Home Guarantee Scheme
Expert tips for utilising the Home Guarantee Scheme
Our General Manager of Money, Stephen Zeller, has some tips for prospective homebuyers looking to tap into the benefits of the Home Guarantee Scheme:
Stephen Zeller
General Manager – Money
Make sure you’re eligible
The eligibility criteria for the Home Guarantee Scheme will vary based on which of the three Guarantees you’re applying for. Check the specific eligibility criteria for the Guarantee you plan on applying for to avoid disappointment when you submit the paperwork.
Try combining the HGS with other benefits
The Home Guarantee Scheme isn’t the only benefit available to Australian first home buyers, with a variety of incentives on offer at the State and Federal level. Eligible home buyers could also access the First Home Owner Grant (FHOG) and/or the First Home Super Saver (FHSS) scheme.
Don’t settle for an average home loan
If you’re gearing up to buy a home with the help of the Home Guarantee Scheme, don’t sell yourself short by taking out the first home loan you see. Only lenders who have been authorised by Housing Australia can offer the Home Guarantee Scheme to borrowers, so take a look at the list of participating lenders and consider doing a side-by-side comparison of your options using our online home loan comparison tool to see if you can find a loan that meets your needs. And if you find a loan you like, we can help you apply for it too!
The Home Guarantee Scheme explained
What is the Home Guarantee Scheme?
The Home Guarantee Scheme is an Australian Government initiative designed to make it easier for eligible home buyers to buy their own home. It’s administrated by Housing Australia on behalf of the Australian Government, and is aimed exclusively at those looking to be owner-occupiers. Property investors are not eligible.
How does the Home Guarantee Scheme work?
The Home Guarantee Scheme helps homebuyers to secure a home loan with a minimum deposit as small as 5% of the loan amount. By guaranteeing up to 15% of the borrower’s home loan, Housing Australia can save them from paying Lenders Mortgage Insurance (LMI), which can cost thousands of dollars.
The Home Guarantee Scheme can be used to assist in the purchasing of an existing home, a house and land package, an off-the-plan apartment or townhouse, or vacant land with a contract to build. However, income thresholds and property price caps form part of the eligibility requirements for the scheme, so be sure to check those before you start gearing up to apply.
What are the benefits of the Home Guarantee Scheme?
The primary benefit of the Home Guarantee Scheme is its potential to save homebuyers with a smaller deposit from having to pay LMI, which can cost thousands of dollars. Not having to pay LMI could have flow-on benefits, including:
- Freeing up more of your income for day-to-day expenses
- Making your home loan repayments smaller and easier to manage
- Making it easier to ‘get ahead’ on your home loan by putting you in a position to make either larger repayments or additional repayments.
At the end of the day, the Home Guarantee Scheme aims to keep more money in your bank account, and less going to your lender.
The three types of Home Guarantee
First Home Guarantee
The First Home Guarantee (FHBG) is designed to help eligible first homebuyers become first home owners by eliminating their LMI costs. From 1 July 2024 to 30 June 2025 there are 35,000 spots available under the FHBG for first homebuyers who meet the eligibility criteria and are looking to buy an eligible property.
Regional First Home Buyer Guarantee
The Regional First Home Buyer Guarantee (RFHBG) is designed to make it easier to achieve property ownership for prospective homebuyers in regional areas. It is largely identical to the FHBG but is specifically available to buyers in regional areas, with 10,000 spots available between 1 July 2024 and 30 June 2025.
Family Home Guarantee
The Family Home Guarantee (FHG) is a bit different to the other two parts of the Home Guarantee Scheme. This is largely because it’s not just for first home buyers. Previous homeowners may also be eligible if they’re a single parent or single legal guardian with at least one dependent child.
The other big difference presented by the FHG is that under it, eligible single parents and legal guardians can secure a home loan with a deposit as small as 2% of the loan amount, without having to pay LMI. Additionally, it is the only Guarantee which does not allow for joint applicants.
5,000 spots are available between 1 July 2024 and 30 June 2025.
Using the Home Guarantee Scheme
Am I eligible for the Home Guarantee Scheme?
While the three different Home Guarantees come with differing eligibility criteria, here are some of the more universal eligibility criteria you’ll need to meet:
- All applicants must be an Australian citizen or permanent resident
- You must be looking to buy a residential property (investment properties are not eligible)
- All applicants must be 18 years of age or older.
You’ll also need to pass an income test based on your total taxable income. Your income will be determined based on your Notice of Assessment issued by the Australian Taxation Office (ATO) for your most recent tax return.
Check the Housing Australia website for more detail on each Guarantee’s specific eligibility requirements.
How do I apply for the Home Guarantee Scheme?
In order to apply for one of the Home Guarantee Scheme’s three Guarantees, you’ll need to speak to a participating lender, as you’ll have to apply using one of these authorised lenders as part of the home application process. The lender will guide you through each step of the HGS application process.
The lenders chosen by Housing Australia as of November 2024 to offer the HGS are:
- Australian Military Bank
- Australian Mutual Bank
- Auswide Bank
- Bank Australia
- bankfirst
- bankSA
- BankWAW
- Bank of Heritage Isle
- Bank of Melbourne
- Bank of us
- Bendigo Bank
- Beyond Bank
- Border Bank
- Commonwealth Bank
- Community First Bank
- Credit Union SA
- Defence Bank
- Firefighters Mutual Bank
- G&C Mutual Bank
- Gateway Bank
- Great Southern Bank
- Health Professionals Bank
- Indigenous Business Australia
- Illawarra Credit Union
- IMB Bank
- MyState Bank
- NAB
- Newcastle Permanent
- People’s Choice
- Police Bank
- QBANK
- Queensland Country Bank
- Regional Australia Bank
- St.George
- Teachers Mutual Bank
- The Mutual Bank
- UniBank
- Unity Bank
- Westpac.
Meet our home loans expert, Stephen Zeller
Stephen has more than 30 years of experience in the financial services industry and holds a Certificate IV in Finance and Mortgage Broking. He’s also a member of both the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) and the Mortgage and Finance Association of Australia (MFAA).
Stephen leads our team of Mortgage Brokers, and reviews and contributes to Compare the Market’s banking-related content to ensure it’s as helpful and empowering as possible for our readers.