Buying a home is a dream for many Australians, but for single parents, it can feel like a challenge. Between saving for a deposit and keeping up with rising property prices, homeownership might seem out of reach. Fortunately, the Australian Government’s Family Home Guarantee makes purchasing a home with as little as a 2% deposit possible, particularly for single parents.
In this blog, we’ll walk you through how the Family Home Guarantee works and the steps to make homeownership a reality.
What is the Family Home Guarantee?
The Family Home Guarantee is designed to help single parents, with at least one dependent child, enter the property market. It allows eligible individuals to purchase a home with a 2% deposit without the need for Lenders Mortgage Insurance (LMI). This government-backed initiative helps reduce the financial barriers many single parents face when buying a home.
Key Features of the Family Home Guarantee
- Low Deposit Requirement: Only 2% of the purchase price is needed.
- No Lenders Mortgage Insurance: The government guarantees up to 18% of the property value, meaning no LMI costs.
- Available for New or Existing Homes: Whether you’re buying a newly built or existing home, the guarantee applies.
- No Requirement to Be a First-Home Buyer: You may still qualify if you've owned property before but don’t currently own one.
Eligibility Criteria
To be eligible for the Family Home Guarantee, you must:
- Be a single parent with at least one dependent child.
- Earn less than $125,000 per year (excluding child support payments).
- Be an Australian citizen (permanent residents are not eligible).
- Have a minimum deposit of 2% of the property’s value.
How Does It Work?
Under the scheme, the government guarantees 18% of your loan, which, when combined with your 2% deposit, allows you to borrow up to 98% of the property price. This reduces the lender's risk and gives you access to better interest rates while avoiding LMI.
Example:
For a $500,000 home:
- You need a 2% deposit ($10,000).
- The government guarantees up to $90,000.
- You can borrow the remaining $490,000 without paying LMI.
Steps to Apply
1. Check Your Eligibility: Ensure you meet all the income and citizenship criteria.
2. Get Pre-Approval: Work with us as your mortgage broker to get pre-approved through a participating lender.
3. Find Your Home: Start house hunting.
4. Submit Your Loan Application: we will handle the application process.
5. Settlement: Once approved, your lender will finalise the process, and you’ll get the keys!
Benefits for Single Parents
- Reduced Financial Barriers: A 2% deposit means you can buy sooner.
- Greater Stability for Your Children: Owning a home provides a stable environment for your family.
- Avoid LMI Costs: Saving on LMI can make homeownership more affordable.
Things to Consider
While this scheme reduces the upfront financial burden, borrowing more means higher monthly repayments and more interest over time. Ensure your budget can handle the mortgage payments and other living expenses.
Ready to Take the Next Step?
If you’re a single parent dreaming of homeownership, the Family Home Guarantee could be the key to achieving your goal. Contact us at Mortgage Achievers to learn more and start your journey toward owning your own home! We’re here to guide you every step of the way.
Source: https://www.housingaustralia.gov.au/support-buy-home/family-home-guarantee
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