Changes to the First Home Guarantee Scheme make homes more accessible

Living with mates, for many of us, is a rite of passage in early adulthood.

Some friends are so good as housemates that they take that next step of buying together – and as of July 1 this year, it’s become a whole lot easier for that to happen.

By using the First Home Guarantee (FHG) – which is part of the Home Guarantee Scheme – two buyers can purchase a property with a 5 per cent deposit without paying lender’s mortgage insurance. Typically, when purchasing a home, a buyer should have at least a 20 per cent deposit, which can take years to save. However, the FHG offers the chance to save and enter the market quickly. 

Previously, the scheme only allowed first-time buyers to buy with a spouse, but now any two people can team up and step onto the property ladder together. This includes siblings, parents (if they haven’t owned property in the past 10 years) and friends.

Finder home loans expert Richard Whitten said one of the most beneficial things about the scheme was the money applicants could save on lenders mortgage insurance. 

“It’s a big, money for nothing really, from a borrower’s point of view,” Whitten said. “It can be 10s of thousands sometimes, your LMI premium.” 

According to the latest Domain House Price Report, more than 100 suburbs across Australia’s capital cities have a median price of less than $500,000.

A 5 per cent deposit on a $500,000 property is $25,000. Between two friends (or siblings) that means each person needs to tip in just $12,500.

When it comes to finding a property at that price, units are more likely to be within budget, which narrows down the number of suburbs to search in. 

In Canberra there are three suburbs within 10 kilometres of the CBD where buying an apartment for less than $500,000 is possible.

These are Gungahlin, which has a unit price median of $450,000, Bruce $465,000 and Belconnen $494,000.

In Sydney, there are 12 potential suburbs where two mates can buy a unit for a median of $500,000 or less. The closest suburbs to the CBD are Auburn, Rosehill and Harris Park, all within 20 kilometres. 

Melbourne has double Sydney’s number of suburbs where mates buying together can use the FHBG scheme. More than half are within 20 kilometres of the CBD.

For example Carlton has a median price of $310,000 – meaning a 5 per cent deposit split between two people is just $7750 each.

“The recent expansion of the eligibility criteria for the scheme to include siblings, friends, permanent residents and people who haven’t owned a property in Australia for more than 10 years allows even more home buyers to take that next step towards home ownership,” Great Southern Bank chief customer officer Megan Keleher said. 

“We understand saving for a deposit and buying a home can feel challenging, but by using available government support and setting up strong savings habits, home ownership can be a reality.”