Everything You Need to Know About the Single Parent Family Home Guarantee
From July 2021 to June 2025, eligible single parents may qualify for a home loan with a deposit as low as 2% without having to pay lender’s mortgage insurance. This is part of the Australian government’s effort to support single parents who want to enter or re-enter the housing market.
Single mothers or fathers with at least one dependent child may apply for a home loan under the Family Home Guarantee Scheme through a participating lender. However, there are several requirements an applicant must meet, including income thresholds and property price thresholds depending on your location.
What is the Single-Family Home Guarantee Scheme?
The Single-Family Home Guarantee Scheme aims to support single parents in their journey to home ownership. It was announced following the success of the First Home Loan Deposit Scheme for first home buyers and the HomeBuilder grant introduced as a response to the coronavirus pandemic.
Normally, lenders require a 20% deposit in order to lend without requiring lender’s mortgage insurance (‘LMI’). Under the Scheme, eligible single parents may be able to purchase a property with as low as a 2% deposit without paying LMI, potentially saving thousands. The government provides a guarantee to the participating lender for other 18% deposit normally required, essentially acting as an insurer to the lender – this is what eliminates the need for LMI. Other costs associated with purchasing a new home such as stamp duty may still be payable.
From the June 2021, 10,000 places will be made available over four financial years (to 30 June 2025) to eligible single parents who are looking to build a new home or purchase an existing home. The good news is this program is available to all single parents, regardless of whether you’re a first home buyer or have previously owned your own home.
How to know if you’re eligible for the Single-Family Home Guarantee Scheme
To be eligible for the Single-Family Home Guarantee scheme you will need to meet the below conditions:
- Be a single parent with at least one dependent. You will need to demonstrate that as a single parent you are legally responsible for the day-to-day care, welfare and development of your child and that they are in your care. Depending on your situation and terms of any shared custody arrangement, both single mother and father of a child may be able to separately access the Family Home Guarantee as individuals.
- Australian citizen, at least 18 years of age
- Have an annual taxable income of $125,000 or less for the previous financial year (Child support payments are not included as income for the purpose of the income cap).
- As a single parent, you must be the sole applicant listed on the loan and certificate of title.
- You must live in the property you intend to purchase.
- You will not be eligible if you currently own property, including commercial property, investment property, or land in Australia.
Not all properties are eligible, and the Scheme is subject to the same property price limits as the First Home Loan Deposit Scheme, which will differ depending on your State.
How can you apply for the scheme?
If you’re a single parent looking to enter or re-enter the property market, contact one of our expert brokers to find out if this scheme is right for you, which lenders are involved in the scheme and discuss your options. Here at Launch Finance, our expert brokers will work in your best interest and can help provide you with an estimate on what costs to expect.