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Last year, Australia’s housing market was one of the most unaffordable in the developed world, with the Demographia International Housing Affordability 2024 report ranking Sydney second to Hong Kong as the least affordable property market.
As the report noted: “Middle-income households face rapidly escalating housing costs, which is the primary cause of the present cost-of-living crisis. For decades, home prices generally rose at about the same rate as income, and homeownership became more widespread. But affordability is disappearing in high-income nations as housing costs now far outpace income growth. The crisis stems principally from land use policies that artificially restrict housing supply, driving up land prices and making homeownership unattainable for many.”
While interest rates kept house prices in check for much of 2022, as of June 2024, it’s a different story. The latest figures from CoreLogic reveal that Australian dwelling values increased a further .7% in June, taking growth to 8% for the financial year to June 30.
In a bid to tackle these difficulties, successive governments have introduced schemes that aim to assist new home buyers and provide more equitable access to home ownership, with varying degrees of success. One of these programs, initially introduced by the Morrison Government, is the Family Home Guarantee, which allows eligible Australians to buy a home with a 2% deposit. This guide explores everything you need to know about the scheme.
What Is the Family Home Guarantee?
The Family Home Guarantee is designed to support eligible single parents with at least one dependent child to purchase a home with a minimum 2% deposit without paying Lenders Mortgage Insurance. Most borrowers pay some form of mortgage insurance if they have a deposit of less than 20%, but the FHG scheme recognises that most single parents face an out-sized challenge to enter the market. It forms part of the wider First Home Guarantee initiative.
When the scheme was initially introduced 10,000 places were made available over a four-year period, or an average of 2,500 places a year. That figure increased to 5,000 places per year in the previous Morrison Government’s federal budget 2022.
When the new Labor Government took office, that increase was confirmed, as was the increase to the caps on the property values as detailed in the Family Home Guarantee Property Price Cap section below. It is one of several schemes designed to tackle housing affordability—others include the National Rental Affordability Scheme and the Regional First Home Buyer Guarantee.
Most recently, the Federal Government announced an expansion of the definition of single parent to include legal guardians, such as grandparents, uncles or aunties.
Housing minister Julie Collins said at the time: “These are sensible changes that will help ensure more families have a safe and secure place to call home.” Permanent residents, as well as Australian citizens, can also now apply.
How Does the 2% Deposit Scheme Work?
The small deposit is possible under the scheme because a portion of the home loan—the deposit, essentially—from a participating lender is guaranteed by the National Housing Finance and Investment Corporation (NHFIC).
The NHFIC is a corporate Commonwealth entity established in June 2018 with the purpose of improving housing outcomes for Australians.
The Family Home Guarantee home loan is for up to a maximum amount of 18% of the value of the property as valued by the participating lender, which is what allows the borrower to contribute just 2% deposit to make up the 20%. The maximum deposit allowed under the scheme is 20%.
Related: Australian Property Market News
Eligibility Requirements for the Family Home Guarantee
To be eligible for the Family Home Guarantee you must be a single parent or a single legal guardian of at least one dependent child—and be applying as an individual not an entity or corporation. You can have owned a property before, but you cannot have any ownership interest in property at the time of the application.
There are also income requirements and you can only earn up to $125,000 a year. Applicants also need to be Australian citizens or permanent residents, 18 years or older and plan to be the owner-occupier of the purchased property. You cannot, for example, use this scheme to fund an investment property.
Eligible Properties
Existing houses, townhouses or apartments are eligible as long as they are residential properties. House and land packages, or an off-the-plan apartment or townhouse, may also be eligible.
Family Home Guarantee Property Price Caps
Below are the maximum values of property eligible for the Family Home Guarantee
How To Apply For The Family Home Guarantee
You need to apply directly via an authorised lender or a mortgage broker that deals with Family Home Guarantee Loans.
As there are only 5,000 places made available per financial year, you will need to first apply via your lender for a place reservation. You will need certain identification details to do this, such as your medicare number and full name and date of birth.
You will also need a Notice of Assessment which will confirm your income meets the income test.
If applying this financial year— July 1, 2024 to June 30, 2025—the relevant Notice of Assessment is the 2023-2024 financial year. Your Notice of Assessment is an annual tax document that is sent to your myGov Inbox once your tax return has been processed.
Find a Participating Lender
The list of the 32 authorised lenders is available here. NAB and the Commonwealth Bank are the only two of the big four banks authorised. However, there are currently 30 other non-bank lenders on the list.
Frequently Asked Questions (FAQs)
How does the family home guarantee work?
The Family Home Guarantee works by allowing eligible single parents or eligible single legal guardians to buy a home with a deposit of just 2%.
What is the income threshold for the Family Home Guarantee?
The income threshold for the Family Home Guarantee is $125,000. If you earn more than this than you will not be eligible for the scheme.
Who is an eligible applicant under the Family Home Guarantee?
Broadly speaking, single parents, as well as single legal guardians, with at least one dependent who don’t earn more than $125,000 per year are eligible to apply. You can have owned property previously, but you must not currently own land or property.
Am I eligible for the Family Home Guarantee?
To be eligible for the Family Home Guarantee you must satisfy a range of criteria:
- be a single parent or legal guardian — i.e. have at least one dependent child;
- be applying as an individual;
- not have any ownership interest in the time of application;
- be earning less than $125,000 a year;
- be an Australian citizen or permanent resident;
- be 18 years or older; and
- intend to be the owner-occupier of the property.
Where can I find the Family Home Guarantee Fact Sheet?
The fact sheet is available here.
Which banks offer the Family Home Guarantee?
The banks and non-bank lenders that currently offer FHG loans are listed below.
Banks
- NAB
- CBA
Non-Major Lenders
- Australian Military Bank
- Australian Mutual Bank
- Auswide Bank
- Bank Australia
- Bank First
- Bank of Heritage Isle
- Bank of Us
- BCU
- Bendigo Bank
- Beyond Bank
- Border Bank
- Community First
- Credit Union SA
- Defence Bank
- Firefighters Mutual Bank
- G&C Mutual Bank
- Gateway Bank
- Great Southern Bank
- Health Professionals Bank
- IBA
- Illawarra Credit Union
- IMB
- Mortgageport
- MyState Bank
- Newcastle Permanent Building Society
- P&N Bank
- People’s Choice
- Police Bank
- QBANK
- Queensland Country Bank
- Regional Australia Bank
- Teachers Mutual Bank
- The Mutual Bank
- UniBank
- Unity Bank
- BankWAW
