The home ownership dream in Australia is becoming harder to achieve and navigating the journey to homeownership can be daunting, particularly for first-time buyers.
Rising property prices in our cities, like Sydney, often present significant barriers to entry, leaving many aspiring homeowners feeling overwhelmed and discouraged. However, there is a glimmer of hope on the horizon in the form of the Regional First Home Buyer Guarantee (RFHBG). This is a transformative initiative, introduced by the Australian Government, designed to make home ownership more accessible for individuals and families in regional areas.
Understanding the Regional First Home Buyer Guarantee (RFHBG)
The Regional First Home Buyer Guarantee is a government-backed initiative aimed at assisting first-time buyers in regional areas to overcome the financial hurdles associated with purchasing their first home. Launched in response to the challenges in property affordability between metro and regional areas, the RFHBG seeks to level the playing field by providing Australians with access to a guarantee that can be used to secure a home loan.
Let’s take a closer look at the features and benefits and how they can help you to get on the property ladder sooner.
Features and Benefits of the Regional First Home Buyer Guarantee
- Increased Buying Power: The RFHBG enhances the buying power of first-time home buyers. By providing a government guarantee on a portion of the loan, lenders are more inclined to offer favourable terms and conditions, thereby enabling buyers to qualify for larger loan amounts and secure their desired property.
- Reduced Deposit Requirements: Traditionally, saving for a sizable deposit is one of the biggest hurdles faced by first-time buyers. With the increased cost of living and high interest rates, the golden target of a 20% deposit can be unachievable. However, with the RFHBG, eligible applicants may be able to purchase a property with a significantly reduced deposit, as low as 5%, allowing them to enter the property market sooner rather than later.
- No Lender’s Mortgage Insurance (LMI): Lender’s Mortgage Insurance (LMI) is often required for home loans with deposits of less than 20%. This additional cost can add thousands of dollars to the overall loan amount. However, under the RFHBG, buyers are exempt from paying LMI, resulting in substantial savings over the life of the loan.
- Opportunity for Regional Living: In addition to the financial benefits, the RFHBG encourages individuals and families to consider purchasing property in regional areas. With more affordable housing options and a lower cost of living, regional areas offer a compelling alternative to the hustle and bustle of city life, providing a chance for buyers to enjoy a higher quality of life.
Regional First Home Buyer Guarantee Eligibility Criteria
While the Regional First Home Buyer Guarantee presents a promising opportunity for aspiring homeowners, it’s essential to understand the eligibility criteria to determine if you qualify for the scheme. Some of the key requirements include:
- Australian Citizen or Permanent Resident: Applicants must be Australian citizens or permanent residents and over the age of 18.
- First-Time Buyer Status: To be eligible for the RFHBG, applicants must be purchasing their first home in Australia. This means individuals who have previously owned property or received a homeownership grant may not be eligible.
- Property Location: As the name suggests, the RFHBG is specifically targeted towards properties located in regional areas of Australia. Eligible regions are determined by the government and may include areas outside major cities like Sydney. You can check here to see if the location you are considering is legible.
- Income Thresholds: Income thresholds apply to ensure that the scheme benefits those who genuinely need assistance in purchasing their first home. The thresholds can vary depending on whether you are considering purchasing a home as an individual or with someone else, the location of the property and the number of dependents.
- Property Value Limits: There are also limits on the value of the property that can be purchased under the RFHBG. These limits are designed to ensure that the scheme remains accessible to low and middle-income earners. The limits vary on your state and location. The RFHBG will help you to buy a modest home, but it must not exceed the price caps set out below.
| STATE | Regional Centre* | All Other Regional Areas |
|---|---|---|
| NSW | $900,000 | $750,000 |
| VIC | $800,000 | $650,000 |
| QLD | $700,000 | $550,000 |
| WA | $450,000 | |
| SA | $450,000 | |
| TAS | $450,000 |
| Territory | Regional Areas |
|---|---|
| ACT | Not Applicable |
| NT Regional | $600,000 |
| Jervis Bay Territory & Norfolk Island | $550,000 |
| Christmas Island & Cocos (Keeling) Islands | $400,000 |
| * Regional centres are Newcastle and Lake Macquarie, Illawarra, Geelong, Gold Coast and Sun Shine Coast. | |
Source: https://www.housingaustralia.gov.au/sites/default/files/2023-09/RFHBG%20Factsheet.pdf
Note that the greater capital city areas of each state and the Northern Territory; and the entire Australian Capital Territory are excluded from the RFHBG.
RFHBG Frequently Asked Questions
Since its introduction, the team at iChoice have had many clients ask us specific questions about the Regional First Home Buyer Guarantee. Here are the most common questions we get asked.
1. How much money can I save with the Regional First Home Buyer Guarantee?
It can be difficult to provide a definitive amount of how much you can save with the Regional First Home Buyer Guarantee (RFHBG) because it depends on various factors, including the property’s purchase price, your deposit amount, and the terms of your loan.
However, some of the potential savings include a reduced deposit requirement, exemption from Lender’s Mortgage Insurance (LMI), and access to more favourable loan terms. By leveraging the RFHBG, eligible applicants may save thousands of dollars in upfront costs and ongoing mortgage expenses, making homeownership more achievable and affordable.
2. How many places are available on the Regional First Home Buyer Guarantee?
The availability of places on the Regional First Home Buyer Guarantee is determined by the government and may vary depending on factors such as funding allocations and demand. While there may not be a specific limit on the number of places available, it’s essential to keep in mind that eligibility criteria apply, and applicants must meet certain requirements to qualify for the scheme. We advise you to stay informed about updates from Housing Australia and consult with qualified professionals to assess your eligibility and secure a place on the RFHBG.
3. Can I apply for the Regional First Home Buyer Guarantee even though I don’t want to live in a regional area?
No, the Regional First Home Buyer Guarantee is specifically targeted towards properties located in regional areas of Australia. Eligible regions are determined by the government and may include areas outside major cities like Sydney. Therefore, if you do not intend to purchase a property in a regional area, you would not be eligible to apply for the RFHBG.
However, there may be other homeownership assistance programs available for properties in cities, so it’s worth exploring alternative options and consulting with the team at iChoice to find a solution that aligns with your goals and circumstances.
How to Apply for the Regional First Home Buyer Guarantee?
Applying for the Regional First Home Buyer Guarantee involves several steps, beginning with determining your eligibility and selecting a participating lender. It’s recommended to seek guidance from a qualified mortgage broker, like the team at iChoice, who can assist you throughout the application process and help you find a suitable loan product that aligns with your financial goals and circumstances.
Leveraging the RFHBG with a Home Loan Broker in Sydney?
For individuals in Sydney considering homeownership in regional areas, partnering with a reputable home loan broker can be immensely beneficial. Home loan brokers specialise in connecting borrowers with lenders and loan products that best suit their needs, simplifying the application process and ensuring a seamless experience from start to finish.
By leveraging the expertise of a home loan broker in Sydney, aspiring homeowners can explore a wide range of financing options, including those that incorporate the RFHBG. A broker can provide valuable insights into the nuances of the scheme, help navigate eligibility requirements, and negotiate favourable terms on behalf of the buyer.
Your best choice for the Regional First Home Buyer Guarantee
By offering increased buying power, reduced deposit requirements, and exemption from Lender’s Mortgage Insurance, the RFHBG empowers first-time buyers to take the crucial step towards homeownership with confidence.
At iChoice, we are well equipped to partner with you through the process of buying your first home with the Regional First Home Buyer Guarantee. We’re supported by the major lenders throughout Australia and can assist you in finding the right loan for your dream home. If you’re looking to take your first step on the property ladder, give us a call on 02 9743 0000 for a confidential discussion.