Home Loans for Single Parents: Family Home Guarantee Scheme

Home Loans for Single Parents - Family Home Guarantee Scheme

For many, buying a home is a very rewarding experience, offering stability and security. However, for single parents, achieving this can be challenging, particularly when there are no specific home loans for single parents.

A program or scheme created to help single parents with dependents build or buy a home is the Family Home Guarantee Scheme. This scheme attempts to address the financial constraints faced by single parents and assists those families with a single income navigate homeownership whilst solo parenting.

In this article, we explain the details of the First Home Guarantee scheme, including its features and benefits, and how it can support single parents and legal guardians to secure a home.

What is the Family Home Guarantee Scheme?

The Family Home Guarantee (FHG) is an Australian Government initiative aimed at supporting eligible single parents or single legal guardians in purchasing a home sooner. Under the Family Home Guarantee, eligible single parents and single legal guardians can secure a mortgage with participating lenders for a new or existing property, with as little as a 2% deposit, without needing to pay Lenders mortgage Insurance (LMI). This means that eligible borrowers are able to purchase a property without a 20% deposit.

Under the Family Home Guarantee, the National Housing and Investment Corporation (NHFIC) guarantees participating lenders up to 18% of the home’s value.

Who is eligible for the Family Home Guarantee Scheme?

To qualify for the First Home Guarantee Scheme, applicants must meet specific criteria.

  • Apply as an individual.
  • Be a single parent or single legal guardian of at least one dependent.
  • Be at least 18 years old.
  • Earn no more than $125,000 per year.
  • Intend to occupy the purchased property as the owner.
  • Not own any other property currently, or intent to upon settlement of the guaranteed property.

It should also be noted that a person is considered single if they don’t have a spouse and/or a de facto partner. A person who is separated but not divorced is not considered single.

Do you have to be a first-home buyer to be a First Home Guarantee applicant?

Unlike many other housing schemes, it is not a requirement that you are a first-home buyer when applying for the First Home Guarantee scheme. In fact, the scheme enables single parents and single legal guardians to enter, or re-enter, the housing market sooner. Applicants can be previous homeowners, however, when using this support, they must not intend to own a separate property upon settlement of the guaranteed property they’re buying.

What is required for the house deposit?

A minimum 2% deposit is required under the First Home Guarantee, without the requirement of Lenders Mortgage Insurance (LMI), offering significant flexibility for eligible home buyers. While the deposit can range from 2% and 20% of the value of an eligible property, participating lenders may impose varying deposit requirements based on the individual’s financial circumstances.

What are eligible property types under the scheme?

For a property to be eligible, it must be a residential property that is consistent with the terms of the scheme. Eligible residential properties 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.

Are there any property price thresholds?

Property price thresholds are a crucial aspect of the scheme’s eligibility criteria. The following thresholds apply:

  • New South Wales: In the capital city and regional centres, the pricing cap stands at $900,000. For the rest of the state, the cap is $750,000.
  • Victoria: In the capital city and regional centres, the pricing cap stands at $800,000. For the rest of the state, the cap is $650,000.
  • Queensland: In the capital city and regional centres, the pricing cap stands at $700,000. For the rest of the state, the cap is $550,000.
  • Western Australia: In the capital city and regional centres, the pricing cap stands at $600,000. For the rest of the state, the cap is $450,000.
  • South Australia: In the capital city and regional centres, the pricing cap stands at $600,000. For the rest of the state, the cap is $450,000.
  • Tasmania: In the capital city and regional centres, the pricing cap stands at $600,000. For the rest of the state, the cap is $450,000.
  • Australian Capital Territory: The pricing cap is $750,000 across the territory.
  • Northern Territory: The pricing cap is $600,000 across the territory.

Our expert brokers are equipped to confirm whether your property is eligible within the specified price caps. If your property exceeds the relevant cap for its location, it will not be eligible for the First Home Guarantee.

What lenders are participating in the First Home Guarantee Scheme?

Housing Australia has authorised a panel of 33 major bank lenders and non-major lenders. We suggest consulting with one of our expert mortgage brokers to explore these lenders, and what terms they offer based on your personal circumstances and objectives. Together, we can also discuss any potential implications, such as changing interest rates.

How can Vision help?

Overall, the Family Home Guarantee recognises the financial strain resulting from moving from a dual to single income and acknowledges the long-term negative effects that instability and insecure housing has on adults and children. At Vision, we can help you understand your eligibility as a single parent, and help identify your borrowing power under the Family Home Guarantee Scheme. We know the market, and are experts at mortgage rates, terms, and features. So, if you’re ready to get started, we’re ready to help. Contact us today.