The 2021 budget has come up trumps for single parents with the exciting announcement of the Family Home Guarantee.
Provided to us from the office of the Assistant Treasurer and Minister for Housing, the Hon Michael Sukkar MP, we have everything you need to know in the article.
We answer these questions for you:
- What is the Family Home Guarantee?
- The benefit of home ownership for single parents
- How does the Family Home Guarantee work?
- What type of property can be bought?
- Who is eligible for the Family Home Guarantee?
- What property price thresholds apply?
- How to apply?
And, in case you are wondering who I am …
I’m Lucy, a single mum and the founder of the website you are on. I spend my time helping other single mums embrace independence, redefine their paths and be the best they can be, all whilst being brilliant single mums. You can get more in-depth, personalised support from my “You’ve Got This” Single Mum eCourse, which has already been downloaded by 2k+ single mums from around the world.
What is the Family Home Guarantee?
The Family Home Guarantee is designed to support housing affordability for single parents with dependants. It can be used to build a new home or purchase an existing home with a deposit of as little as 2 per cent, regardless of whether that single parent is a first home buyer or previous owner-occupier.
From 1 July 2021, 10,000 Family Home Guarantees will be made available over four financial years to eligible single parents with dependants, subject to their ability to service a loan.
The benefit of home ownership for single parents
Homeownership has significant economic and social benefits, including:
- Increased workforce participation
- Improved education and health outcomes
- Reduced welfare dependence
- The path to a more comfortable and secure retirement
How does the Family Home Guarantee work?
Eligible single parents with dependants looking to build a new home or purchase an existing home are able to apply for a loan to purchase an eligible property through a participating lender.
The Family Home Guarantee will see the Government (via NHFIC) guarantee up to 18 per cent of the property purchase price, provided the borrower has a minimum 2 per cent deposit, and is eligible for the program. This will enable single parents with dependants to enter, or re-enter, the housing market sooner.
The deposit requirement is lower than the 5 per cent deposit required under the First Home Loan Deposit Scheme and the New Home Guarantee and significantly lower than the 20 per cent deposit required to take out a standard mortgage without the use of lender’s mortgage insurance or parental guarantees. The 2 per cent deposit recognises the challenging circumstances faced by single parents with dependants, in particular the challenge of saving for a deposit while renting.
What type of property can be bought?
Eligible properties under the Family Home Guarantee include building a new home or purchasing an existing home.
For a property to be eligible, it must be a residential property – this term has a particular meaning under the program and is consistent with the First Home Loan Deposit Scheme.
Who is eligible for the Family Home Guarantee?
- Australian citizens who are at least 18 years of age. Permanent residents are not eligible.
- Must be a single parent with at least one dependant.
- The single parent must have an annual taxable income that did not exceed $125,000 per annum for the previous financial year. Child support payments are not included as income for the purpose of the income cap.
- The single parent must be the only name listed on the loan and the certificate of title.
- It is expected that the single parent demonstrate that they have at least shared custody of their dependant/s. Depending on the shared custody arrangement, this may enable both individuals in a former couple to separately access the Family Home Guarantee.
- Individuals must have at least a 2 per cent of the property purchase price available as a deposit. If 20 per cent or more is saved, then the home loan will not be covered by the Family Home Guarantee.
- Loans under the Family Home Guarantee require scheduled repayments of the principal and interest of the loan for the full period of the agreement. The loan agreement must have a term of no more than 30 years.
- Applicants must intend to be owner-occupiers of the purchased property. In the case of active Australian Defence Force member applicant(s), the guarantee is not subject to the owner-occupier requirement after entering into the loan if they cannot meet this requirement because of their duties. Investment properties are not supported by the Family Home Guarantee.
- Applicants can be either first home buyers or previous owner-occupiers who do not currently own a home. That is, the applicant does not currently hold a freehold interest in real property in Australia, a lease of land in Australia or a company title interest in land in Australia
More information on eligibility criteria for the Family Home Guarantee will be outlined in forthcoming amendments to the National Housing Finance and Investment Corporation Investment Mandate Direction 2018.
What property price thresholds apply?
The property price thresholds for the Family Home Guarantee will be the same as those applying to the First Home Loan Deposit Scheme.
How to apply
For the territories of Jervis Bay Territory, Norfolk Island, Christmas Island and the Cocos (Keeling) Islands, the relevant price cap is the same as the rest of state cap that applies in the closest State – New South Wales (for Jervis Bay Territory and Norfolk Island) and Western Australia (for Christmas Island and the Cocos (Keeling) Islands).
Eligible first home buyers will be able to apply for the Family Home Guarantee through a participating lender.
There are no costs or repayments associated with the guarantee. However, first home buyers are responsible for meeting all costs and repayments for the home loan associated with the guarantee.
NHFIC will not accept applications directly and does not maintain a waiting list for places, including for the additional guarantees to be made available.