Regional first home buyer support scheme: a guide for aspiring homeowners

Australian citizens and permanent residents dreaming of buying their first home can get some government support via the regional first home buyer support scheme. This involves having the government guarantee your loan to buy a house in a regional area.  

In this article, we’ll go over everything an applicant needs to know about the Regional First Home Buyer Guarantee. We’ll discuss who qualifies, which property types and areas are covered, and how much applicants need to pay. Read on to know more.

What is the regional home guarantee 2023?

The Regional First Home Buyer Guarantee (RFHBG) is designed to help Australian home buyers in a specific region purchase a property sooner. The RFHBG is part of the Home Guarantee Scheme (HGS), an Australian Government initiative to support eligible home buyers.

Under the RFHBG, a portion of eligible home buyers’ mortgages is guaranteed by Housing Australia. That allows eligible home buyers to buy a property with as little as 5% deposit. It also means that the buyer does not have to pay Lenders Mortgage Insurance (LMI). Between 1 July 2023 and 30 June 2024, 10,000 homes are available under the RFHBG.

Eligibility criteria

To take advantage of the RGHBG, make sure you meet these eligibility criteria:

• You must apply as an individual or joint applicants
• You must be an Australian citizen(s) or permanent resident(s) at the time of entering the loan
• You must be at least 18 years old
• You must earn up to $125,000 as an individual or $200,000 for joint applicants (as shown on the Notice of Assessment issued by the Australian Taxation Office)
• You must intend to be owner-occupiers of the purchased home
• The scheme is for home buyers who have not previously owned (or had an interest in) a home in Australia or 10 years before the date they execute their mortgage
• The scheme is also for home buyers or previous homeowners who have not owned a property in Australia in the previous 10 years

Definition of a regional area

Under the RFHBG, a regional area is defined as:

• Statistical Area Level 4 areas in a state or the Northern Territory that are not capital cities
• Norfolk Island, the Territories of Christmas Island, Jervis Bay, or Cocos (Keeling Islands)

The greater capital city areas of all states and the Northern Territory, as well as the whole Australian Capital Territory, are excluded from the RFHBG. Home buyers in these areas might be eligible for the Family Home Guarantee scheme or the First Home Guarantee.

Application process

To apply for the RFHBG, you have 2 options:

• go through a participating lender
• apply through your authorised representative, such as a mortgage broker

Housing Australia will not accept your application directly or provide personal financial advice.

Home buyers and anyone representing the home buyer should consult a participating lender. You should also seek independent legal and financial advice about whether a particular mortgage or home and the HGS terms suit your personal circumstances and goals.

Before entering a home loan agreement, talk with your lender or broker. This will help clarify the potential implications of changing interest rates or home prices on your individual circumstances.

Participating lenders and income assessment

Participating lenders (mentioned above) have been authorised by Housing Australia to offer the HGS scheme to home buyers.

The scheme also includes an income test. The test is assessed by lenders using a notice of assessment, or NOA. First, a tax return must be processed. Then, the Australian Taxation Office (ATO) sends a statement entitled the notice of assessment to the taxpayer’s myGov Inbox.

If your reservation was made between 1 July 2023 and 30 June 2024, you must submit your NOA for the 2022 to 2023 financial year.

Deposit requirements

If you are applying for the RFHBG, you should save between 5% to 20% of the value of an eligible home for the deposit. In other words, the minimum deposit required for the scheme is 5%. However, participating lenders might require you to have a higher percentage deposit. It depends on your individual financial circumstances.

You should speak with a participating lender to determine whether a deposit is made up of genuine savings for the FHG and their lending criteria. You should also confirm that cash grants from the Australian Government, State or Territory schemes or programs qualify as part of your genuine savings.

Property types and price caps

Under the Home Guarantee Scheme, home buyers can purchase residential homes. These properties include:

• existing homes, townhouses, or apartments
• home and land packages
• land and a separate contract to build a house
• off-the-plan apartments or townhouses

Using the Property Price Cap tool can help you find property price caps for all locations. Different criteria and timeframes apply to specific types of property. If applicable, the contract of sale might need to be executed by certain dates. The same is true of eligible building contracts.

What is the regional home grant in NSW?

The regional home grant in New South Wales (NSW) is officially titled the Regional Relocation Home Buyers Grant. This grant provides a one-off payment of $7,000 to approved applicants to help with the cost of relocating from a metropolitan area to a regional area.

Regional home grant NSW eligibility requirements

Let’s look at some of the eligibility requirements for the regional home grant in NSW. These requirements include the following:

• You must be an Australian citizen or permanent resident at the date of completion of the regional property purchase. In the case of a long-term lease, you must be an Australian citizen or permanent resident on the date the lease starts.
• You must reside in the regional property within 12 months from the date of purchase completion or start date of a long-term lease. You must also reside in the property for at least 12 consecutive months.
• You must either have owned or occupied a metropolitan property as your principal residence in the 12 months before buying your regional property.
• If you have not owned the home, then you must have been renting a home in a metropolitan area 12 months prior to purchasing your regional property and can establish a 2-year continuous rental history in this and other metropolitan homes.
• You must apply either as a single or joint applicant
• You have earned $125,000 or less if you are single, or $200,000 or less for couples in the last financial year, as shown on the Notice of Assessment issued by the ATO.
• You must be a first home buyer or have not owned a home in the past 10 years (whether owner-occupied or as an investment).
• You must have at least a 5% deposit to contribute towards your property purchase.
• You must purchase a property in your current or adjacent regional area.

Homeownership made easier

Buying a home in regional Australia is made easier with the regional first home buyer support scheme. Prospective homeowners should go over all the application details and contact their mortgage advisor or a participating lender for any questions.  

Do you think that the regional first home buyer support scheme is a good option for first-time home buyers? Let us know in the comments.