The Family Home Guarantee

The Family Home Guarantee (FHG) is an initiative by the Australia Government and a component of the Home Guarantee Scheme (HGS).

The FHG is designated by Housing Australia and aimed at helping eligible single parents or single legal guardians, with at least one dependent, to purchase a home sooner.

What is the Family Home Guarantee?

The FHG enables eligible single parents with dependents to build a new home or purchase an existing one with a deposit of 2 percent, subject to lenders' credit criteria. Recipients can qualify regardless of whether they are a first home buyer or a previous home owner.

Starting from 1 July 2023, 5,000 Family Home Guarantees will be available each year until 30 June 2025.

How does the FHG work?

Eligible single parents or legal guardians with dependents who are interested in building a new home or purchasing an existing one have the opportunity to apply for a single parent home loan. This loan can be used to buy an eligible property through a participating lender, providing financial support to those who qualify.

Housing Australia guarantees up to 18 percent of the property's value to a participating lender, provided the borrower meets certain conditions. These conditions include having a minimum 2 percent deposit and being an eligible single parent or single legal guardian. This guarantee is designed to help single parents or legal guardians with dependents to enter or re-enter the housing market more quickly.

There are no additional costs or repayments directly associated with the Family Home Guarantee itself. However, eligible single parents and eligible single legal guardians are still responsible for all the usual costs and repayments associated with the home loan they obtain under the Family Home Guarantee. This includes meeting the mortgage repayments, covering any associated fees, and handling any other financial obligations related to the home loan.

The Family Home Guarantee does not support the purchase of investment properties. This program is specifically designed to assist eligible single parents and single legal guardians in buying a home to live in, rather than for investment purposes. Therefore, properties intended for rental income or investment gains are not eligible for this guarantee.

Family Home Guarantee Scheme Eligibility Criteria:

To qualify for the program, you must meet several criteria:

  • be an eligible single parent (either a single mother or father) or a single legal guardian with at least one dependent.
  • be over the age of 18
  • be either an Australian citizen or a permanent resident.
  • Your taxable income for the previous financial year should not exceed $125,000, excluding child support payments from this calculation.
  • The eligible single parent or eligible single legal guardian must be the only name listed on the loan and the certificate of title.
  • the loan agreement must have a term of no more than 30 years.
  • Individuals must have at least 2 per cent of the value of the property available as a deposit. If the borrower has a deposit of more than 20 per cent, then the home loan cannot be covered by the Family Home Guarantee.
  • Furthermore, you must intend to occupy the property you are purchasing as your primary residence. It's also important that you do not currently own any property, and if you are purchasing a guaranteed property, you should not have plans to own another separate property at the time of settlement. 

These conditions are in place to ensure that the program supports those looking to secure a home for themselves and their dependents, rather than for investment purposes.

Can you be an owner of another property and still eligible for the FHG loan?

When entering into the home loan agreement, applicants must ensure they do not currently possess any other form of property interest in Australia, such as owning land outright, holding a lease of land, or having a company title interest in land. If applicants do hold such an interest at the time of applying, they must either intend to relinquish this interest upon settlement of the property they are purchasing or hold the interest jointly with another party as a joint tenant or tenant in common in relation to the property linked to the loan. Additionally, they must intend to become the sole registered owner of the property as a result of obtaining the loan. These conditions are crucial to comply with the eligibility criteria and ensure clarity regarding property ownership throughout the loan process.

What types of properties are eligible for the FHG?

The property you intend to purchase must be a residential property, suitable for living purposes. If you choose to build, the loan can cover not only the purchase of land but also the construction costs involved in building a residential property on that land.

Eligible residential properties generally include:

• an existing house, townhouse or apartment

• a house and land package

• land and a separate contract to build a home

• an off-the-plan apartment or townhouse.

It is crucial that the total cost of the property remains within the specified price caps for each state and region. Additionally, for most cases, you are required to apply for a Principal and Interest loan, unless you are applying for a Construction Loan specifically tailored for building purposes.

Participating lenders need the land where you plan to build or buy a home to have a clear title before they can give you an NHFIC guarantee. This means the land must be legally registered in your name or as per the lender's rules before the 90-day pre-approval period ends. This ensures all the necessary legal ownership paperwork is sorted out before they guarantee your loan.

Why do you need a Conveyancer to buy a home?

If you are thinking of entering into a contract for the purchase of land or the construction of a home, it is advisable to consult with a qualified conveyancing expert. They can provide comprehensive guidance on understanding and mitigating any potential risks associated with a conveyance transaction. This will ensure that you are well-informed and prepared to navigate the legal complexities involved in these significant financial commitments.

It is also essential to be aware that as part of the process, you will need to sign a fixed-price building contract. Any changes made to this contract after signing could potentially affect the status of your place in the Scheme.

Is Lenders Mortgage Insurance required by the Lender?

Additionally, it's important to know that your bank may ask you to pay for Lenders Mortgage Insurance (LMI) or cover extra costs if changes to the contract increase expenses. So, it's essential to review and stick to the agreed terms carefully to avoid unexpected financial problems.

When are payments made with the FHG loan?

Loans under the Family Home Guarantee need you to make regular payments that cover both the loan amount and the interest throughout the entire loan term. There are only a few exceptions for interest-only loans, mainly for construction purposes. Before you sign a home loan agreement, it's a good idea to talk to your lender or broker about how changes in interest rates or house prices might affect you personally.

What property price thresholds apply?

The property price thresholds for the Family Home Guarantee are the same as those applying to the First Home Guarantee.