The First Home Guarantee (FHBG), previously known as First Home Loan Deposit Scheme (FHLDS) is an Australian Government initiative to help you buy your first home sooner. From 1 July 2022, up to 35,000 home loans can be guaranteed under the FHBG in any financial year (ending 30 June).
If you’re eligible you’ll get a limited guarantee from the Australian Government to buy your first home with a low deposit of 5%, without paying Lenders Mortgage Insurance (LMI). What you’ll need to provide to the lender (along with all the usual requirements):
Your Full Name & Date of Birth
Medicare Card
Notice of Assessment (NOA) for the 2021/22 Financial Year
You’ll also need to ensure that you’re eligible for the scheme. In summary you need to satisfy the following tests:
Income Test
To satisfy this test:
for singles – your taxable income for the previous income year must not be more than $125,000, or
for couples – your combined taxable income for the previous income year must not be more than $200,000.
Prior Property Ownership Test
The prior property ownership test for you being an eligible first home buyer for the FHBG is that you have not ever held:
a freehold interest in real property in Australia (this includes owning land only)
an interest in a lease of land in Australia with a term of 50 years (or more), or
a company title interest in land in Australia.
Citizenship Test
The citizenship test for the FHBG is that you will need to be an Australian citizen at your Home Loan Date. If you are applying under the FHBG:
‘as a single’, then only you, individually, will need to satisfy the citizenship test, or
‘as part of a couple’, then you will both need to satisfy the citizenship test.
Minimum Age Test
The FHBG is only open to persons that are 18 years of age or over.
The minimum age test for the FHBG is that you will need to be 18 years of age or over at your Home Loan Date.
If you are applying under the FHBG:
‘as a single’, then only you, individually, will need to satisfy the minimum age test, or
‘as part of a couple’, then you will both need to satisfy the minimum age test.
Deposit Requirement
There is a minimum and maximum deposit requirement for the FHBG. Your Participating Lender will be able to tell you if you satisfy this requirement. The FHBG is to assist singles and couples who have at least 5% of the Value of an eligible property saved as a deposit. It is a requirement of the FHBG that you use the maximum amount of your savings as possible towards your deposit (subject to the policies of your lender and your financial circumstances). If you have 20% or more saved, then your home loan will not be covered by the FHBG.
Owner-Occupied Requirement
The FHBG assists Australians to purchase their first home. Investment properties are not being supported by the FHBG. Under your Home Buyer Declaration, you will need to declare that you intend to:
start living in the Eligible Property you purchase within 6 months from either the settlement date of your loan or, for new builds, the date an occupancy certificate is issued, and
continue to live in that property for as long as your home loan has a guarantee under the FHBG unless you are an ADF member and the ADF owner-occupier exemption applies (see below).
If you are applying under the FHBG:
‘as a single’, then only you, individually, will need to satisfy the owner-occupier requirement unless the ADF owner-occupier exemption applies to you, or
‘as part of a couple’, then you will both need to satisfy the owner-occupier requirement unless the ADF owner-occupier exemption applies to either one or both of you
Property Price Thresholds
Navigating these different schemes without the assistance of a broking professional can be stressful. To avoid this stress please reach please contact myself on 0401 225 713 or lmckean@lbkprivatelending.com.au.