The 2021 Federal Budget is out and single parents struggling to get a foot on the property ladder are in luck, with a new scheme introduced that may allow them to purchase property with a deposit of only 2 per cent.
This scheme, called the Family Home Guarantee, will see the remaining 18 per cent of a home loan deposit needed to avoid Lender’s Mortgage Insurance (LMI) guaranteed by the Federal Government.
Family Home Guarantee will be available for up to 10,000 single parents with dependants over four years, as of 1 July 2021. The scheme is available to those with a household income under $125,000
As property prices have continued to grow across the country, particularly in Sydney and Melbourne, the cost of a deposit has continued to slip out of many would-be buyers hands.
For example, based on the latest CoreLogic data showing a median-priced Sydney unit to be $771,859, a buyer would need to save at least $154,371 for a 20 per cent deposit. This doesn’t include the cost of stamp duty, as well as other mortgage application costs.
This scheme is similar to other buyer support schemes, such as the First Home Loan Deposit Scheme, in that the government is helping buyers struggling to afford 20 per cent deposits
Government property buyer schemes available
While the Family Home Guarantee may help single parents, it’s not the only government scheme available. Australians looking to buy may have other options from the government, including property purchasing schemes, grants, concessions, and exemptions that may be available to would-be buyers.
1. Family Home Guarantee
Available for single parents with an income cap of $125,000, the Family Home Guarantee helps applicants with deposits as small as 2 per cent meet eligibility criteria to qualify for a home loan. The guarantee is available from 1 July 2021, with only 10,000 places available over the next four years.
2. First Home Loan Deposit Scheme (FHLDS)
This government initiative specifically targets first home buyers. Similar to the Family Home Guarantee, it supports buyers with deposits under 20 per cent (up to 5 per cent) to purchase property without having to pay LMI. Here, the Australian government also acts as a guarantor.
Key conditions for FHLDS include income caps of $125,000 per annum, capped at $200,000 for couples), with enrolment into the FHLDS capped at 10,000 per financial year. As per the latest Federal Budget announcements this week, the scheme has been extended by another 10,000 places in 2021-2022.
3. First Home Super Saver Scheme (FHSSS)
Another scheme targeted at first home buyers, FHSSS allows eligible home buyers to make extra contributions into their super fund with intent to be used towards a property deposit. Previously, first home buyers could withdraw up to $30,000, however the latest Federal Budget has revealed the scheme will be increased to $50,000 from 1 July, 2022.
As interest rates are at an historic low across savings accounts and term deposits, using your super fund to try and take advantage of higher rates of return may prove to be a faster option than waiting for your deposit to grow in a saver account.
4. First Home Owner Grant
One of the original home buyer schemes, originally introduced on 1 July 2000 to offset the effect of GST on home ownership, First Home Owner Grants differ per Australian state or territory. A one-off grant is paid to eligible first home buyers, with conditions around property values and residential requirements common.
5. Stamp duty concessions and exemptions
Stamp duty is one of the biggest upfront costs associated with purchasing property outside of the deposit, so it’s beneficial that struggling first home buyers are offered assistance in this category too. First home buyers may be eligible for stamp duty concessions or exemptions depending on a range of factors, including the state or territory of the purchased property and the value of the property.