Searching for an affordable home nowadays feels like trying to reach millions of users’ ‘For You’ pages with a single TikTok video. Unless the algorithm of the property market permits you to do so, the odds might not seem like they are in your favour as the continuous increases in property prices affect the market.
Like how everybody’s obsessed with all those trending videos in the ‘clock app’, we’ve also been intrigued by the latest viral hit in the real estate world that could potentially help fix everyone’s affordability constraints: the expansion of the Home Guarantee Scheme.
And you guessed it, you don’t need to swipe, surf, and search all over your feed because we’ve prepared on this blog everything you need to know about this programme. (Just continue scrolling…)
What’s with the Home Guarantee Scheme?
In an effort to address the current housing crisis, the federal government is expanding eligibility for its Home Guarantee Scheme (HGS), putting home ownership within reach for millions more Australians.
Formerly known as the First Home Loan Deposit Scheme (FHLDS), the Home Guarantee Scheme is a government-backed programme launched in 2020 to aid first-time homebuyers in getting onto the property ladder easier. It enables qualified purchasers to put down as little as 5% (even 2% for the Family Home Guarantee) of the purchase price of a home, with the government guaranteeing the lender up to 15% of the home’s worth.
As a result, purchasers might potentially avoid paying Lenders Mortgage Insurance (LMI), which can be a considerable expense for many first-time home buyers, and buy a property with a lesser down payment.
Now, the federal government is expanding and making this scheme more accessible and beneficial to Australians than it already is. And if you’re planning to take advantage of it, you should know all the ins and outs of this which you can learn in the succeeding paragraphs.
What are the changes to look forward to?
The Home Guarantee Scheme encompasses the First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee. Prior to now, these programmes have only been available to married and single people, as well as those in de facto relationships, that meet the other programme requirements.
But beginning July this year, friends, siblings, and other family members will be able to submit joint applications for the First Home Guarantee and Regional First Home Guarantee. These programmes will also be open to non-first homebuyers who haven’t purchased a dwelling in the previous ten years.
Additionally, candidates for the Family Home Guarantee will be considered regardless of whether they are single natural or adoptive parents of dependent children. With this modification, qualified borrowers who are single legal guardians of children, such as aunts, uncles, and grandparents, will now be able to use the guarantee.
Furthermore, these three guarantees will also be made accessible not only to Australian citizens but also to qualified borrowers who are Australian Permanent Residents.
How do I verify if I’m eligible?
Due to the fact that each of the three Home Guarantee Schemes has a cap on the number of posts it can accept, not every applicant will be able to receive government funding.
A total of 35,000 spaces are available annually under the First Home Guarantee, 10,000 places annually under the Regional First Home Buyer Guarantee, and 5,000 places annually under the Family Home Guarantee through June 30, 2025.
The federal government’s National Housing Finance and Investment Corporation (NHFIC) website features a short questionnaire that can help you determine whether you qualify for one of the programmes. You may access the eligibility checker here.
What are the scopes and limitations?
Whilst the three Home Guarantee Schemes sound promising, they still have a fair share of scopes and limitations. These government programmes may be utilised to assist with the purchase of (1) an existing home, apartment, or townhouse, (2) a land and home combination, (3) property and a separate agreement to construct a house, and (4) a townhouse or apartment that is not yet built.
Moreover, to qualify for the Regional First Home Buyer Guarantee, the property you are eyeing must be located outside of the capital cities.
Not all banks and mortgage lenders in Australia are a member of these programmes, too. So, you have to keep in mind that you might not always be able to obtain a mortgage from your preferred lender due to this restriction on your options for mortgages.
Hence, you should be aware of the participating lenders in this project. Before submitting an application for one of the government guarantee programmes, it is crucial to evaluate home loans from these participating lenders based on your current situation and financial needs.
What’s in it for the Property Market?
Housing Minister Julie Collins has mentioned that the expansion of the Home Guarantee Scheme is essential to “move with the times”. The modifications in the programme, according to Ms Collins, can certainly help meet the needs of Australia’s changing household situations.
![4one4 Property Co | Home Guarantee Scheme Expansion | Housing Minister Julie Collins and her thoughts about the expansion of the Home Guarantee Scheme [Photo: Nikki Davis-Jones]](https://www.4one4.com.au/wp-content/uploads/2023/05/b7e8372a7678bac12fac94e30cb61d74-1024x576.jpg)
“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.”
The extension aims to increase first-time buyers’ access to affordable homeownership, especially in areas with high housing costs. Additionally, the scheme seems more diverse and inclusive now that it gives opportunities to non-first home buyers and generally, to more people regardless of relationship status.
These changes are anticipated to raise demand for real estate in certain areas and could result in more buyers’ competition. And this is what Deputy Opposition leader David Littleproud highlighted that needed attention.
The government’s expansion of the programmes, according to him, might assist to alleviate the housing problem “in some small way,” but it wouldn’t be a “silver bullet.”
“It’s part of the total package of solutions that are required, but the biggest challenge we’ve got is supply,” Mr Littleproud claimed in a conversation with Nine’s Weekend Today program.
“There is going to be more pressure now that the government wants to bring in 650,000 new migrants over the next two years, so it is important that we accelerate the supply issue,” he stressed.
What’s Next?
First-time homeowners and aspiring applicants can benefit greatly from the guidance of real estate agents, who can assist them in comprehending qualifying requirements and locating properties that suit their needs.
If anything you’ve read today has piqued your interest but you’re still puzzled with the processes involved to get approved by any of these schemes, you can reach out to our friendly and lovely team at 4one4 Property Co. and we’ll help you get everything sorted!
