16Minimum and maximum contributions to purchase price

16  Minimum and maximum contributions to purchase price

 (1) The contribution made by Housing Australia, on behalf of the Commonwealth, to the purchase price of a relevant property under an arrangement must fall within the limits set out in the following table.

 

• Commonwealth’s contribution
• Property type Minimum contribution Maximum contribution
• Existing dwelling 5% of purchase price 30% of purchase price
• New home 5% of purchase price 40% of purchase price

Note: The remainder of the purchase price will be supplied by the participant’s deposit and funding from a participating lender secured by way of a mortgage.

 (2) However, Housing Australia must not contribute, on behalf of the Commonwealth, less than the amount required to ensure that its contribution and the participant’s deposit will together equal at least 20% of the value of the property as assessed by the participating lender mentioned in paragraph 21(1)(a).

Note: Where the Commonwealth’s contribution, and the participant’s deposit, together equal at least 20% of the value of the property, the participant will not need to bear the cost of lenders’ mortgage insurance.

Example: If the participant is contributing 5% of the assessed value as a deposit, Housing Australia’s minimum contribution amount would be 15% of the assessed value.

 (3) Housing Australia must determine the percentage that the Commonwealth will contribute (the agreed percentage), taking into account:

 (a) the percentage (if any) that a participant requested in their application; and

 (b) the principle that a participant must contribute as large a deposit as can reasonably be required in light of their personal circumstances and financial capacity.

Note: The agreed percentage must fall within the limits set out in subsection (1) at the time the arrangement is entered into. However, on or after settlement, it is possible to vary the percentage of the value of the relevant property to which the Commonwealth is entitled in accordance with subsections 25(3) and (4). Accordingly, that percentage might subsequently fall outside of the ranges in subsection (1) of this section.

Division 3—Who is an eligible applicant?