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Under the Regional First Home Buyer Guarantee (RFHBG), 10,000 eligible borrowers can buy or build new homes in regional Australia with just 5% deposits. The scheme came into effect on October 1, 2022, with several banks and lenders taking part.
You can borrow the remaining 95% of your property's value while avoiding lenders mortgage insurance (LMI) premiums. LMI can add tens of thousands of dollars to your buying costs when your deposit is smaller than 20%. So this is a big help for buyers.
The scheme was announced as part of the 2022-23 federal budget, along with expansions to similar schemes like the First Home Loan Deposit Scheme.
Here are the basics:
To be eligible for the scheme you must:
Under the scheme, borrowers can purchase:
State/Territory | Regional centre | 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 |
ACT | - | N/A |
NT | - | $600,000 |
Jervis Bay Territory & Norfolk Island | - | $550,000 |
Christmas Island and Cocos (Keeling) Islands | - | $400,000 |
LMI is often a forgotten homebuying cost, after your deposit, stamp duty and conveyancer's fees. And it only applies to borrowers with low deposits, which means deposits smaller than 20% of your property's value.
Here's a simple example of how much LMI can cost:
Now if you ran the same numbers with a 5% deposit ($25,000), you'd pay over $15,000 in LMI.
If you successfully apply for the RFHBG, you simply avoid this cost altogether. Instead, the government backs your loan under the scheme, allowing your lender to avoid charging you the premium.
You need to apply for the RFHBG directly through a participating lender. You cannot apply through the National Housing Finance and Investment Corporation which administers the scheme. Be aware that your deposit amount may change depending on your circumstances and lender.
You must apply for the Guarantee before 30 June 2023.
According to NHFIC, there are 32 participating lenders for its Home Guarantee Schemes.
There are many other schemes and help for homebuyers, at the state/territory and federal level:
The First Home Loan Deposit Scheme will let new buyers borrow 95% and avoid paying thousands in lenders mortgage insurance premiums.
Planning on buying your first home? Tips from the experts can help first home buyers save a deposit and get into your own home sooner than you think.
The First Home Super Saver Scheme explained.
If you’re a first home buyer in NSW, find out what government grants and concessions may be available to you if you’re an eligible purchaser.
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