A home loan that is available to single parents may be possible starting in July 2021, and ending in June 2025. It can have a down payment as low as 2%. This is part of the Australian government’s effort to support single parents who want to enter or re-enter the housing market.
Single mothers or fathers with at least one dependent child may apply for a loan to their home through a lender participating in the Family Home Garant Scheme. Your income and legal requirements may be different depending on where you live. You may also need to meet certain property price thresholds.
Below we will take a closer glance at the government’s single parent loan scheme and the eligibility criteria borrowers must fulfill.
The deposit scheme is available to first-time homebuyers
What is the Family Home Guarantee Program?
The federal budget 2021-22 announced this new program. Single parents can borrow money to purchase a house or to build a house.
The scheme is managed and funded by the Australian Government through National Housing Finance and Investment Corporation (NHFIC).
The First Home Loan deposit Scheme (FHLDS), is managed by the same organisation. It offers a 15% deposit guarantee for eligible first-homebuyers each financial year.
Similarly, the NHFIC intends to provide 10,000 Family Home Guarantees yearly to eligible single parents – given that they have sufficient income to service monthly repayments. The agency will guarantee a participating bank or non-bank mortgage lender up to 18% of the property’s value.
Although there are no application fees for the loan, all eligible applicants will have to pay the required mortgage repayments as well as any associated costs.
Moreover, the NFHIC does not directly handle applications – you still need to find a participating institution like the Commonwealth Bank or the Australian Military Bank and apply for the guarantee through one of their loan products.
The program will be offered for four financial years. It will begin in July 2021, and end in June 2025.
Criteria for loans to single-parents
You must meet the NHIC Mandate Amendment requirements to be eligible.
These are seven important things to keep in mind when applying for a Family Home Garant Loan
1. The evidence of parenthood
This is the primary eligibility requirement for Family Home Garant Scheme. You must have a single parent legally responsible for providing care and development for your child.
Section 5 of Social Security Act of 1992 requires that the dependent child be under your supervision. This applies whether the parents are single or joint caretakers.
“Alternatively, the single parent must show that they are the natural or adoptive parent of a child between 16 and 22 years of age, who receives a disability support pension and lives with them,” says the NFHIC.
These are the top five tips to help you save your first home deposit
2. Citizenship and age
To apply for an Australian citizenship, you must be at minimum 18 years of age. Only permanent residents or holders of special visas are exempt.
Moreover, the single parent’s name will be the only name written on the mortgage loan and the property’s certificate of title.
3. Acceptable types of property
You may choose between buying an established house and building a new home – given that it is classified as a residential property. This term has been given a specific meaning by NHFIC and conforms to FHLDS.
A house, apartment, townhouse or other residential property that is currently in use is eligible. A house or apartment with land package as well as an off the plan home are eligible. You can get a loan for vacant land or a separate contract to build a new home.
You will need to purchase an existing property in order to buy it.
4. Income threshold
Your annual taxable income for the preceding financial year must not exceed $125,000. Child support payments will not be included in the assessment.
To apply during the schemes’ first year up to 30 June 2022, you need to submit a Notice of Assessment from the Australian Taxation Office for your income in 2020.
Are home-buyers still eligible to apply for the deposit scheme?
5. Limitations on property prices
The maximum property price for the Family Home Guarantee program is the same as that of the FHLDS. Prices can vary depending upon where you live and your territory. In their capital cities and regional centers, the thresholds for Family Home Guarantee Scheme are typically higher than $100,000 to $200,000
- Australian Capital Territory: $500,000
- New South Wales: $600,000
- Northern Territory: $500,000
- Queensland: $450,000
- South Australia: $350,000
- Tasmania: $400,000
- Victoria: $500,000
- Western Australia: $400,000
The threshold for properties on Norfolk Island, Christmas Island, the Cocos Islands(Keeling) Islands or Jervis Bay Territory will be the same as the price limit for the closest state.
6. Loan deposit
Maximum deposit must not exceed 2%- 20% of the total loan amount. According to the NHFIC factsheet a borrower cannot have their home loan covered with the Family Guarantee if they have a deposit higher than 20%.
7. It is not necessary to be a current owner of a house.
Also, you must be a first home buyer or someone who isn’t currently a homeowner. You may still be eligible even if you don’t own any property or investment properties.
