The new financial year marks the opportunity to access a raft of grants and incentives aimed at helping more people buy a home. That means now is the perfect time to sort through all the national and state schemes, and finding the ones that are right for you.
To get you started, here’s a quick rundown of what’s on offer. Don’t forget that they could combine to get you on the property ladder this year.
Three National Home Guarantee Schemes
The National Home Guarantee Scheme (HGS) has expanded to offer help to more groups that find it difficult to buy their own home.
All three offer a government guarantee of your below 20% deposit loan. This saves you adding the cost of Lenders Mortgage Insurance (LMI) to your repayments.
No money changes hands, but as that ever-harder-to-save 20% deposit slips out of reach for more people, having a loan with a deposit of 5% or even 2% guaranteed by the government could help you get into the market sooner. Let’s take a brief look at what’s on offer.
The First Home Buyer Guarantee (FHBG) supports up to 35,000 eligible first home buyers each financial year. Your minimum deposit is 5%, while the maximum price and other conditions vary from state to state. The new news is that the scheme now accepts joint applications from friends, siblings, and other family members. Buyers who have previously owned a home may also be allowed to apply as long as their last ownership was at least 10 years ago.
Eligibility criteria for the First Home Buyer Guarantee
To apply home buyers must be:
- applying as an individual or couple (married / de facto)
- an Australian citizen(s) at the time they enter the loan
- at least 18 years of age
- earning up to $125,000 for individuals or $200,000 for couples, as shown on the Notice of Assessment (issued by the Australian Taxation Office)
- intending to be owner-occupiers of the purchased property
- first home buyers who have not previously owned, or had an interest in, a property in Australia.
The Regional First Home Buyer Guarantee (RFHBG) is for eligible first home buyers in regional areas. There are 10,000 places available each financial year to 30 June 2025. Again, the maximum cost of the home and the applicant’s annual income varies state to state but a minimum 5% deposit is needed wherever you are.
The Family Home Guarantee (FHG) supports eligible single parents and single legal guardians with at least one dependent child. That now includes single aunts, uncles and grandparents caring for a child. The minimum deposit needed is just 2%, with 5,000 places available each financial year to 30 June 2025. Again, there are limits on annual income and the cost of the home.
One thing to keep in mind when looking at the National Home Guarantee Schemes is that most, but not all, lenders will include the schemes when assessing your home loan application. Different lenders also have different minimum deposits they will accept, and of course different interest rates. It may save you valuable time and keep your banking record clean if you check with us before applying for any scheme or loan.
State specific grants, stamp duty and shared equity schemes
Regardless of where you are buying, you’ll find that each state and territory has some form of support for first home buyers. Usually, these offer payments or discounts to first home buyers purchasing new properties or house and land packages. These grants are not taxed and don’t have to be repaid, making them worth considering.
Stamp duty is a huge up-front cost for buyers, adding thousands to the price of a property. All the states have a minimum price threshold before stamp duty is charged. They also offer one-off stamp duty concessions for first homebuyers paying below certain amounts. In some states, first homebuyers can also opt to pay a much smaller annual land tax instead of stamp duty.
Shared equity schemes are also broadening the people who qualify. Shared equity is when the state government buys a portion of your home. This reduces your deposit, loan amount and repayments. In return, if and when you sell, they will take that percentage of the sale price. Shared equity is traditionally only offered to key workers. However, in some states, single parents and singles aged over 50 can also apply.
First Home Super Savers Scheme
Another scheme is the national First Home Super Savers Scheme. In this, you make contributions into your super fund to save for your first home. Depending on how many years you’re registered with the scheme, you can withdraw a maximum of $50,000, plus the calculated earnings from those investments. You find out how much you can access by asking for a FHSS determination, and then request a withdrawal when you sign the contract for your home. This takes a minimum of 20 days, so planning is crucial. Because it affects your super, it’s wise to get some financial advice before you do it.
While having more schemes to choose from provides options, sorting through your options can be complicated and time consuming. The capped number on some offers means it’s best to get in touch with us sooner rather than later.
We can work out which schemes you qualify for and put together a buying roadmap, to help you get into your own home sooner.