Home Guarantee Scheme expanded for low-deposit buyers


Getting into the property market has never been easy, but with elevated living costs eating into people's capacity to save for a deposit and rising interest rates diminishing borrowing power, it's certainly an uphill battle for many first home buyers at present.

That's reflected in borrowing figures, as the 39,068 new loan commitments taken on by owner-occupier first home buyers in the first five months of 2023 is the lowest number to start a year since 2017.

There is support at hand though. One of the largest initiatives is the federal government's Home Guarantee Scheme which, as of July 1, has been broadened to accommodate even more budding first home purchasers and other buyers.

home guarantee scheme expanded for more low-deposit first home buyers

"The scheme assists eligible home buyers to overcome some of the key barriers to home ownership, including the challenge of saving a deposit," says Nathan Dal Bon, chief executive of the National Housing Finance and Investment Corporation which administers the program.

So what's the scheme all about, and what's changed as of July 1? Here's a run-through:

What is the Home Guarantee Scheme?

First introduced in 2019 as the First Home Loan Deposit Scheme, the initiative has since evolved into the umbrella Home Guarantee Scheme which is made up of three guarantees, all of which share the common aim of assisting low-deposit buyers to enter the market:

  • First Home Guarantee: This initiative allows people to purchase a home with a deposit as low as 5% without having to pay lenders mortgage insurance (LMI) - a cost that can often reach into the thousands, or even tens of thousands of dollars. Instead, the government will guarantee up to 15% of the value of the property with a participating lender. 
  • Regional First Home Buyer Guarantee: Similar to the First Home Guarantee, this guarantee enables eligible regional buyers to purchase a home in a regional area with a deposit of just 5%. Again, the government will guarantee up to 15% of the value of the property with a participating lender in order to save buyers from having to pay LMI.
  • Family Home Guarantee: This guarantee is available to eligible single parents or legal guardians who aren't current property owners, allowing them to purchase a home with a minimum 2% deposit. The government will guarantee the difference (up to 18% of the property value) with a participating lender, meaning that buyers can avoid the cost of LMI.

That's the condensed version of each of the guarantees, but each have their own eligibility criteria for both buyers and properties, including income and property price caps.

How many places are available?

In total there are 50,000 places on offer through the Home Guarantee Scheme, and the good news for would-be buyers is that the number of places just reset on July 1 at the start of the new financial year. So for the 2023-24 financial year, the caps are as follows:

  • 35,000 through the First Home Guarantee
  • 10,000 through the Regional First Home Buyer Guarantee
  • 5000 through the Family Home Guarantee

July 2023 Home Guarantee Scheme changes

As the Home Guarantee Scheme has evolved over the years, it's been made available to a larger pool of buyers. And in the 2023 Federal Budget, the government proposed four changes that have broadened eligibility even further - changes that kicked in on July 1:

  1. While the three guarantees were previously only accessible to Australian citizens, each has now been opened up to Australian permanent residents.
  2. In an acknowledgement that individuals and couples aren't the only types of buyers out there, the government has opened up the First Home Guarantee and Regional First Home Buyer Guarantee to siblings, family members and even friends who can now apply together.
  3. Despite the names, the First Home Guarantee and Regional First Home Buyer Guarantee are no longer exclusive to first-time buyers. Instead, people who haven't owned a property in Australia in the past 10 years can also apply for either initiative.
  4. On the Family Home Guarantee front, single legal guardians of children (e.g. grandparents, aunts, uncles, etc) can now make use of the guarantee. Previously it had been limited to single natural or adoptive parents.

How can buyers apply for the Home Guarantee Scheme?

While the National Housing Finance and Investment Corporation administers the Home Guarantee Scheme, Australians interested in applying will actually need to do so through one of the 33 banks and mortgage lenders participating in the initiative.

The list currently includes major banks like the Commonwealth Bank, NAB and Westpac, plus a host of other familiar names such as Bank Australia, Bendigo Bank, Great Southern Bank, Newcastle Permanent and Teachers Mutual Bank.

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Tom Watson is a senior journalist at Money magazine, and one of the hosts of the Friends With Money podcast. He's previously worked as a journalist covering everything from property and consumer banking to financial technology. Tom has a Bachelor of Communication (Journalism) from the University of Technology, Sydney.