- The Family Home Guarantee allows single mothers in Australia to buy a home with just a 2% deposit, removing the need for Lenders Mortgage Insurance (LMI) through a government-backed guarantee.
- To be eligible, single parents must be Australian citizens, earn $125,000 or less per year, have at least one dependent child, and not currently own property.
- The scheme applies to new and existing homes, with property price caps varying by state, and loans are available through participating lenders only.
- Single mothers can apply with the help of a free mortgage broker, ensuring you meet financial requirements, submit necessary documents, and secure pre-approval before purchasing a home.
Buying a home as a single mother or single parent in Australia is challenging, especially with the rising cost of living and property prices. Many single-income households struggle to save for a deposit while covering everyday expenses, making homeownership feel out of reach. However, the Australian government offers financial assistance to help eligible single parents purchase a home. One of the most beneficial programs is the Family Home Guarantee, which specifically supports single parents with dependent children by allowing them to secure a home loan with only 2% deposit.
This article explores the Family Home Guarantee in detail, explaining how it works, who qualifies, and how to apply. Understanding this government home loan program can help single mothers secure a home without the usual financial barriers. Additionally, we’ll discuss key considerations, advantages, and other financial resources available to single mothers to help them successfully navigate the home-buying process.
Family Home Guarantee - Summary
What is the Family Home Guarantee?
The Family Home Guarantee is a government initiative designed specifically to help single parents, including single mothers, enter the property market. This program allows eligible applicants to buy a home with just a 2% deposit, significantly lowering the upfront cost of homeownership. Typically, borrowers with a deposit below 20% must pay Lenders Mortgage Insurance (LMI), but under this scheme, the government guarantees up to 18% of the loan, avoiding LMI. This reduces the financial burden and enables single mothers to secure a home loan with minimal savings.
Unlike first-home buyer government schemes, the Family Home Guarantee is open to both first-time buyers and those who have previously owned a home, as long as they do not currently own property. This makes it particularly valuable for single mothers who may have previously owned a home with a partner but are now starting fresh. The scheme is part of the Australian Government’s effort to increase homeownership opportunities for single parents and provide financial stability for families.
Eligibility Criteria
There are certain criteria that single parents must meet to access the Family Home Guarantee. Applicants must be:
- at least 18 years old
- applying as an individual
- a single parent or single legal guardian of at least one dependent
- Australian citizens or permanent residents
- planning to live in the purchased property
- earning a maximum of $125,000 per year, as shown on Notice of Assessment by ATO for previous financial year
- not a current property owner, or upon settlement of the guaranteed property, not intend to own a separate property
To begin your application or learn more about the process, reach out to an expert from Eden Emerald Mortgages by filling out the form below. Their services are 100% free of charge for you (they are paid a commission by the lender), and they specialise in home loans for single mothers and single parents. They will guide you through the whole process of securing a government home loan, and negotiate the lowest interest rates for you.
How Much Deposit Do I Need?
Under the Family Home Guarantee, eligible buyers can purchase a property with a deposit as low as 2% of the property's value. However, certain lenders may require a larger deposit based on individual financial circumstances. The Government will guarantee up to 18% of the deposit, allowing buyers to avoid Lender’s Mortgage Insurance (LMI), which is usually required when borrowing more than 80% of the property's value.
What Property Types are Eligible?
Under the Family Home Guarantee, eligible applicants can buy a new or existing residential property. This includes houses, apartments, and townhouses, provided they meet the lender’s eligibility criteria. House & Land packages and off-the-plan apartments and townhouses are also accepted. However, the home must be intended as the primary place of residence (PPOR), meaning the buyer must live in the property rather than rent it out. Investment properties are not permitted under this scheme.
This government program is designed to support affordable housing for single mothers and single parents, so there are property price limits based on location. These limits vary between states and cities, ensuring the scheme targets homes within a reasonable price range. For example, property price caps in Sydney are higher than in regional areas due to market differences. Before applying, single mothers should check the latest price limits below for their preferred location to ensure their desired home qualifies.
Property Price Caps
State/Territory | Capital City and Regional Centre* | Rest of State |
|---|---|---|
NSW | $900,000 | $750,000 |
VIC | $800,000 | $650,000 |
QLD | $700,000 | $550,000 |
WA | $600,000 | $450,000 |
SA | $600,000 | $450,000 |
TAS | $600,000 | $450,000 |
ACT | $750,000 | Cell |
NT | $600,000 | Cell |
Jervis Bay Territory & Norfolk Island | $550,000 | Cell |
Christmas Island and Cocos (Keeling) Island | $400,000 | Cell |
* Regional centres are Newcastle and Lake Macquarie, Illawarra, Geelong, Gold Coast and Sunshine Coast.
Participating Lenders
There are 39 lenders that participate in the Family Home Guarantee scheme, including major banks and smaller financial institutions. Some of the participating lenders include Commonwealth Bank, National Australia Bank (NAB), Westpac and St. George along with several credit unions and regional banks. It is advisable to speak to an expert mortgage broker such as Eden Emerald Mortgages to guide you through the process. Your mortgage broker can advise which lenders offer the Family Home Guarantee, what their minimum deposit requirements are, and compare and negotiate the lowest interest rates for you.
How Much Can You Borrow as a Single Parent?
The amount that a single mother or single parent can borrow under the Family Home Guarantee depends on your lender’s borrowing assessment and the government’s property price caps. Since the program allows for a 2% deposit, the home loan will typically cover the remaining 98% of the property value. This means that for a $500,000 home, an applicant would only need a $10,000 deposit, while the government would guarantee the rest to help secure loan approval.
Although the government guarantee removes the need for LMI, it does not cover loan repayments. Applicants must still prove they can comfortably afford mortgage repayments based on their income and financial situation. Lenders will assess employment stability, credit history, and existing debts before approving the loan. Single mothers should use a home loan calculator or seek mortgage advice to determine how much they can afford to borrow and repay.
What Documents are Required?
To apply for the Family Home Guarantee, single mothers will need to provide proof of citizenship, income, and parental status. Required documents typically include payslips, tax returns, Centrelink statements, and evidence of dependents (such as birth certificates or court documents). A credit check will also be conducted to assess borrowing capacity and repayment history.
How to Apply for Family Home Guarantee
The Family Home Guarantee is only available at certain banks and lenders. Single mothers interested in applying should speak to a mortgage broker to find a lender that offers the scheme. A mortgage broker can help compare lenders, negotiate lower interest rates, and guide you through the whole home loan process. Since home loans come with varying repayment terms and conditions, it is important to choose a lender that offers flexibility and affordability. Working with a free mortgage broker can help you avoid costly mistakes and secure a home loan that suits your long-term financial needs.
Eden Emerald Mortgages will help you navigate the application, compare offerings from participating lenders, and get you pre-approved for a loan. Once pre-approved, you can search for a suitable property. Your broker will submit the application to Housing Australia on your behalf. If approved, you can proceed with the purchase, benefiting from the reduced deposit requirement and avoiding Lender’s Mortgage Insurance (LMI). Engaging a mortgage broker ensures that you get expert advice and the best possible loan terms tailored to your needs as a single parent. To speak to EE Mortgages now, leave a message in the contact form below, or call (02) 9188 9398.
Conclusion
The Family Home Guarantee is an essential government program that helps single mothers achieve homeownership with minimal upfront costs. By allowing eligible single parents to buy a home with just a 2% deposit and removing the burden of LMI, the scheme provides a realistic path to financial independence. However, it is important to understand the eligibility criteria, borrowing requirements, and property limitations before applying.
For single mothers considering these home loans, seeking professional advice from mortgage brokers can help ensure you make the best decision. With proper planning and support, homeownership can become an achievable goal, providing long-term security for single parents and their children.