With property prices showing no sign of easing, many first-time home buyers – especially those in our capital cities – are struggling to get a foot in the door.1 So, the Australian Government has launched an initiative aimed at people seeking to purchase property away from the hustle and bustle of major capital cities.
The Regional First Home Buyer Guarantee falls under the Home Guarantee Scheme (HGS) and it supports eligible buyers to purchase a home in a regional area with a smaller deposit, without having to pay Lenders Mortgage Insurance (LMI).2
Other schemes designed to support home buyers include the first home buyers grants offered by many states and territories, and the First Home Super Saver Scheme.
But for now, let’s explore the Regional First Home Buyer Guarantee, including eligibility criteria, benefits and potential pitfalls. We’ll also look at when during the home-buying process home insurance might need to be considered.
What does the Regional First Home Buyer Guarantee offer?
Under the scheme, part of an eligible home buyer’s home loan is guaranteed by Housing Australia.3 This helps eligible buyers to purchase a home with a deposit as low as 5% and removes the need for LMI, which is a costly expense often required for low-deposit home loans.4
The guarantee is for up to 15% of the value of the property. In the 2024-25 financial year, 10,000 places are available for regional first home buyers.3
“The Regional First Home Buyer Guarantee can be used to build a new property or purchase an established home,” explains a spokesperson for Housing Australia.
Eligibility for the Regional First Home Buyer Guarantee
Regional First Home Buyer Guarantee eligibility extends beyond traditional first home buyers.
“The Regional First Home Buyer Guarantee isn’t just available to first home buyers,” explains the Housing Australia spokesperson. “It’s also available to previous property owners who are looking to re-enter the property market after a prolonged period of absence, which we define as not having owned property in Australia within the last 10 years.”
Key eligibility criteria for the guarantee include:3
- Individuals or joint applicants must be at least 18 years old and Australian citizens or permanent residents.
- Applicants must have at least 5% of the value of an eligible property saved as a deposit.
- Individual applicants require a taxable income of $125,000 or less per year, and joint applicants require a combined taxable income of $200,000 or less per year.
- Applicants – or at least one applicant in a joint application – must’ve lived in the regional or adjacent regional area they’re purchasing in for the 12 months prior to the date they execute the home loan.3
How to apply for the Regional First Home Buyer Guarantee
Applications can only be made through a participating lender or their authorised representative – for example, a mortgage broker.5
Housing Australia advises that borrowers should ensure they have the relevant documentation ready and understand their obligations under the scheme – specifically around ensuring that they’ll continue to live in the property as their primary place of residence while the Guarantee is still active.
Where is the Regional First Home Buyer Guarantee available?
Eligible home buyers must purchase a property in regional Australia. The greater capital city areas of each state, the Northern Territory and the Australian Capital Territory are excluded from the Guarantee.2
Housing Australia’s Regional Checker allows home buyers to confirm their eligibility for the program by entering their current postcode, and the postcode of the suburb they’d like to purchase in.6
Potential risks of the Regional First Home Buyer Guarantee
While the Guarantee offers substantial financial assistance to eligible home buyers, it’s important to be aware of the potential risks associated with purchasing a property with a smaller deposit.7
A smaller deposit inevitability means a larger loan to pay off, which could have consequences for buyers should interest rates rise.7
“Borrowers should talk to their lender or broker to obtain financial advice relating to the lending solution that best fits their specific needs,” says the Housing Australia spokesperson.
Additionally, it might be a good idea to plan for interest rate fluctuations and factor in stamp duty and other upfront costs when determining your budget.8
Other considerations – the Home Guarantee Scheme
The Regional First Home Buyer Guarantee is part of the broader Home Guarantee Scheme, which also includes the First Home Guarantee and the Family Home Guarantee.
“If a borrower is not eligible for the Regional First Home Buyer Guarantee, they may still be able to use the First Home Guarantee,” says the Housing Australia spokesperson.
The First Home Guarantee allows eligible home buyers to purchase a property anywhere in Australia with a 5% deposit by having part of their home loan guaranteed by Housing Australia.9
The Family Home Guarantee allows eligible single parents or single legal guardians to purchase a property anywhere in Australia with a 2% deposit, with part of their home loan guaranteed by Housing Australia.9
Planning for insurance and closing costs
Once you’ve found a property to buy, home insurance comes into play. In some states, lenders may require you to take out insurance before settlement.10 For example, in Queensland, most buyers legally assume property risk from 5pm on the next business day after contract signing.11
It may be worth discussing insurance requirements with your solicitor or conveyancer and checking regulations in your state or territory to ensure compliance.
Is the Regional First Home Buyer Guarantee right for you?
The program offers eligible buyers a unique pathway to home ownership in regional Australia. Before taking the plunge, you may wish to weigh up the potential risks and carefully assess your financial readiness.
Then, when you’ve found a home you love, consider Youi’s home insurance options to see if there’s a coverage level that meets your needs as a new homeowner.
1 Source: ABC News – Has the great Australian dream of affordable home ownerships turned to a nightmare?, April 2024
2 Source: Housing Australia – Regional First Home Buyer Guarantee
3 Source: Housing Australia – Home Guarantee Scheme, July 2024
4 Source: Moneysmart – Save for a house deposit
5 Source: Housing Australia – Home Guarantee Scheme Participating Lenders
6 Source: Housing Australia – Regional Checker
7 Source: Domain – What are the risks and advantages of buying property with a small deposit?, June 2023
8 Source: Vic Government – First home buyer guide
9 Source: Housing Australia – Guarantee Comparison Table
10 Source: Moneysmart – Buying a house
11 Source: Qld Government – Home and contents insurance, October 2020
