Government Loan helps families secure homes for just 5% deposit.
The New Home Guarantee scheme helps first-time buyers get onto the property market, with a deposit of as little as 5%, and saves them from paying Lenders Mortgage Insurance (LMI).
The program was launched a few years ago for families looking to build a new home or purchase a newly built property, but may not be able to save enough for a deposit. Mortgage lenders usually require a 20% down payment if you wish to avoid paying LMI, however, if you’re eligible for the New Home Guarantee, you can get into a new home with a 5% deposit, and the government will underwrite the remaining 15%. This can help you get into your dream home, and save thousands on LMI.
Signature Dream Homes is here to support families on their property journey. Our goal is to give you the keys to your new home. We understand that the process may look complicated and confusing, that’s why our experts are here every step of the way to provide you with the best options and advice. We can check if you qualify for The New Home Guarantee, previously known as the First Home Loan Deposit Scheme (FHLDS), and help partner you with the 27 participating lenders across the country.
From the 1st July 2021 – 30th June 2022, only 10,000 applications will be accepted, therefore reach out to us as soon as possible to get yours processed.
(Read more: Single parents can own homes for as little as 2% deposit)
How does it work?
Most lending facilities require a 20% deposit on a new home to offer an exemption on LMI. In many cases, this amount is simply too much to save, and families are stuck paying a never-ending stream of rent payments and unable to afford their own home. With the New Home Guarantee, the government is lowering the barriers for many families to enter the property market. If you are able to save 5% of the deposit, the government will underwrite the remaining 15%, allowing the exemption from paying LMI.
Through Signature Dream Homes we can demonstrate if you meet eligibility criteria, as listed below. If your application is successful, you can take out a home loan and the government will act as your guarantor. This means you can secure your dream home quicker and easier, without having to wait and save up a 20% deposit, whilst also paying rent on a property.
What is LMI and how am I saving?
LMI is an expected payment if you borrow more than 80% of your home’s value. If you can’t afford a 20% deposit, you will be required to pay LMI. It is usually a one-off payment at the time of loan settlement. It covers the lender in case payments are defaulted and is often quite expensive. The amount of LMI can vary and depends on the size of the loan, the size of the deposit, and the lender’s contract agreements.
With the New Home Guarantee, families can pay a 5% deposit, and the government will cover the remaining 15%, as a loan. You can get into your dream home, and save thousands on LMI.
Are you eligible?
- You must be an Australian citizen, at least 18 years old.
- You must provide evidence that you and your partner have never held property in Australia before, including investment, commercial or company titles.
- You must move into the property within six months of signing the contract, and live in that property whilst it is guaranteed under the First Loan Deposit Scheme.
- Couples are only allowed to apply if they are married or in a de-facto relationship.
- Your annual taxable income must be less than $125,000 (single) or $200,000 (couples) during the previous financial year. You will need to provide relevant tax and income records from the ATO.
You must show that you already have 5% of the property value you wish to purchase in savings.
Property caps:
The New Home Guarantee is to help families get onto the property market at entry-level. Certain restrictions and caps have been implemented to ensure that the scheme helps those most in need, therefore only modest-homes or modest-property builds are accepted. Please see the below cap for Queensland:
Capital city/regional center:
- Purchase established property – $600,000
- Build or purchase a newly built home – $650,000
Rest of state:
- Purchase Established property – $450,000
- Build or purchase a newly built home – $500,000
Why choose Signature Dream Homes?
Signature Dream Homes specialises in helping first-time buyers take the first step on the property ladder. We understand that owning your own home may seem impossible due to saving for a high deposit whilst also renting a property. Many of our clients felt trapped and thought owning their own home was a faraway dream, until they talked to us and we provided solutions. We can do the same for you. In many cases, you can own your own home for less than your current rent payments.
If you live in Queensland and would like to apply for the New Home Guarantee contact our team and we’ll provide you with the answers in a 1-on-1 consultation. We also have information on other government grants and incentives that could be beneficial for you and your family. Through our trusted partners we have a wide selection of affordable House & Land Packages, and we connect you with the best Australian builders.