In particular we focus on getting the loan structure right the first time, choosing which lenders to use in the right order (yes this is important) and finally getting our clients the best deal possible.
First Home Guarantee
Get into your home sooner
ONLY 5% DEPOSIT
NO MORTGAGE INSURANCE
DISCOUNTED RATES
First Home Guarantee
Get into your home sooner
ONLY 5% DEPOSIT
NO MORTGAGE INSURANCE
DISCOUNTED RATES
What is the first home guarantee
It’s a scheme created by the federal government in partnership with commercial lenders to help first home buyers get into the market with a lower deposit requirement and less costs. To help first home buyers with less than a 20% deposit the government can guarantee part of an eligible borrower’s loan. This means that the first home buyer needs a smaller deposit than typical and doesn’t incur the cost of lenders mortgage insurance which can be more than $25,000 in some cases.
To get the standard loan terms lenders typically require a borrower to have at least a 20% deposit. Lenders will lend to those with less deposit, 10% or 5% for example but this then requires the borrower to fund the cost of lenders mortgage insurance (LMI) which as mentioned can be many thousands of dollars. LMI protects the lenders in case of default NOT the borrower. The interest rates offered for loans where the deposit is less than 20% are also considerably higher than those with bigger deposits.
Using the Guarantee Scheme, a first home buyer can purchase their first home with a deposit of just 5% (plus costs*) and borrow the other 95% from one of the participating lenders in the scheme. The Government would in background guarantee a portion of the loan meaning the lender essentially carries the risk of a standard 80% loan. The first home buyer would avoid paying LMI altogether and should qualify for the lower interest rates offered on standard loans. A win win for the borrowers and lenders.
The Guarantee Scheme is not a cash payment. The borrower still must be able to afford the loan repayments on the full amount of the loan i.e., up to 95% of the property value. It is however a way around some of the restrictions that have made lower deposit loans hard to qualify for and expensive.
*NB – costs need to be covered by the purchasers. They can be made up of stamp duty, lenders application fees, conveyancing fees, inspection fees etc. Some state government also offer stamp duty concessions for first home buyers.
Eligibility Test
Please check the boxes below to see if you qualify:
Income
Are you single with a taxable income less than $125,000
or couples less than $200,000?
Prior Ownership
You have never owned property in Australia or haven't owned in the last 10 years.
Citizenship
Are you an Australian Citizen or Permanent Resident and over 18?
Owner Occupied
Will you be living in the property within six months of buying it?
You Qualify! You meet all the requirements for the First Home Buyers Guarantee.
Get in touch with us below if you would like us to help you with your application and walk you through the process.
How much you will save
Let’s compare two scenarios, one using the scheme and one without. Let’s assume the first home buyers qualify under the scheme, have a 5% deposit and are buying in NSW for $700,000.
With the Scheme
$700,000 purchase price
+ $10,400 NSW stamp duty (concessional rate)
+ $2600 legal and miscellaneous costs
+ $0 Lenders Mortgage Insurance
Maximum Loan 95% =$665,000
Total Deposit Required = $48,000
Repayments (4% rate) over 30 Years = $3,175/m
*The government would provide a guarantee of $105,000 to the lender being the difference between the loan amount of $665,000 and 80% of the property value $560,000
**No LMI would be payable
***Typical interest rate would be approximately 1% lower than without the scheme.
Without the Scheme
$700,000 purchase price
+ $10,400 NSW stamp duty (concessional rate)
+ $2600 legal and miscellaneous costs
+ $27,000 Lenders Mortgage Insurance
Maximum Loan 95% = $665,000
Total Deposit Required = $75,000
Repayments (5% rate) over 30 Years = $3,570/m
*Typical interest rate would be approximately 5% pa
First home buyers using the scheme need $27,000 less deposit
(no LMI), their repayments would be $395/month less equating
to a $23,700 savings over the first 5 years of the loan.
ONLY 5% DEPOSIT
NO MORTGAGE INSURANCE
DISCOUNTED RATES
FAQs
Am I eligible for the First Home Guarantee?
First Home Guarantee eligibility:
- You intend to be an owner occupier of the property
- You are 18+ years of age, an Australian citizen and have a Medicare card number
- Singles have earned no more than $125,000 taxable income in the last financial year
- Couples are married OR defacto and have combined earnings of no more than $200,000 taxable income in the last financial year
- You’re building or purchasing a home below the property price cap of the location you’re buying in
How does the First Home Guarantee scheme work?
The aim of the First Home Guarantee scheme is to allow the time first home buyers to save as little as 5% deposit to buy a home without paying LMI (Lenders Mortgage Insurance) as the government guarantees the LVR from 80-95%.
To qualify you must:
- Have minimum 5% deposit as genuine savings (normally 3 months history)
- Be an Australian citizen or permanent resident
- 18 years of age or over
- Individuals earning up to $125,000 and joint applicants up to $200,000 combined (shown on your previous year ATO Notice of Assessment)
- Intending to live in the property purchased, Owner Occupied purpose
- Be a first time home buyer OR haven’t had an ‘interest’ in a property in past 10 years
There are property price caps depending on state, city and regional areas.
How much can I spend with the first home buyers’ scheme?
If you purchase a newly built house, townhouse, apartment, unit or similar the purchase price must not exceed $600,000.
If you purchase vacant land and sign a building contract with a builder, then add the value of the vacant land, plus the value of the comprehensive home building contract plus the cost of any building variations done together. The total combined cost must not exceed $750,000.
If you purchase a home which was substantially renovated by the seller, the purchase price must not exceed $600,000.
You may be eligible for the grant if:
- most of the home was removed or replaced
- the seller, builder or a tenant has not lived in the home prior to, during or after renovations
- it is the first time the home has been sold since completion of renovations.
This means the first sale of a property will not be a new home if the person who built it lived in it, leased it out or used it for short-term accommodation.
How does the family home guarantee scheme work?
- Eligible single parents with dependants looking to build a new home or purchase an existing home can apply for a loan to purchase an eligible property through a participating lender.
- NHFIC guarantees to a participating lender up to 18 per cent of the value of the property, provided the borrower has a minimum 2 per cent deposit, and is eligible for the program.
Am I eligible for the family home guarantee?
The family home guarantee government scheme is geared towards single parents who have at least one dependent to buy a home. Unlike the first home guarantee scheme, you can have owned a property before, you just need to make sure at settlement that you only have the new sole property and not own another separate property.
- *Australian citizens or permanent residents who are at least 18 years of age.
- *Must be a single parent or legal guardian with at least one dependent.
- *The single parent must have a taxable income that does not exceed $125,000 per annum for the previous financial year.
- *Intend to live in the property and will a owner-occupied premises.
- *Currently don’t own a property or at settlement will no longer have another separate residence that you own.
How to apply
Are you eligible?
Check if you’re eligible
Use our eligibility tool to find out if you can apply.
Talk to our home loan specialists
Buying your home can be overwhelming. We’ll help guide you through the process and help find the best home loan for your needs.
Find your first home
This is the fun bit - shopping. Remember, your home will need to meet certain eligibility criteria for the scheme.
Maximum Property Prices
| States & Territories | Capital City/Regional Centre | Rest of State |
| VIC | $800,000 | $650,000 |
| NSW | $900,000 | $750,000 |
| QLD | $700,000 | $550,000 |
| WA | $600,000 | $450,000 |
| SA | $600,000 | $450,000 |
| TAS | $600,000 | $450,000 |
| ACT | $750,000 | N/A |
| NT | $600,000 | N/A |
Check your eligibility
Check your Eligibility for the scheme using our quick tool.
Make an appointment
Enquire online and a Mortgage Experts team member will be in contact shortly to assist you with your application.
Buy your home
Purchase a property within the price threshold for the area you’re interested in under the Guarantee.
Move in
Move into your new home!
Get started TODAY!
Apply
