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One third of first home buyers get government support: How to apply for the Home Guarantee Scheme

Mark Bristow avatar
Mark Bristow
- 4 min read
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Around one in three home first home buyers in the 2023-2024 financial year were supported by the federal government’s Home Guarantee Scheme (HGS). The scheme’s strong take-up could indicate how challenging the purchasing environment is for buyers without additional support.

The Home Guarantee Scheme is intended to help support Australians purchase property with a low deposit, by having the government effectively serve as the loan’s guarantor. Combined with other sources of support like the First Home Owner Grant (FHOG), this can help Australians to take control of their financial future sooner. 

According to the HGS Trends and Insights Report 2023-24, almost nine in ten of all available Scheme places were taken up in 2023–24. That’s 43,800 out of the 50,000 available spots, consisting of 35,000 First Home Guarantee spots, 10,000 Regional First Home Buyers Guarantee spots, and 5000 Family Home Guarantee spots.

For comparison, just 1 in 10 home loans were helped by the scheme in its introduction in 2020. And since that time, almost 1 in 5 households have already transitioned out of the Scheme and no longer require support. That’s more than 19,000 loans, or 18% of the total guarantees issued. Approximately 60% of home buyers who transitioned out of the Scheme either paid down the loan to under the 80% LVR, or refinanced to another lender, likely leveraging additional accumulated equity.

Who’s using the scheme?

According to the report, joint borrower participation and the age and income profile of guarantee recipients increased over 2023-24, likely reflecting the higher costs in servicing a mortgage. For reference, overall first home buyer participation fell by 33% between 2020–21 and 2023-24.

The typical profile of HGS users in the different schemes are as follows:

Scheme

Primary borrower age

Median purchase price

First Home Guarantee

Early 30s

  • $482,000 (single borrowers)
  • $624,000 (joint borrowers)

Regional First Home Buyer Guarantee

25-29 years

  • $390,000 (single borrowers)
  • $520,000 (joint borrowers)

Family Home Guarantee

35-39 years

  • $425,000

How to access the government guarantee

If you’re confident that the you could benefit from the HGS, you can look at taking the following steps:

1.  Check the eligibility criteria

There are different Home Guarantee options to suit different Australians:

  • First Home Guarantee: For Australians planning to buy their first home.
  • Regional First Home Buyer Guarantee: For Australians planning to buy their first home in a regional area.
  • Family Home Guarantee: For single parents planning to purchase a home.

Each of these schemes has similar eligibility criteria, with a few important differences. You’ll generally need to earn an income below a maximum threshold, and will only be able to purchase property valued up to a maximum price cap

You’ll need to be a first home buyer or a previous homeowner who hasn’t owned a property in Australia in the past 10 years for both the First Home Guarantee and the Regional First Home Buyer Guarantee. For the Family Home Guarantee you need to be a single parent or single legal guardian who does not currently own a property or does not intend to own a separate property when they settle on the home. 

The full terms and conditions for each guarantee can be found on the HGS website.

2.  Get your documents together

Much like applying for a standard home loan, you’ll need to provide proof of your identity and residency, as well as details of your finances.

3.  Prepare your deposit

Both the FHG and the RFHG require a deposit of 5%, while the Family Home Guarantee you may only need just 2%. Housing Australia will then guarantee the remaining 15% or 18% of the value of the home loan so you don’t need to pay for Lenders Mortgage Insurance (LMI)

4.  Contact a participating lender

A limited number of banks and mortgage lenders participate in the HGS, so you may not always be able to get a loan with your preferred bank. Compare the available options to find the lender offering the best choice for your needs, then contact that lender to make an application.

5.  Buy a property

Once you’ve been approved, you can confidently bid at an auction or negotiate a private sale.

Need more help?

The Home Guarantee Scheme may not be the best option for every borrower – it’s important to remember that a smaller deposit means a bigger loan, which could cost more to repay and put you at risk of stress if your financial situation changes in the future.

Consider contacting a mortgage broker for more personal advice on whether this may be right for you. Also, a solicitor or conveyancer can help you take care of the legal process putting a purchased property’s title into your name.  

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Product database updated 11 Oct, 2024

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