Home Guarantee Scheme 2023 Explained

The 2023/2024 federal budget has made new changes to the existing schemes and processes for financing a home across Australia. As the housing market stays a volatile place, especially for first time home buyers, these programs seek to help Australians enter the market and become homeowners.  

As of July 2023, the recent series of changes has combined multiple housing schemes under Home Guarantee Scheme. The scheme reduces the amount of deposit required to secure a home loan so home buyers can purchase a home sooner. Accessing these schemes could boost your chances of achieving your dream home but with only so many grants available and certain eligibility criteria to meet, it’s important to know how to navigate.  

As proud builders of first homes and family homes, G.J. Gardner Homes’ wants to support Australians during their home buying journey and the Home Guarantee Scheme is a tool that can help make accessing the home one step easier.  

What is the Home Guarantee Scheme 

The Home Guarantee Scheme 2023 is the latest iteration of the government program that helps first home buyers purchase a home with a deposit of as little as 5%. Administered by the National Housing Finance & Investment Corporation (NHFIC), the scheme offers three types of guarantees: 

• First Home Guarantee (FHBG): This is the most popular type of guarantee and is available to eligible first home buyers who are purchasing a property in any location. The government will guarantee up to 15% of the value of the property, which means that you can purchase a home with a deposit of as little as 5%. 
• Family Home Guarantee (FHG): This guarantee is available to single parents with at least one dependent child. The government will guarantee up to 18% of the value of the property, which means that you can purchase a home with a deposit of as little as 3%. 
• Regional Home Guarantee (RHG): This guarantee is available to first home buyers who are purchasing a property in a regional area. The government will guarantee up to 25% of the value of the property, which means that you can purchase a home with a deposit of as little as 2%.  

The Home Guarantee Scheme 2023 is a great way to get into the property market with a smaller deposit. However, there are some eligibility criteria that you need to meet in order to access the scheme.  

These criteria include: 

• You must be a first home buyer (or a single parent with at least one dependent child). 
• You must have a combined income of less than $125,000 (or $180,000 if you are purchasing a property in a regional area). 
• You must have a deposit of at least 5% (or 3% if you are applying for the Family Home Guarantee). 
• You must meet the lending criteria of a participating lender. 

The Home Guarantee Scheme 2023 is a great way to get into the property market with a smaller deposit. However, it is important to note that the scheme is limited to a certain number of places each year. So, if you are interested in applying for the scheme, it is important to do so as early as possible. 

What are the 2023 changes

The main changes involved in the latest Home Guarantee Scheme is the end of the New Home Guarantee (NHG) which means fewer spots are now available for these grants overall.   

The NHG had a similar premise to the ongoing home buying schemes with over 100 000 spots and a focus on new homes.  It was discontinued as part of the government’s wider attempts to stabilise the current housing market. As a successful scheme that helped to make home ownership more accessible for first home buyers, its end will likely shift the market’s conditions. Without the NHG, we can expect the initial cost of home ownership for first home buyers to increase, but it also likely reduces the current unprecedented demand for new homes.  

What does this mean for you? If you have the funds to make your first home purchase, you’ll now be dealing with less competition and demand in the new home industry.  

The Family Home Guarantee scheme  

The Family Home Guarantee (FHG) is part of the HGS and is specifically designed to help single parents or legal guardians who are on low or middle incomes. It provides a guarantee for up to 18% of the value of a single parent’s home loan. This means that you can borrow more money with a smaller deposit, helping single parents to get into the property market sooner and avoid paying Lenders Mortgage Insurance (LMI). 

The FHG is available for both first home buyers and previous homeowners, and on new builds and existing homes.   

How does the Home Guarantee Scheme work 

To access the Home Guarantee Scheme (HGS), you need to apply through a participating lender and follow the guidelines set by the NHFIC. The lender will assess your application and let you know if you are approved. 

Here are the steps on how to access the HGS: 

• Find a participating lender. You can find a list of participating lenders on the NHFIC website. 
• Speak to a lender about your eligibility. The lender will assess your eligibility for the HGS and let you know if you are eligible. 
• Apply for the HGS. If you are eligible, you will need to apply for the HGS through the lender.
• Provide documentation. You will need to provide documentation to support your application, such as your income statement, your tax return, and your Notice of Assessment. 
• Then wait for approval. The lender will assess your application and let you know if you are approved. 

If you are approved for the HGS, you will be able to purchase a property with a deposit as low as 5%. This will make it much easier for you to get into the property market and start building your wealth.