The First Home Guarantee, formerly known as the First Home Deposit Scheme, is a federal government initiative that assists a limited number of first home buyers in purchasing a property with as little as a 5% deposit without the requirement of paying Lenders’ Mortgage Insurance (LMI). It is part of a suite of Home Guarantees introduced by the government.
To be eligible for the First Home Guarantee, applicants must meet certain criteria:
- Income test based on taxable income, where singles must earn less than $125,000 and couples less than $200,000 in the previous financial year.
- Joint applications are now permitted for any two eligible individuals, not limited to married or de-facto couples.
- Applicants must provide evidence of never having owned or held an interest in any property in Australia before, including commercial, investment, or company title properties.
One of the key benefits of the First Home Guarantee is that it provides quick access to the property market by eliminating barriers. With a lower deposit requirement, eligible buyers can save time on accumulating a 20% deposit and expedite their first home purchase. By avoiding the payment of LMI, buyers can save significant amounts of money at settlement. The government acts as a guarantor, underwriting the home loan and assuming the risk in case of default, resulting in additional savings on interest that would have been incurred on the LMI component of the loan.
To apply for the First Home Guarantee, applicants can submit their application directly to participating lenders or work with a mortgage broker. Currently, there are 27 participating lenders across Australia offering places under the scheme. Applicants are encouraged to engage Walker Hill’s mortgage brokers to determine eligibility and explore the lenders involved. For more detailed information, contact our friendly team at support@walkerhill.com.au
