The Australian government’s Family Home Guarantee Scheme aims to support Australian single parents in securing a home loan.
Here are some frequently asked questions regarding single parent loans.
How one mother saved her home
How do I apply to the Family Home Garanty?
The National Housing Finance and Investment Corporation (NHFIC), which administers the scheme through participating lenders, predicts that there are around 125,000 buyers across the country that satisfy the eligibility criteria – but only 10,000 will be granted the deposit assistance over the scheme’s four-year period.
Moreover, there are strict legal and documentary requirements that you must satisfy – but don’t let these discourage you.
Here’s a step-by-step guide to help you through the application process.
1. Refer to the eligibility criteria. Prepare supporting documentation.
Australian citizens must have at least 18 years of age. The Family Home Guarantee Scheme does NOT cover permanent residents, or current property owners.
A single parent must be present and at least one dependent child. Section 5 of 1991’s Social Security Act states that you must prove you are the biological parent or adoptive parent.
Last, but not least: Your income for the previous financial year should not exceed $125,000. Child support payments are exempt. For this, you need to get your Notice of Assessment via myGov’s online service as a supporting document.
2. Locate a participating lender
NHFIC is unable to process your application directly. The bank that participates in the loan program, or a non-bank lender, will be required to submit your application.
These are the financial organizations that were participating as of 22 Jul 2021.
- Australian Military Bank
- Bank Australia
- Bank First
- Bank of Heritage Isle
- Bank of Us
- Bendigo Bank
- Border Bank
- Commonwealth Bank
- Community First Credit Union
- Defence Bank
- Firefighters Mutual Bank
- G&C Mutual Bank
- Gateway Bank
- Health Professionals Bank
- Indigenous Business Australia
- Police Bank
- Q Bank
- Regional Australia Bank
- Teachers Mutual Bank
- The Mutual Bank
Alternativly you could apply through a broker, an authorized representative or one of these lenders.
Do you qualify for a single parent loan?
3. Select an eligible property you wish to buy.
Single-parent home loans are available to help you purchase a house or townhouse, as well as a parcel of land and property.
NHFIC also accepts borrowers who wish to purchase a vacant land and a separate building contract, similar to the government’s First Home Loan Deposit Scheme (FHLDS).
It is important to ensure that the price of your potential home does NOT exceed the property-price thresholds in each state and territory. Here they are for every state’s capital city and regional centers.
- New South Wales: $800,000
- Queensland: $600,000
- South Australia $500,000
- Tasmania: $500,000
- Victoria: $700,000
- Western Australia $500,000
The price limit for each state is typically lower at $100,000 to $200,000. The threshold for the entire Australian Capital Territory and Northern Territory is $500,000
4. Pre-approve your lender to get a home mortgage.
Pre-approval is also known as conditional approbation. This means that the lender has committed money to help you purchase your home. It’s not yet a guarantee or final approval, but it provides an indication of the property price that you can afford.
Before making a decision, do your research on the price of the home. You can use financial calculators to determine how much you will have to repay over the loan’s lifetime.
However, the Family Home Guarantee does not allow for loans exceeding 30 years. You can use the Monthly Payment Calculator to get an accurate picture of your monthly costs.
Before your lender grants a preapproval, they will first review your assets, regular income, loan history, and credit history. Your postcode and type of residence will be required.
5. Buy your family home.
Finally, it’s time to buy your home. NHFIC guarantees a minimum of 18% deposit. You need to have at least 2 percent of the value of your property or as per your loan agreement.
Family Home Guarantee Scheme also requires that the occupant be present within six months of settlement.
How does your child expense impact your mortgage payments
What do I need to do in order to be eligible for Family Home Guarantee?
You can save thousands of dollars by getting a loan from the government. This option has its downsides.
For instance, you’ll have a high loan to value ratio (LVR) which may result in negative equity. An increase in interest rates will have a significant impact on your monthly payments.
Additional expenses not covered by the Family Home Garant Scheme are not covered. These expenses include stamp duty, mortgage fees, and other costs.
Do you know of any grants that could be used in conjunction the Family Home Guarantee scheme?
You may be eligible for rebates and concessions on stamp duty offered by your state/territorial to lower your costs. A stamp duty calculator can help you calculate your costs and identify savings opportunities.
For example, eligible single parents may use the Family Home Guarantee with their state’s First Home Owner Grant (FHOG). Depending on where the borrower is located, the FHOG could award them a lump-sum or a reduction on stamp duty.
FHLDS is not compatible with single-parent home loans, which are similar programs offered by NHFIC to low deposit buyers.
Do the rules apply to investment properties?
The Family Home Guarantee does NOT cover investment properties. The scheme is only for the purchase or construction of a residential home.