The Regional Home Guarantee (RHG) was one of the new schemes announced by the Australian Government in the 2022-23 Federal Budget to provide more opportunities for home buyers outside of the major cities. The government has introduced the incentive to spread the population from densely populated capital cities.
As part of the wider Home Guarantee Scheme, the Regional Home Guarantee has been implemented to help prospective home buyers purchase a property without the barrier of a large deposit.
Although the RHG has not been made available yet, it’s worth diving into the details to see if you may be eligible for the incentive when it rolls out. Our comprehensive guide to the Regional Home Guarantee explains everything you need to know to leverage the scheme and potentially shave tens of thousands off your home loan as soon as it becomes available.
Much like most other Home Guarantee schemes currently available, the Regional Home Guarantee is a National Housing Finance and Investment Corporation (NHFIC) funded and administered initiative. It will allow the government to guarantee a portion of your home loan so you can purchase using a smaller upfront deposit.
From October 2022, up to 10,000 eligible borrowers can leverage the RHG to buy a home in regional areas with as little as a 5% deposit. In essence, the scheme will allow home buyers to borrow 95% of the property’s value without paying hefty lender’s mortgage insurance (LMI) premiums normally required for a deposit of less than 20%.
The Regional Home Guarantee is not a cash payment or reduction but an assurance to the lender that the government will insure the other 15% of the deposit required. Furthermore, from the structure of other Home Guarantee Schemes, we can assume that the RHG will most likely be subject to lender participation.
Before the 2022 Federal Election, no home buying schemes or incentives explicitly encouraged property purchase in regional Australia.
Although property thresholds imposed on certain schemes benefited those purchasing outside the capital cities and regional centres, the Regional Home Guarantee has been designed solely to benefit regional home buyers. Moreover, taking advantage of the RHG does not disqualify you from accessing other first home buying initiatives such as the First Home Super Saver Scheme (FHSS) or the state-specific First Home Owners Grant (FHOG).
Some more specific benefits of the RHG include:
You may be wondering at this point just how much the RHG can help you save. That’s why we’ve put together a hypothetical scenario to help visualise the tangible benefits:
Scott wants to purchase his first home in Wagga Wagga for $500,000. However, he only has $25,000 saved up for a deposit. Under normal circumstances, with a loan to value ratio (LVR) of 95%, he would have to pay around $19,285 in lender’s mortgage insurance premiums alone.
Under the Regional Home Guarantee, Scott will be able to delay 15% of the deposit ($75,000) and tangibly save $19,285 of his hard-earned money.
Unlike other Home Guarantee Schemes, the Regional Home Guarantee does not place emphasis on first home buyer status. However, some restrictions still exist to ensure the grant is accessed by those most in need. This means that even if you have previously owned property within Australia, you may still be eligible for the RHG as long as you meet all the eligibility requirements.
Although we do not know the full extent of the eligibility criteria for the RHG, the government has confirmed some conditions to qualify for the scheme:
Although further eligibility criteria will be decided in the coming months, we can draw conclusions based on the eligibility criteria of other Home Guarantee Schemes:
When available, the RHG will likely be restricted to certain locations outside capital cities that are classified as regional areas under the scheme. Regional status will likely be determined by the classifications listed on the latest edition of the Australian Statistical Geography Standard published by the Australian Bureau of Statistics.
As of yet, we do not know exactly which areas are eligible for the RHG, but we can safely assume that most places outside of the capital cities and certain regional city centres will qualify for the scheme.
Property price caps are currently in place for all other Home Guarantee Schemes, and so it’s safe to assume that the Regional Home Guarantee will also have restrictions based on price.
We do not know whether these price thresholds will remain consistent for the RHG. Still, the current thresholds for properties classified under “rest of the state” provide a good reference for what’s to come.
Just like the other Home Guarantee Schemes, you can’t apply directly through the NHFIC. Once a list of participating lending institutions has been announced, all applications for the Regional Home Guarantee must be made and processed through a participating lender or one of their authorised representatives (mortgage brokers).
The process is relatively straightforward, as you will only need to provide the necessary documentation requested by your lender. They should, however, already have access to most of the corresponding paperwork. They will assess your financial circumstances and eligibility for the scheme before applying on your behalf.
Though the full list of lenders has not been made available, some institutions may already be aware of their participation status. We recommend you reach out to your respective lender for further information on the application process.
If the Regional Home Guarantee isn’t for you, then there are a wealth of other grants and schemes available to assist with buying a home, particularly for eligible first home buyers. These include the following:
Eligibility for the First Home Owners Grant is usually determined by state-specific restrictions on property value, as well as other general qualifying conditions. You can find more information about the FHOG in your state by heading over to one of our state specific guides.
It’s worth noting that some previously available schemes like the First Home Loan Deposit Scheme (FHLDS) and New Home Guarantee (NHG) have been discontinued following the 2022 Federal Election, but these grants have been integrated into other schemes like the newly introduced First Home Guarantee Scheme.
If you’re interested in further details regarding the above incentives, or just plain curious about all the grants available to you as a first home buyer in Australia, check out our comprehensive breakdown of every first home buyer grant currently available.
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