In a move to help single parents with dependants purchase a family home, the Federal Government this year introduced the Family Home Guarantee.
Commencing on 1 July 2021, up to 10,000 Family Home Guarantees will be made available over the next four financial years. The Guarantees will be available to eligible single parents who have dependants and is subject to their ability to secure a home loan with a participating lender.
The Guarantee is intended to help enable single parents who have dependants to enter or re-enter, the housing market sooner.
Eligible single parents who have dependants and want to build or buy a home will need to apply and be approved for a loan through a participating lender. The National Housing Finance and Investment Corporation, which will administer the Family Home Guarantee, will then guarantee up to 18 per cent of the value of the home.
Are all property types eligible?
Only residential properties are eligible for the Family Home Guarantee. Potential applicants should refer to the meaning of ‘residential property’ under the First Home Loan Deposit Scheme for clarity, however, this typically includes:
- an existing house, townhouse or apartment;
- an off-the-plan apartment or townhouse;
- a house and land package; or
- land with a separate contract to build a home.
Who is eligible for the Family Home Guarantee?
All of the following criteria must be met to be eligible for the Guarantee:
- the applicant must be an Australian citizen over 18 years of age; and
- be a single parent who has at least one dependant; and
- have a taxable income not exceeding $125,000 per annum for the previous financial year (child support payments do not form income for the purpose of the income cap for this initiative); and
- have between 2% and 20% of the deposit for their home saved. Parents with a deposit of more than 20% are ineligible for the Guarantee.
Single parents who have previously owned a home are eligible for the Guarantee so long as they do not currently have a freehold interest in real property in Australia, a lease of land in Australia or a company title interest in land in Australia.
Permanent residents are not eligible for the Guarantee.
Loans approved under the Family Home Guarantee must require repayments of both the principal and interest of the loan for the full period of the agreement, which must not exceed a term of 30 years.
The single parent applying for the Guarantee must be the only person listed on the loan and the Certificate of Title and they must be able to demonstrate that they are the natural or adoptive parent of a dependent child pursuant to section 5 of the Social Security Act 1991 (Cth).
Two single parents who share custody of the same child/ren may both be eligible for the Guarantee separately, however, it will depend on the terms of any shared custody arrangement if they are indeed eligible.
Applicants must intend to occupy the purchased property and are subject to the owner-occupier requirement in all cases except for active Australian Defence Force members where they cannot meet the requirement because of their duties.
Applicants must satisfy the eligibility criteria at the time the loan agreement is entered into.
Are there caps on the property prices?
Yes. Similarly to the First Home Loan Deposit Scheme, property price thresholds exist for the Family Home Guarantee.
In all states, the capital city price threshold also applies to regional centres that have a population of more than 250,000, including the Gold Coast and Sunshine Coast.
The thresholds are as follows:
State Capital city and regional centres / Rest of State
Queensland $475,000 / $400,000
New South Wales $700,000 / $450,000
Victoria $600,000 / $375,000
Western Australia $400,000 / $300,000
South Australia $400,000 / $250,000
Tasmania $400,000 / $300,000
In the territories, the thresholds are consistent even if the property is not in a capital city or regional centre.
Australian Capital Territory $500,000
Northern Territory $375,000
How do you apply for the Family Home Guarantee?
If you are an eligible single parent you will be able to apply for the Family Home Guarantee through the same lenders who participate in the First Home Loan Deposit Scheme.
The Guarantee does not cost any extra to apply for, but the eligible single parents must understand that they are responsible for meeting all associated costs and repayments for the home loan.
If you are eligible and looking to apply or need more information, speak to our Mortgage Brokers today.