Changes to the First Home Guarantee Eligibility

The First Home Guarantee is a Scheme for Australians to buy their first home without having to save for one of the most expensive up front fees, Lenders Mortgage Insurance (LMI). LMI is a compulsory fee that protects the bank if a home buyer has less than a 20% deposit to buy their property. For example, if a person were to purchase a home valued at 500K and had a 5% deposit, they would usually have to save an additional 15K for LMI. Under this Scheme, the government is guaranteeing this 15K so you don’t have to pay it out of your own pocket.

The current qualifying criteria for the Scheme are:

· Must be a first home buyer i.e. never owned property previously or their partner never owning a home

· Must be an Australian citizen

· Earn up to 125K for individuals and up to 200K for couples

· Must purchase for owner occupied purposes, so cannot be for an investment property purchase

· Applying as an individual or a couple – married or defacto

· Property price cap of 900K for Sydney metro and surrounds – lower price caps for the rest of NSW and other states. See https://www.nhfic.gov.au/support-buy-home/property-price-caps for price caps.

As of July 1, there will be major changes to the Scheme, which will allow a much larger percentage of the population to qualify. These changes include:

· Eligible if you have not owned a property in the last 10 years, but have owned and sold a property prior to this time

· Australian residents are now eligible, so it is no longer limited to Australian citizens.

· You can now purchase with another person that is not your partner. This would include buying with a parent/child or another family member, or friends who wish to purchase their first home together, so long as you all qualify as first home buyers.

At this point in time, it is expected that there will remain a cap on the number of First Home Guarantee places to 35,000 purchases nationwide. So if you do believe that you qualify and are interested in applying, I would recommend that you do so in the first quarter of the next financial year as there is no guarantee of how long these places will last.

To those who already qualify for the Scheme, I would recommend that you apply prior to 1 July as there are still spots available.

To apply, contact your broker to find out if you qualify. Not all banks are a party to this Scheme, so ensure that you are applying for a loan with the right banks. Your broker will have access to the majority of these banks/lenders.

For any further information or to apply, contact me at jennifer@jblhomeloans.com.au or call on 0414670151