Family Home Guarantee Explained

September 12, 2022

In the 2022-2023 Federal Budget, the Australian government announced the Family Home Guarantee Scheme extension for another three years, with 5000 spots open each year to eligible single parents.

The scheme aims at helping eligible home buyers get on the property ladder and purchase a home sooner. With this in mind, we break down everything you need to know about the Family Home Guarantee Scheme as a single parent!

What is the Family Home Guarantee?

First announced in the 2021/22 Federal Budget, the Family Home Guarantee (FHG) is part of the government’s Home Guarantee Scheme. It is managed by the National Housing Finance and Investment Corporation (NHFIC).

The Family Home Guarantee scheme can be accessed to build your new home or purchase an existing home even with a deposit as low as 2 per cent. You can avail of the scheme irrespective of whether you’re a first home buyer or previously owned a home.

The Family Home Guarantee is available through 30 June 2025, with 5000 spots available each financial year to eligible home buyers. For a single parent with at least one dependent child, this could be the perfect opportunity for you to get a foot on the first rung.

You should know at the onset that this particular applies only to residential property and does not support investment property purchases.

Why Should I Care About the Family Home Guarantee?

Home buyers with deposits lower than 20 per cent commonly have to pay Lenders Mortgage Insurance (LMI), consequently increasing the cost of your loan by thousands. 

However, under the Family Home Guarantee scheme, if you have a minimum 2% deposit if you’re an eligible single parent, the government will guarantee your participating lender up to 18% of the property’s value (assessed by the lender). This Australian Government initiative helps you avoid LMI and allows you to access the property market with less financial stress.

Notably, the guarantee is not a cash payment or a deposit for your home loan. Instead, it’s a legal arrangement between NHFIC and your lender. The NHFIC will pay up to a certain amount you owe your lender if you default under your home loan terms and your property is sold.

Who is Eligible for the Scheme?

To access the Family Home Guarantee, you’ll need to satisfy eligibility criteria based on your circumstances, participating lenders, home loan and property type.

You can get started by ensuring you meet the essential requirements for the scheme as follows:


The Family Home Guarantee is exclusively for eligible Australian citizens 18 years of age and above at their home loan date. It does not include the following:

Single Parent Status

You can participate if you are single, i.e. do not have a spouse or partner. You will not be considered single if separated but not officially divorced.

You have a dependent child, natural or adoptive, and your child should be either :


Your annual taxable income for the previous financial year must not exceed $125,000. Where Family Home Guarantee applications are made from 1 July 2022 to 30 June 2023, the 2021-22 income year will be considered. Your lender will assess this test at your home loan date and using your taxable income.

Property Ownership

You can be either a first home buyer or a previous home owner who currently does not own a home. In addition:

These criteria apply for property interests across Australia, irrespective of whether the property was residential or commercial, for investment or owner-occupied reasons, and whether or not it was a place of residence.


The scheme aims to help single parents who are struggling to save a deposit, so if you have saved 20% or more, you will not qualify for the Family Home Guarantee Scheme.

Likewise, you will need to represent your intentions to:

Eligible properties

The residential properties eligible for single parents under the home guarantee scheme typically include:

How Does the Family Home Guarantee Scheme Work?

The Family Home Guarantee is open only to eligible loans made by participating lenders approved by NHFIC.

You can apply for a loan to purchase an eligible property through a participating lender if:

These additional points will help you make the most of the scheme if you are eligible:

  1. Number of lenders: You can apply for home loan finance from more than one participating lender. Your home loan terms and conditions will be as agreed between you and your lender.
  2. Loan Terms: Your loan term under the scheme must be for 30 years or less and have regular principal repayments. Nonetheless, limited exceptions for interest-only loans mainly relate to construction lending. It will also include a mortgage over your purchased property, specify reasonable lending limits, settle once your lender begins as a participating lender under the FHG and comply with relevant laws and the lender’s policies.
  3. Land title: Your participating lender will require your land to be titled before issuing an NHFIC guarantee. Therefore, your land must be titled before the end of the 90-day pre-approval period.
  4. Management: The NHFIC will not be involved in your home loan application procedure, assessments or approvals. Neither will it be involved with the management or administration of your home loan, including circumstances of default and enforcement. 

Once approved, NHFIC will guarantee to your participating lender up to 18 per cent of the value of your property, provided you have at least a 2 per cent deposit and are eligible for the scheme.

Family Home Guarantee Price Caps

Your lender will guide you on the price cap applicable to your property based on its street address and suburb. The updated property price caps for eligible single parents are listed below.

Where the purchase price, or the purchase price and construction costs (for a new build land and separate contract to build a home), for your property exceeds the price cap for its location, that will not be eligible for the FHG.

The capital city price thresholds are applicable to regional centres with a population over 250,000 (Newcastle & Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast, and Sunshine Coast). This is because dwellings in these places can be relatively more expensive compared to regional centres rest of Australia.

Limitations of the Family Home Guarantee Scheme

While the FHG scheme does provide some level of protection for property buyers, there are specific risks that you should be aware of:

  1. Limited Equity: Since your deposit is only 2% of the property price, you start your home loan holding very little ownership in your property, i.e., 2% only. Suppose the value drops below the property price threshold; your debt may be more than the property value.
  2. Substantial loan amount: The smaller your deposit, the more you will need to borrow. The main risk with the scheme is that it may encourage you to enter into contracts for new builds you cannot afford.
  3. By borrowing up to 98%, the more considerable the loan amount and the interest you have to pay. Therefore, there are higher chances of defaulting on your mortgage repayments and eventually losing your homes.
  4. No support for repayments and other upfront costs: While there aren’t costs associated with the Family Home Guarantee, you will have to incur all the expenses and repayments for your home loan linked to the Family Home Guarantee.

In addition, while the FHG is a federal initiative to support single parents, if you cannot repay the loan, you will have to sell the property so your lender can recover the debt. The government won’t support you with repayments.

How to Apply

NHFIC neither accepts applications directly nor maintains a waiting list. However, you can apply for the Family Home Guarantee through a participating lender.

The list can be accessed at

After applying, your lender will inform you if you’ve been able to reserve a spot for the Family Home Guarantee successfully. These 4 steps will help you understand the process for reserving a place in the Family Home Guarantee:

1. Initial Application with an Approved Lender

To begin with, you must make an FHG reservation; you should apply for a home loan with a participating lender. It typically takes up to 14 days while your lender assesses your financial situation. Your lender will inform you if the period is different.

In addition, you can apply to more than one participating lender during this period. Nonetheless, your 14-day reservation will be counted from the day the first lender makes the reservation.

2. Pre-Approval

Once your lender informs you that you have received pre-approval on your home loan, your reservation can be extended for 90 days (starts on the first date your Participating Lender extends it).

This reservation period enables you to find and sign a contract of sale for an Eligible Property you wish to purchase.

4. Sign Your Contract of Sale

Once you’ve signed the contract of sale, your FHG reservation can be extended further for 30 days from the signing date.

This additional period lets you and your lender finalise the necessary paperwork and other home loan checks. If your lender asks, you may have to provide information and materials in less than 30 days.

For this extension to apply, you must inform your lender immediately after signing your contract for sale. This enables your lender to notify NHFIC without any delay.

Your FHG place reservation for a home loan will expire in you cannot finalise your loan within this period. As a result, your participating lender will have to make a new reservation under the FHG.

Final Considerations Before Applying

Like many single parents, you too may find it challenging to secure suitable housing for yourself and your dependent children. And the Family Home Guarantee may be just the perfect thing to get you closer to having your own home.

Nonetheless, any significant financial decision, no matter how good it seems, should involve thoughtful consideration of all the details. So before you apply for the Family Home Guarantee, here are some factors to consider:

  1. Interest rates: Because of a lower deposit, you will have to pay off a relatively large loan. With rising interest rates, your monthly repayments will increase too. Talk to a loan expert or use the Mortgage Payment Calculator to estimate your regular loan repayments and the total interest payable.
  2. Falling prices: In a situation where house prices drop, you may incur negative equity when the value of your property drops below the balance mortgage. This scenario is more likely with borrowers who show smaller deposits and have higher loan-to-value ratios (LVRs)
  3. Participating lenders: Study the offers and deals by different participating lenders and use tools like our Home Loan Comparison Calculator to ​select a who gives you a competitive rate with suitable features.
  4. Government grants 2022: The housing market seems to have gotten costlier, especially for single parents, in the last two years. However, the government has announced attractive incentives and first home buyer grants, which you could consider to help you get a leg up in the property market.

Eligible single parents looking to enter into contracts related to purchasing land and construction of a home should inform the participating lender (or mortgage brokers, where applicable) of all the potential risks associated with these transactions.You also have to sign a fixed-price building contract, and any amendments to this after signing may affect the validity of your place in the scheme. Moreover, you may have to pay Lenders Mortgage Insurance or fund these additional costs yourself.

How Joust Can Help You Save on Your Home Loan

Are you looking for home loans that support single parents’ home-ownership goals? You could connect with our Concierge Service for expert guidance on how to find a suitable home loan solution that maximises your cost savings.

Alternatively, head to our Instant Match service page to find competitive home loan rates at the tip of your fingers! Save valuable time on crawling through the market for the home loan of your team and try our free lender connection service!