Home Guarantee Scheme to expand eligibility criteria – what you need to know

More Australian first home buyers may soon become eligible for the Home Guarantee Scheme, thanks to new changes to its eligibility criteria announced by the Federal Government. But if you or someone you know are looking to take a advantage of the scheme, it’s essential to familiarise yourself with the requirements involved. 

What’s the Home Guarantee Scheme?

The Home Guarantee Scheme (HGS), previously known as the First Home Loan Deposit Scheme (FHLDS), encompasses the First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee. 

These schemes allow eligible borrowers to purchase their first home with a deposit as small as 5% (or even 2% for the Family Home Guarantee) of the property value. As the government effectively acts as a guarantor for the loan, these borrowers may be able to save thousands of dollars in Lenders Mortgage Insurance (LMI) charges.

What’s changing? 

While these schemes have previously been limited to single and couple applicants who fulfil the scheme’s other eligibility criteria, the following changes have been announced to take effect from 1 July 2023:

• Friends, siblings, and other family members will be eligible for joint applications under the First Home Guarantee and the Regional First Home Buyer Guarantee.
• The guarantees will be expanded to non‑first home buyers who haven’t owned a property in Australia in the last ten years.
• The Family Home Guarantee will be expanded from single natural or adoptive parents with dependents to eligible borrowers who are single legal guardians of children, such as aunts, uncles and grandparents.
• All three guarantees will also become available to eligible borrowers who are Australian Permanent Residents, in addition to Australian citizens.

Minister for Housing, Julie Collins, said that these changes are to help meet the needs of Australia’s changing households: 

“We know friends and family members are already teaming up to secure their own place to call home. Our actions will allow them to access vital assistance, just as couples have been able to previously… These are sensible changes that will help ensure more families have a safe and secure place to call home.”

What do you need to know about the Home Guarantee Scheme?

Places are limited

Not every applicant for one of the three Home Guarantee Schemes may be able to benefit from government assistance, as there are only a limited number of positions available in each scheme.

In total, 35,000 places are available per year across the First Home Guarantee, 10,000 places per year to 30 June 2025 under the Regional First Home Buyer Guarantee, and 5,000 places per year to 30 June 2025 under the Family Home Guarantee.

Limited property types

These government schemes can be used to help purchase:

• 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.

Additionally, the Regional First Home Buyer Guarantee requires that this property be in an area outside of the capital cities.

Lenders are limited

Not all of Australia’ banks and mortgage lenders are participating in these schemes. This could limit your choice of home loans, so you may not always be able to get a mortgage from your preferred lender.

It’s important to compare home loans from participating lenders before applying for one of the government guarantee schemes.

If you need more help, a skilled and qualified mortgage broker may be able to help you navigate the application process and manage the paperwork on your behalf.  

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