First Home Guarantee (FHBG or Guarantee)
Sumit Joshi
Senior Loan Advisor
What is the First Home Guarantee?
The First Home Guarantee (FHBG or Guarantee) is an Australian Government initiative to support eligible home buyers to buy a home sooner. It is administered by Housing Australia under the Home Guarantee Scheme (Scheme) on behalf of the Australian Government.
Usually, home buyers with less than a 20 per cent deposit need to pay lenders mortgage insurance. Under the First Home Guarantee, eligible home buyers can purchase a modest home with a deposit of as little as 5 per cent (lenders criteria apply). This is because Housing Australia guarantees to a participating lender up to 15 percent of the value of the property purchased that is financed by an eligible home buyer’s home loan.
How does the First Home Guarantee work?
Eligible first home buyers are able to apply for an eligible loan to buy an eligible property through a participating lender. The First Home Guarantee supports up to 35,000 guaranteed loans each financial year. Eligible borrowers can use the FHBG in conjunction with other government programs like the First Home Super Saver Scheme or state and territory first home owner grants and stamp duty concessions. The Guarantee is not a cash payment or a deposit for your home loan.
What type of property can be bought?
For a property to be eligible, it must be a ‘residential property’ – this term has a particular meaning under the First Home Guarantee and participating lenders can assist if there is any doubt. Eligible residential properties include:
Specific dates and requirements apply for the different property types.
For transactions involving the purchase of land, Participating Lenders require your land to be titled prior to the issuance of a Housing Australia guarantee, therefore the land will need to be titled before the end of the 90 day pre-approval period.
If you are considering entering into contracts relating to purchasing land and for the construction of a home, you may wish to discuss with your participating lender (and broker, if applicable) all of the potential risks that may be associated with these transactions. It is worth noting that you are required to sign a fixed price building contract, and that any amendments to this after signing, may impact the validity of your Scheme place and your bank may require you to pay Lenders Mortgage Insurance (LMI) or fund these additional costs yourself.
Who is eligible?
If you are eligible for the Regional First Home Buyer Guarantee (RFHBG) or the Family Home Guarantee (FHG), you are not eligible for the FHBG. To help you work out which Guarantee you may be eligible for, try the Eligibility Tool at www.housingaustralia.gov.au
What property price thresholds apply?
The FHBG assists in the purchase or construction of a modest home and the value of the residential property must not exceed the relevant price cap for the area in which it is located. The price caps for capital cities, large regional centres and regional areas are:
| State | Capital city & regional centres* | Rest of State |
|---|---|---|
| NSW | $900,000 | $750,000 |
| VIC | $800,000 | $650,000 |
| QLD | $700,000 | $550,000 |
| WA | $600,000 | $450,000 |
| SA | $600,000 | $450,000 |
| TAS | $600,000 | $450,000 |
| Territory | All Areas |
|---|---|
| ACT | $750,000 |
| NT | $600,000 |
| Jervis Bay Territory & Norfolk Island | $550,000 |
| Christmas Island & Cocos (Keeling) Islands | $400,000 |
Search the property price threshold for a suburb or postcode at www.housingaustralia.gov.au
How to apply
Find out more about the eligibility criteria and a list of panel lenders at www.housingaustralia.gov.au
Before you enter into a home loan agreement, you should consider talking with our Senior Loan Advisor, Sumit Joshi on 1300 11 7970 about the potential implications of changing interest rates or house prices on your individual circumstances.
