What Is the First Home Guarantee?

What Is the First Home Guarantee?

The First Home Guarantee Scheme allows first-home buyers with a deposit as low as 5% to qualify for a home loan without paying Lenders Mortgage Insurance. Depending on the purchase price, your stamp duty can be waived, too.

It's a government scheme alongside the Family Home Guarantee & Regional First Home Buyer Guarantee.

So How Does It Work?

The government will act as the mortgage insurer, If you, as the borrower provides a 5% deposit, the government guarantees 15% of the property value, making the risk to the lender the same as if the borrower provided a 20% deposit.

This scheme is assisting low- and middle-income Australians buy their first home sooner by reducing the amount they need for a deposit. It eliminates LMI costs, saving the borrower tens of thousands of dollars.

To avoid paying thousands in LMI fees, you as the borrower needs a 20% deposit. However, under this scheme, you avoid LMI fees with a 5% deposit since the government will guarantee up to 15% of the value of the property.

If you're eligible, first home buyers will be able to use the scheme together with other government programs such as the First Home Super Saver Scheme etc. There are a few first home buyer schemes, so it's best to give me a call for guidance - Finance Broker - Matthew Stack - 0423 237 242.

Participating lenders will assess a first-home buyer’s eligibility alongside other standard home loan considerations such as serviceability (borrowing power), credit checks etc. But borrowers must apply through a participating lender - there are currently 27 but this will grow as more people use the scheme. The NHFIC government department does not accept applications directly.

As an accredited mortgage broker, I can help you reserve your place and find the best lender and loan product for you. Due to the limited number of spaces, be aware your application is first-in-best-dressed. Always apply as soon as possible.

It is for these reasons that I recommend you get your pre-approval in place by calling Finance Broker - Matthew Stack on 0423 237 242.

Am I Eligible?

There are a few simple criteria to qualify for the First Home Guarantee:

• Need at least a 5% deposit. Needs to be "genuine savings". Talk to me, this can be flexible.
• Must be an Australian citizens - can't be PR.
• Must be at lest 18 years old.
• Must hold a Medicare Card.
• Single first-home buyers can earn up to $125,000 a year or couples up to $200,000.
• Couples need to be married or de-facto. Can't be siblings, parent/child or friends.
• Loan repayments must be P&I - no Interest only loans.
• Applicants must be first-home buyers.
• Applicants must intend to move into and live in the property as their principal place of residence.

Must have evidence of 5% deposit, enough funds for a solicitor, bank fees and stamp duty (if needed).

What Documents Will I Need?

First Home Buyers must provide:

• Your Medicare number
• Your latest Notice of Assessment (NOA) for your taxable income.
• I'll guide you through the lender application process, once we've selected a lender together.

Benefits & Disadvantages of The First Home Guarantee Scheme?

Benefits:

• First home buyers save tens of thousands in LMI.
• First home buyers can buy their first home sooner.
• Stop paying rent and own your own home!
• Save on stamp duty as a first home buyer.

Disadvantages:

• As your deposit is lower, your loan balance is higher. You'll pay more interest over the life of the loan.
• Risk of negative equity if there's a property market fluctuation.
• Increases demand for lower value properties, which makes it hard for First Home Buyers to be successful at auctions etc.

I would be happy to help you with your first home loan & all the grants available to you. It all starts with a call. I am not pushy, and will give you a plan of action if you're not ready to get started.

Finance Broker - Matthew Stack - 0423 237 242

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