2% Deposit for Single Parents – Family Home Guarantee

2% Deposit for Single Parents – Family Home Guarantee

Have you been thinking about owning your own home but don’t have the required deposit?

Are you a single parent?

The new Family Home Guarantee scheme allows you to buy a house with only a 2% deposit.

From 1st July 2021, 10,000 spots for the Family Home Guarantees were made available to allow eligible single parents with dependants the opportunity to purchase an existing house or build a new home with a deposit of 2%, subject to the individual’s ability to service a home loan.

The government will act as a guarantor for up to 18% of the property price for those who qualify.

Are you eligible to qualify?

You qualify if:

You are a separated or divorced single parent with dependent children.

You have an annual taxable income of less than $125,000.

You have at least a 2% deposit, which is $10,000 for a property worth $500,000.

Spots are limited, so you may have to act early to benefit from the scheme.

If you buy a home with a 2% deposit, there are chances of negative equity (i.e. when the loan is higher than the value of the property) if the value of the property decreases over the next few years. Negative equity can cause you problems if you would like to refinance or sell soon.

Stamp duty maybe be payable and will be an extra cost, not included in the 2% deposit funds.

Interest rates are low now and there is no guarantee that there will not rise.

Best to talk to your mortgage broker to find out more details.