Family Home Guarantee: Everything You Need To Know

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.

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 Morrison Government’s federal budget 2022.

When the new Labor Government took office in July last year, 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 First Home Loan Deposit Scheme.

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: “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.

Related: Australian Property Market Forecast for 2023

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 Australia.

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 2% deposit to make up the 20%. The maximum deposit allowed under the scheme is 20%.

Related: Australian Property Market News

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.

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.

Below are the maximum values of property eligible 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, 2022 to June 30, 2023—the relevant Notice of Assessment is the 2021-2022 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.