A Quick Guide to Regional First Home Buyer Guarantee

By Deltos Finance on April 11, 2024
regional first home buyer guarantee

It’s no secret that buying your first home comes with certain challenges, especially when you need to pay for a substantial deposit. However, if you’re looking to buy in regional Australia, the Regional First Home Buyer Guarantee (RFHBG) could be the helping hand you need. Today, we’ll provide a quick guide to help you understand how this particular government initiative works and whether you might be eligible.

Overview of the Regional First Home Buyer Guarantee

Typically, homebuyers in Australia need to pay 20% of the value of their property as a home loan deposit while their lenders take care of the rest. If they choose a lower deposit (and if the lender allows it), buyers need to take out Lenders Mortgage Insurance (LMI) to cover the risk of having a lower deposit, which is another hefty upfront cost. 

All of that can change if you’re purchasing your first home in a regional area. Launched on 1 October 2022, the Regional First Home Buyer Guarantee is a support scheme that allows eligible buyers to purchase a home with as little as a 5% deposit without paying the often costly LMI. With this scheme, the Australian Government may guarantee up to 15% of the property value to support first-home buyers in regional areas while providing a safety net for lenders. This simply means you can purchase your first home sooner because it will be more accessible & affordable. 

What is Considered a Regional Area?

A regional area is defined as any location outside of a capital city. To qualify, you must have been living in the regional area or a nearby regional area for at least 12 months before signing your home loan contract. Unsure whether you’re qualified in terms of location? Use the Regional Checker. All you have to do is enter your current residence’s suburb or postcode and the suburb or postcode of the area where you want to buy your first house. You’ll quickly find out whether you’re eligible. 

Are you eyeing to buy your first residential property in the greater capital city area or another regional area that isn’t near or adjacent to your current residence? You may be eligible for the First Home Owner Grant or Family Home Guarantee instead.

regional first home owners grant

Eligibility Requirements

To be eligible for the Regional First Home Buyer Guarantee, you must:

  • Be an Australian citizen and at least 18 years of age. From 1 July 2023, the scheme will also be open to Australian Permanent Residents and those who haven’t owned a residential property in Australia in the last ten years. It’s also no longer limited to single applicants, married or de facto couples. Joint applications will be accepted from friends & family members.
  • Have lived in a regional area or nearby regional area for at least 12 months before your mortgage agreement.
  • Be purchasing a property in a regional area.
  • Be a first-home buyer who hasn’t previously owned or had an interest in a residential property in Australia.
  • Meet the income eligibility requirements: taxable income of up to $125,000 per year for individual applicants and $200,000 per year for couples or joint applicants.

Property Types and Price Caps

The RFHBG covers various property types, including new and existing homes, a house and land package, an off-the-plan townhouse or apartment, and a land & a separate contract to construct a home. However, there are price caps that vary depending on the location of the property. For instance, the property price cap in regional Tasmania is $450,000, while it is $800,000 in Geelong, Victoria. These price caps ensure the scheme remains targeted at helping those who need it most.

You can use the Property Price Cap tool to search for particular postcodes and get a clear idea of whether the regional property you’re eyeing is within the price cap. 

Will You Be Eligible for Other Benefits if You Receive the RFHBG?

Yes. If you receive the Regional First Home Buyer Guarantee in Australia, you may still be eligible for other benefits or government grants for first-home buyers. For instance, you may still enjoy other state-specific grants and concessions, such as stamp duty concessions that make your first home purchase even more affordable. 

How to Apply for Regional First Home Buyer Guarantee

The application process for the RFHBG involves securing a mortgage or home loan with a participating lender. The lender will assess your eligibility for the scheme and guide you through the application process. There are 10,000 places available each financial year until 30 June 2025, so it’s important to apply early.

Let Us Help You with Your First Home Purchase

Want to explore your eligibility for the Regional First Home Buyer Guarantee scheme as you shop for your first home in Tasmania? Let our mortgage brokers assist you. 

At Deltos Finance, we have maintained a vast network of lenders over the years. Trust us to connect you to a participating lender that can help you secure a home loan with a 5% deposit through the Regional First Home Buyer Guarantee.

Contact us today to get started. 

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