What is the Regional First Home Buyer Guarantee?

Did you know that from 1 October 2022, 10,000 new places are available under the Australian Government’s Home Guarantee Scheme (HGS), helping thousands more Australians living in regional areas to enter the housing market sooner? Read on to find out more about the Regional First Home Buyer Guarantee and what new changes we can expect going forward.

Key Takeaways:

The new Regional First Home Buyer Guarantee (RFHBG) allows eligible first-home buyers in regional areas to buy a home with a deposit of as little as 5%.

There are 10,000 new places in the Regional First Home Buyer Guarantee as of 1 October 2022, increasing the total number of annual HGS places to 50,000.

To be eligible, applicants (or at least one applicant if applying as couple) must have lived in the regional area, or an adjacent regional area, that they are purchasing in for the preceding 12-month period to the date they execute the home loan agreement.

Eligible applicants do not need to purchase Lenders’ Mortgage Insurance – get on the property ladder sooner without penalty.

What is the Regional First Home Buyer Guarantee?

The Regional First Home Buyer Guarantee (also known as the RFHBG) is an Australian Government initiative to support eligible first-home buyers in regional areas to purchase a home. With high property prices and rising interest rates, many young Aussies need help to break into the property market.

The National Housing Finance and Investment Corporation (NHFIC) operates the RFHBG, on behalf of the Australian Government, to provide first-home buyers in regional areas with the chance to get on the housing market sooner.

Eligible buyers can pay as little as a 5% deposit towards their property without paying Lenders’ Mortgage Insurance (LMI). LMI is a hefty payment requirement for buyers with a deposit below 20% of the property value. Avoiding LMI payments could save eligible home buyers significant sums on their property purchases.

How many RFHBG places are available?

From 1 October 2022, the Regional First Home Buyer Guarantee will have 10,000 new places each financial year up to 30 June 2025. The introduction of the RFHBG increases the total number of HGS places this financial year to 50,000.

Who is eligible for the Regional First Home Buyer Guarantee?

Eligible applicants include

1. Singles or couples (married or de-facto relationships)
2. Australian citizens at least 18 years of age
3. Single applicants with an annual taxable income of up to $125,000; couples with an annual income of $200,000
4. Applicants (or at least one applicant if applying as couple) who have lived in the regional area, or adjacent regional area, that they are purchasing in for the preceding 12-month period to the date they execute the home loan agreement
5. Applicants with home loan repayments of both principal and interest for the full period of the loan agreement
6. Applicants who intend to be owner-occupiers of the purchased property
7. Applicants who have at least 5% of the value of an eligible property saved as a deposit
8. First-home buyers who have not previously owned or had an interest in a property or land in Australia

What property can I buy using the Regional First Home Buyer Guarantee?

The property must exist in a regional area and meet applicable property price caps.

A regional area is defined as

1. the Statistical Area Level 4 (ASGS SA4 2016) areas in a State or the Northern Territory that are not a capital city of that State or Territory; and
2. Norfolk Island; or the Territories of Jervis Bay, Christmas Island or Cocos (Keeling) Islands.

Eligible residential properties include

1. An existing house, townhouse, or apartment
2. A house and land package
3. Land with a separate contract to build
4. An off-the-plan apartment or townhouse

Property price caps differ between states. In the NSW regional centers of Newcastle, Lake Macquarie, and the Illawarra, the property price cap is $900,000. In all other regional areas in NSW, the property price cap is $750,000.

What are the benefits of the Regional First Home Buyer Guarantee?

The biggest advantage of purchasing a property with the Regional First Home Buyer Guarantee is that you can own your home faster. If the average property price in regional NSW is $740,000, you will need a deposit of as little as $37,000 and you will not be required to pay Lenders’ Mortgage Insurance.

Are there any other loan guarantees available for home buyers under the Home Guarantee?

If purchasing property in a regional area doesn’t sound appealing, other guarantees are available under the Home Guarantee Scheme to buy in a capital city and to support single parents with dependents. The Home Guarantee Scheme includes the

1. First Home Buyer Guarantee
2. Family Home Guarantee (applicants can be either first home buyers or previous owners who do not currently own a home)
3. Regional First Home Buyer Guarantee

How can I apply for the Regional First Home Buyer Guarantee?

Speak to our team of Sydney mortgage brokers about your eligibility for the RFHBG. We can help you find suitable home loan options for your regional home with the help of the RFHBG.

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FAQs

How much money can I save with the Regional First Home Buyer Guarantee?

The average property price in regional NSW is around $740,000, meaning you only need $37,000 as a deposit rather than the standard 20% of $148,000. You could save more than $100,000 upfront costs on your home.

How many places are available on the Regional First Home Buyer Guarantee?

From 1 October, 2022, 10,000 places are available to eligible regional first home buyers per financial year up to 30 June 2025.

Can I apply for the Regional First Home Buyer Guarantee even though I don’t want to live in a regional area?

The Regional Guarantee is only available for properties outside the capital cities. However, the First Home Guarantee and the Family Home Guarantee allow applicants to purchase eligible properties anywhere in Australia.