Family Home Guarantee: Single parents could soon get home loan with 2% deposit

Single parents will be able to purchase a property with a deposit of just 2%, under a new scheme announced in the 2021-22 Budget.
Family Home Guarantee
Source: Arthur Bargan/

The proposed Family Home Guarantee aims to help single-parent families, most of whom are led by women, get onto the property ladder or re-enter the market. Here’s how it will work.

What is the Family Home Guarantee?

The Family Home Guarantee is set to allow single parents to purchase a property with a deposit as low as 2%, with the government guaranteeing the remaining 18%. Applicants can either build a new home or purchase an existing home.

Usually, home buyers would need to save up at least a 20% deposit, or take out lenders mortgage insurance (LMI) which can leave them thousands of dollars out of pocket.

The Family Home Guarantee is limited to 10,000 places. However, this will be spread out over four financial years – which equates to 2,500 spots per year.

The Federal Government says about 125,000 single parents will be eligible for the scheme. That means only 8% of eligible families would benefit from the measure over the four-year period.

The scheme is similar to – but more generous than – the First Home Loan Deposit Scheme, in which the government guarantees loans of first home buyers who only have a 5% deposit.

While some lenders such as CommBank and NAB have welcomed the scheme, other groups have raised concerns.

The Finance Brokers Association of Australia (FBAA) warned some borrowers could end up with a negative equity position if property values fall and interest rates rise.

Research house Core Logic also cautioned that low deposits mean more debt, adding more interest that needs to be paid over the life of the loan. However, this could be worthwhile if the borrower would otherwise be spending thousands in rent, Core Logic said. Borrowers may also benefit from long term gains in real estate values.

Eligibility for the Family Home Guarantee

Single parents with dependants who earn up to $125,000 per year will be eligible for the Family Home Guarantee. Applicants must also be Australian citizens and at least 18 years old.

The scheme is open to first home buyers as well as those who have previously owned a home.

How do I apply for the Family Home Guarantee?

The Family Home Guarantee will commence from 1 July 2021, subject to legislative approval. Further information about the scheme will be available on the National Housing Finance and Investment Corporation (NHFIC) website in the coming days.

Other housing measures

The government has also announced that another 10,000 places will be added to the First Home Loan Deposit Scheme (FHLDS) from 1 July 2021 to 30 June 2022, which will only be available for those buying or building new homes. FHLDS (New Homes) places allow first home buyers to purchase a new property with a deposit of as little as 5%.

The government also revealed plans to increase the amount that can be withdrawn under the First Home Super Saver Scheme (FHSS) from $30,000 to $50,000. The scheme allows first home buyers to make voluntary contributions to their super which they can then put towards a house deposit.

This story has been updated. It was originally published on 10 May 2021.

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This article was reviewed by our Senior News Journalist Ellie McLachlan and Digital Editor Amanda Horswill before it was updated, as part of our fact-checking process.