The First Home Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS). An initiative by the Australian Government designed to help eligible Australians buy their first home sooner. Managed by Housing Australia, the FHBG allows eligible home buyers to purchase a property with a lower deposit. Making home ownership more accessible.
How the First Home Guarantee Works
Under the FHBG, Housing Australia guarantees a portion of an eligible home buyer’s loan from a participating lender. This guarantee allows home buyers to purchase a property with as little as a 5% deposit without paying Lenders Mortgage Insurance (LMI). The guarantee covers up to 15% of the property value, as assessed by the lender. It’s important to note that it is not a cash payment or contribution towards the deposit.
From 1 July 2024 to 30 June 2025, 35,000 FHBG places will be available.
Eligibility Criteria
To qualify for the FHBG, home buyers must meet the following criteria:
- Application Type: Applicants can apply as individuals or as two joint applicants.
- Residency: Applicants must be Australian citizens or permanent residents at the time they enter the loan.
- Age: Applicants must be at least 18 years old.
- Income: Applicants must have an annual income of up to $125,000 for individuals or $200,000 for joint applicants. This must be verified by a Notice of Assessment issued by the Australian Taxation Office.
- Property Ownership History: Applicants must be first home buyers or previous homeowners who have not owned property in Australia in the last ten years. This includes land ownership.
- Occupancy: Applicants must intend to occupy the purchased property as their principal place of residence.
To find out if you meet the eligibility criteria, use the Eligibility Tool from the Housing Australia website.
Deposit Requirements
For the guarantee, first home buyers need a deposit between 5% and 20% of the property’s value. While the scheme allows for a minimum deposit of 5%, participating lenders may require a higher deposit based on your individual financial circumstances. Consult a professional to determine what counts as genuine savings and whether other government grants can be included in your deposit
Property Types and Price Caps
The FHBG can be used to purchase a variety of residential properties, including:
- Existing houses, townhouses, or apartments
- House and land packages
- Land with a separate contract to build a home
- Off-the-plan apartments or townhouses
Each property type may have specific eligibility criteria and price caps, which can vary by location. Use the Property Price Cap Tool to check the price caps for your desired area.
How to Apply
You can submit HGS applications through an authorised representative or mortgage broker like Roar Capital, or directly with a participating lender. Before committing to a home loan, it’s advisable to consult with your mortgage broker & seek independent financial and legal advice. It’s crucial to understand the terms of the HGS and how factors like changing interest rates or property prices could affect your financial situation. At Roar Capital, we help many first home buyers achieve their dream of property ownership, hence happy to answer any questions you have.
Notice of Assessment Requirements
Your Notice of Assessment (NOA) plays a crucial role in determining eligibility for the FHBG. Once the ATO processes your tax return, they issue the NOA, which lenders will use to verify your income
- If you make a scheme reservation before 30 June 2024, you will need to provide the 2022-23 NOA
- For reservations made on or after 1 July 2024, the 2023-24 NOA will be necessary. The lender can provide a 90-day grace period to obtain the NOA, but you must submit it before a guarantee is issued
The First Home Guarantee represents a valuable opportunity for eligible Australians to enter the property market sooner. By understanding the scheme’s requirements and consulting with an authorised representative such as a Mortgage Broker, you can take the next step toward owning your own home sooner.
Take the Next Step
If you’re ready to learn more about the First Home Guarantee, get in touch with our team via the Contact Us page and we can have an initial chat to see if the scheme is right for you.
