The First Home Guarantee (FHBG) stands as a pivotal component within the broader framework of the Home Guarantee Scheme (HGS), an initiative spearheaded by the Australian Government to assist qualified first-home homebuyers in realizing their aspirations of homeownership. The administration of the FHBG falls under the purview of the National Housing Finance and Investment Corporation (NHFIC) on behalf of the government.
A key advantage offered by the FHBG is its facilitation of home purchases with a minimal 5% deposit, exempting homebuyers from the customary requirement of paying Lenders Mortgage Insurance (LMI), which conventionally mandates a 20% deposit. This proves to be a significant financial relief for many first-home buyers, alleviating the burden associated with LMI expenses. By furnishing a guarantee for a portion of the home loan, NHFIC strives to ease the financial strain on eligible homebuyers, enabling them to actualize their homeownership aspirations expeditiously.
It is imperative to clarify that the FHBG does not constitute a cash payment or deposit for a home loan; rather, it functions as a guarantee for up to a maximum of 15% of the property value, as evaluated by the participating lender. Consequently, the participating lender will conduct a thorough assessment of the borrower’s repayment capacity and only lend as per their standard lending criteria.
Moreover, the FHBG is contingent upon specific criteria, terms, and conditions. At Rest Assured Finance, we offer comprehensive guidance on meeting these criteria and navigating through the associated intricacies. Seeking advice from a qualified mortgage broker is crucial in this context. The FHBG is exclusively available to eligible first home buyers or individuals who have not owned a home in the past ten years. These criteria encompass:
- Being an Australian citizen or permanent resident.
- Ineligibility for RFHBG* or FHG**.
- Having a taxable income of less than $125,000 for individuals or $200,000 for couples.
- Intending to reside in the property as their principal place of residence.
- The property being purchased must adhere to certain requirements, such as being new or established and falling within a specific price cap ***.
In summary, the First Home Guarantee is an integral facet of the Home Guarantee Scheme, designed to support eligible first homebuyers in realizing their homeownership aspirations. By guaranteeing a portion of the home loan, NHFIC facilitates eligible homebuyers in acquiring a home with a minimal 5% deposit without incurring Lenders Mortgage Insurance. However, it is crucial to recognize that the FHBG is subject to specific eligibility criteria and is not a cash payment or deposit for a home loan.
Key Points to Note:
There are two additional guarantee schemes serving a similar purpose, each with distinct eligibility criteria:
* Regional Home Buyer Guarantee (RFHBG) – Aimed at supporting eligible homebuyers in regional areas.
** Family Home Guarantee (FHG) – Geared towards assisting eligible single parents or legal guardians with at least one dependent in purchasing their first home.
*** For detailed information on property price caps in your area of interest, please refer to the following link: Property Price Caps.