EXPLANATORY STATEMENT
Issued by authority of the Minister for Housing, Homelessness and Cities
Housing Australia Investment Mandate Direction 2018
Housing Australia Investment Mandate Amendment (2026 Measures No. 2) Direction 2026
Subsection 12(1) of the Housing Australia Act 2018 (Act) provides that the Minister may, by legislative instrument, give the Board of Housing Australia directions about the performance of Housing Australia’s functions. The Housing Australia Investment Mandate Direction 2018 (Investment Mandate) constitutes those directions.
The Act established Housing Australia to improve housing outcomes for Australians. It is a corporate Commonwealth entity in the Treasury portfolio and is governed by an independent board. The Board is subject to the requirements of the Act, the Investment Mandate, and other relevant legislation.
Housing Australia improves housing outcomes for Australians through its guarantee, financing and capacity building functions. Housing Australia also has other functions conferred by legislation, such as the Help to Buy Act 2024.
Housing Australia administers the Home Guarantee Scheme (Scheme), also known as the Australian Government 5% Deposit Scheme, under its guarantee function. The Scheme aims to enable first home buyers, single parents or legal guardians with dependants, and other eligible home buyers to access the housing market sooner. The Scheme comprises the First Home Guarantee (FHBG) and the Family Home Guarantee (FHG). The Scheme formerly included other streams of guarantees, however no new guarantees can be issued under the New Home Guarantee (NHG) since 1 July 2022 or under the Regional First Home Buyer Guarantee (RFHBG) since 1 October 2025.
The purpose of the Housing Australia Investment Mandate Amendment (2026 Measures No. 2) Direction 2026 (Instrument) is to support the more efficient and effective operation of the Scheme by making several operational refinements. The Instrument amends the Investment Mandate to:
• allow eligible homebuyers to capitalise refinancing-related costs into the new loan;
• align FHBG with FHG by removing the requirement that a proportion of guarantees issued under FHBG be issued to non-major banks;
• support diversity among eligible lenders by requiring Housing Australia to consider the extent to which approval of a lender promotes a diverse lender panel;
• change the calculation of the Government’s Guaranteed Maximum Liability to provide an eligible lender the expected guaranteed amount where an eligible homebuyer purchased a dwelling that a lender valued as less than the sale price;
• clarify the loan-to-value ratio requirements;
• specify that a legal guardian is an eligible adult of a dependent child;
• provide separate caps on the value of properties in Darwin and in the rest of the Northern Territory, to be eligible under the Scheme; and
• align New South Wales regional centres between the Scheme and Help to Buy.
The Act does not specify any conditions that need to be satisfied before the power to make the Instrument may be exercised.
Targeted consultation was undertaken with key stakeholders and Housing Australia, which informed the amendments made by the Instrument. In particular, targeted consultation was undertaken in July 2025 on the Scheme expansion with key stakeholders including the Australian Prudential Regulation Authority, the banking, and LMI (lenders’ mortgage insurance) sectors. These amendments have also been informed by ongoing stakeholder feedback on clarity to support operational activities by Housing Australia.
The Instrument is a legislative instrument for the purposes of the Legislation Act 2003 (Legislation Act). As a direction made by a Minister to a person or body, the Instrument is exempt from sunsetting and from disallowance. The sunsetting exemption is pursuant to paragraph 54(2)(b) of the Legislation Act and item 3 of the table in section 11 of the Legislation (Exemptions and Other Matters) Regulation 2015 (Legislation Exemptions Regulation). The disallowance exemption is pursuant to section 42 of the Legislation Act and item 2 of the table in section 9 of the Legislation Exemptions Regulation. Accordingly, no statement of compatibility with human rights is required under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011.
The Instrument is subject to the automatic repeal process under section 48A of the Legislation Act. This section provides that where a legislative instrument only repeals or amends another instrument, without making any application, saving or transitional provisions relating to the amendment or repeal, that instrument is automatically repealed. By virtue of subparagraph 48A(2)(a)(i), the Instrument is automatically repealed on the day after the commencement of the Instrument which results in the amendment of the Investment Mandate.
The Instrument commenced on 1 July 2026.
Details of the Instrument are set out in Attachment A.
ATTACHMENT A
Details of the Housing Australia Investment Mandate Amendment (2026 Measures No. 2) Direction 2026
Section 1 – Name
This section provides that the name of the instrument is the Housing Australia Investment Mandate Amendment (2026 Measures No. 2) Direction 2026 (Instrument).
Section 2 – Commencement
Schedule 1 to the Instrument commenced on 1 July 2026.
Section 3 – Authority
The Instrument is made under the Housing Australia Act 2018 (Act).
Section 4 – Schedule
This section provides that each instrument that is specified in the Schedules to this instrument are amended or repealed as set out in the applicable items in the Schedules, and any other item in the Schedules to this instrument has effect according to its terms.
Schedule 1 – Amendments
Definitions
Items 1 and 2 of the Instrument amend section 4 of the Housing Australia Investment Mandate Direction 2018 (Investment Mandate) to insert ‘ABN’ and substitute a new definition for ‘major bank’.
The insertion of a definition for ‘ABN’ is required to support the amendment of the definition for ‘major bank’. ‘Major bank’ is amended to remove the reference to the listed banks’ Australian Company Numbers and substitute these banks’ Australian Business Numbers. Further, Macquarie Bank Limited and its related bodies is added to the list of banks identified for the meaning of ‘major bank’.
Meaning of capital city, regional centre and regional area
Item 3 of the Instrument amends subsection 4A(2) of the Investment Mandate by repealing item 1 of the table and substituting a new item 1. Item 1 of the table sets out the regional centres for New South Wales. The Central Coast, Mid-North Coast, Coffs Harbour-Grafton and Richmond-Tweed are added to the Illawarra, and Newcastle and Lake Macquarie.
The purpose of this amendment is to align the regional centres for the Home Guarantee Scheme (Scheme) with the regional centres for the Help to Buy scheme – also administered by Housing Australia.
Simplified outline of Part 5A of the Investment Mandate
Section 28ZF sets out the simplified outline of Part 5A of the Investment Mandate. Part 5A provides for the Scheme.
Items 4 and 5 omit the descriptions of ‘deposit of between 5 and 20 per cent’ and ‘deposit of between 2 and 20 per cent’ to be substituted with ‘deposit of at least 5 per cent and less than 20 per cent’ and ‘deposit of at least 2 per cent and less than 20 per cent’. The intent of these amendments is to ensure that the language in the simplified outline is consistent with operation of the Scheme as set out in the substantive provisions in Part 5A of the Investment Mandate. Namely, that the maximum deposit is less than 20 per cent, rather than 20 per cent. The amendments also align the language of the simplified outline with amendments to section 29C, which are discussed below.
Eligible lender
Section 29B of the Investment Mandate defines an ‘eligible lender’. Subsection 29B(3) sets out the criteria that Housing Australia must include in its criteria for approving entities to be eligible lenders.
Item 6 of the Instrument amends paragraph 29B(3)(e) by repealing the paragraph and substituting the following:
• the extent to which approval of an entity would promote:
– competition in lending markets and related markets;
– consumer choice; and
– diversity amongst eligible lenders, particularly, as between major banks and lenders that are not major banks.
The purpose of this amendment is to step out what promoting competition in lending markets and related markets should support – that being greater consumer choice in lenders, and Housing Australia considering the participation of non-major banks in the Scheme when approving eligible lenders.
Relatedly, items 17 and 18 of the Instrument amend section 29K of the Investment Mandate to require Housing Australia to operate the Scheme in a manner that aligns with the intent of the amendment made by item 6.
Item 18 amends subsection 29K(1) to add a new paragraph (h), which requires that Housing Australia must operate the Scheme in a manner that seeks to promote competition in lending markets and related markets; consumer choice; and diversity amongst eligible lenders, particularly, as between major banks and lenders that are not major banks.
Item 17 repeals paragraph 29K(1)(aa), which provided that Housing Australia must operate the Scheme in a manner that seeks to ensure that a proportion of guarantees issued under the First Home Guarantee in the 2022-23 financial year or a later financial year are issued to eligible lenders that are not major banks. This paragraph is no longer required given that places are now uncapped under the Scheme, and given the amendments made by item 18.
Eligible loan
Section 29C of the Investment Mandate establishes when a loan is an ‘eligible loan’. Paragraph 29C(2)(i) required that ‘the loan-to-value ratio is between 80 and 95 per cent’ for a loan to be an eligible loan for FHBG. Similarly, paragraph 29C(2B)(c) required that ‘the loan-to-value ratio is between 80 and 98 per cent’ for a loan to be an eligible loan for FHG.
Items 7 and 8 of the Instrument amend paragraphs 29C(2)(i) and 29C(2B)(c). Item 7 omits ‘is between 80 and 95 per cent’ and substitutes ‘exceeds 80 per cent but is not more than 95 per cent’. Item 8 omits ‘is between 80 and 98 per cent’ and substitutes ‘exceeds 80 per cent but is no more than 98 per cent’.
These amendments ensure that the requirements cannot be interpreted in a way that unintentionally limits the maximum loan-to-value ratio of Scheme-backed loans below their intended limits of 95 per cent for FHBG and 98 per cent for FHG. The policy intent is that Scheme-backed loans can be written with loan-to-value ratios greater than 80 per cent (i.e. not equal to 80 per cent) and up to (i.e. equal to or less than) 95 per cent for FHBG and 98 per cent for FHG.
Subsection 29C(4) applies when a Scheme-backed loan is refinanced. Item 9 of the Instrument amends paragraph 29C(4)(a) to provide that a Scheme-backed loan can be refinanced where the loan fully satisfies the obligations of the borrower or borrowers under an existing loan and meets the direct costs (if any) of establishing the refinancing loan that are not otherwise met from other sources.
Prior to this amendment, paragraph 29C(4)(a) required a Scheme participant to pay refinancing fees out of pocket, rather than being able to capitalise these costs into the loan, which is standard market practice. The policy intent for this amendment is to align the Scheme’s refinancing rules with market practice to improve eligible lenders’ and eligible home buyers’ experiences with the Scheme. As such, eligible home buyers should be able to capitalise refinancing-related costs into the loan.
Eligible home buyer, eligible single parent and eligible single legal guardian
Section 29D of the Investment Mandate establishes when a person is an ‘eligible home buyer’, ‘eligible single parent’ and ‘eligible single legal guardian’. It also sets out when a person is ‘single’, an ‘adult’ and when they are a ‘dependent child’. Paragraph 29D(5)(a) did not clearly reflect that legal guardians are adults of a dependent child.
Items 10, 11 and 12 of the Instrument amend the Investment Mandate to make clear that a legal guardian is also an adult of a dependent child (in addition to a natural or adoptive parent).
This is achieved through item 10 omitting ‘(the adult)’ from subsection 29D(5), which removes ‘the adult’ as the defined term for ‘a second person’. Item 11 then repeals paragraph 29D(5)(a) and substitutes ‘the second person is a natural or adoptive parent, or legal guardian, of the person’. Prior to the amendment, this paragraph did not identify a legal guardian as a natural or adoptive parent of the person. Finally, item 12 amends paragraph 29D(5)(b) to omit ‘the adult’ wherever it occurs and substitute ‘the second person’.
Price Cap
Section 29F of the Investment Mandate limits the value of properties which are eligible to receive a guarantee under the scheme, according to the median price for locations in each State and Territory.
Item 13 of the Instrument amends the table of property values in subsection 29F(1) for the Northern Territory, to separate price caps for the capital city and the rest of the Northern Territory. This approach reflects the difference in median house prices across the Territory and aligns with the approach taken for other States. As a result of the change, to be eligible for the Scheme the value of a property in Darwin must not exceed $750,000, while in the rest of the Territory the price cap continues to be $600,000.
The form of the guarantee
Section 29H of the Investment Mandate manages the form, limit, and cessation of guarantee. Various amendments are made to clarify operation of this section, to ensure the Scheme does not support loans with a loan-to-value ratio of 80 percent or less.
Subsection 29H(1) provides for when a guarantee becomes payable and subsection 29H(2) provides for limits on the amount of the guarantee.
Item 14 amends subsection 29H(1) to replace the words ‘loan contract’ with ‘loan agreement’, which is more accurate terminology and consistent with the terminology used elsewhere in Part 5A of the Investment Mandate.
Item 15 amends subsection 29H(2), which provides that in the event of borrower default, the amount payable under a guarantee issued by Housing Australia is the lesser of the amount still owed to the lender and another amount. The other amount was determined by a formula set out in paragraph 29H(2)(b), being 20 percent of the value of the property less the deposit paid by the borrower. Item 15 substitutes a new paragraph 29H(2)(b) that provides the other amount is the amount of the loan at the time the loan agreement was entered into, less 80 percent of the value of the residential property.
Prior to this amendment, where an eligible home buyer purchased a property for a price greater than the eligible lender’s assessed value, the calculation of guaranteed maximum liability (GML) could result in a lower than expected GML for the lender by taking into account the value of ‘overpayment’ by the eligible home buyer. This was not intended and could lead to an eligible lender being overexposed to liability.
Subsections 29H(3) and (4) of the Investment Mandate provide for cessation of guarantees. Item 16 amends subsection 29H(3) to align drafting with subsection (4), to ensure they operate consistently. The practical effect of this change is that guarantees will cease when the balance of the loan becomes 80 percent or less than the value of the residential property.
Application
Item 19 of the Instrument amends the Investment Mandate by adding a new Division 10 with section 46 at the end of Part 7.
Section 46 provides that the amendments of the Instrument made by item 3 and items 7 to 16 of Schedule 1 to the Instrument apply to guarantees issued on or after the commencement of the Instrument. This means that the amendments made by item 3 and items 7 to 16 of Schedule 1 to the Instrument will apply to any guarantees issued in relation to any new home loans entered into after commencement of the Instrument, including the refinancing of home loans that were subject to guarantees issued prior to the commencement of the Instrument. This is because when a home loan is refinanced, a new guarantee is issued (see subsection 29C(4) of the Investment Mandate).
Item 3 and items 7 to 16 relate specifically to the issue of guarantees, and so it is appropriate to confine their application to guarantees issued on or after commencement to avoid the retrospective application of the changes on issued guarantees and their ongoing validity. The other items in Schedule 1 relate to the general administration of the Scheme rather than the issue of guarantees in specific circumstances.