To be eligible for this scheme, at the time you are applying you must:
- Be an Australian resident who is at least 18 years of age and single – meaning without a spouse (separated but not divorced is not considered single) or de facto partner. This single parent must have a taxable income which does not exceed $125,000 per annum.
- Have a least one dependent child living with you – meaning you are the natural or adoptive parent of a child who is either under 18 years of age or 16-22 years of age and receiving a disability support pension, indicating that you are legally responsible for their care, welfare and development.
- Not currently own a home in Australia – meaning you must not currently have a freehold interest in real property, a lease of land or a company title interest in land. It does not matter whether you are a first home buyer or have previously owned a home, as long as you do not currently own a home.
- Have the minimum 2% deposit available to pay for the residential property.
- Be looking to purchase a residential property – such as a house, townhouse or apartment. The type of home you purchase will determine the time frame of your eligibility. For example, if you are purchasing an existing dwelling, the contract of sale must be signed by you and dated on or after 1 July 2021 but other dates may apply if you are building the home.
Additional property price caps apply depending on your chosen location. In Sydney and regional centres within New South Wales, the property price threshold is $800,000. In the rest of the state, the property price threshold is $600,000. We have prepared another article on the hidden costs of purchasing property to ensure you do not encounter any unexpected costs in this process. Participating Lenders have additional property specific criteria which will affect your eligibility.
Applying for the Family Home Guarantee
All eligible purchasers need to consult with Participating Lenders as all applications for the scheme need to be made directly with them. Seeking legal advice from an experienced solicitor can help with this and also assist you to structure your loan agreement to best suit your personal circumstances.
How Etheringtons Solicitors can help
A solicitor at Etheringtons Solicitors can provide clarification of the relevant property law and its relation to your particular property purchase and individual circumstances. If you need further advice or assistance with property law matters, please contact one of our experienced solicitors on (02) 9963 9800 or via our contact form.