First home owner grants and schemes available

BUYING YOUR FIRST HOME?

Want to know if you’re eligible for one of the federal or state government offers?

Here is a summary of all the schemes and grants you could be eligible for:

Home Guarantee Scheme (HGS)

HGS is a Federal government initiative and has 3 parts:

The FHBG is an initiative launched in 2019 by the Australian Government to help you buy your first home sooner, with as little as 5% saved.

Generally, when purchasing a home, a 20% deposit is ideal – if the deposit is lower than 20%, typically a Lender’s Mortgage Insurance (LMI) must be paid. However, under this scheme first time owners can purchase or build a home with as low as a 5% deposit and avoid paying LMI.

  • - Places Available: 35,000

    - Minimum Deposit: 5%

    - LMI: Waived

    - Purpose: Intending to be the owner occupiers of the purchased property

    - Applicant: Individual or 2 joint applicants

    - Permanent residents: Australian permanent residents, expanded from only Australian citizens

    - Income: Earning no more than $125,000 for individuals or $200,000 for joint applicants, as shown on the Notice of Assessment issued by the Australian Taxation Office

    - Home Ownership: First home buyers or previous homeowners who haven’t owned property in Australia in the past 10 years

B. Family Home Guarantee - For Eligible Single Parents (FHG)

This FHG aims to assist single parents with at least one dependent child to purchase a family home. The Family Home Guarantee, for eligible single parents on low and middle income, allows a purchase to be made with as little as a 2% deposit, regardless of whether the single parent has bought a home before or is a first home buyer.

This means you can buy your first home with only a 2% deposit and avoid paying LMI.

  • - Places Available: 5,000
    - Minimum Deposit: 2%
    - LMI: Waived
    - Purpose: Intending to be the owner occupiers of the purchased property

    - Applicant:

    o Be single – no spouse or de facto partner. Note: a person who is separated but not divorced is not considered single

    o Be the natural or adoptive parent or legal guardian of at least one dependant.

    o Be legally responsible (whether alone or jointly with another person) for the day-to- day care, welfare and development of the dependent and the dependent is in their care

    - Citizenship: Australian/ New Zealand citizens or permanent residents at least 18 years of age

    - Income: Earning no more than $125,000 per year

    - Home Ownership: Be either first home buyers or previous homeowners who do not intend to own a separate property upon settlement of the guaranteed property they’re buying.

This is the third initiative from the Federal government, the RFHBG aims to provide more opportunities for home buyers outside of the major cities and has been implemented to help home buyers purchase a property in regional areas with a smaller deposit.

  • - Places Available: 10,000
    - Minimum Deposit: 5%
    - LMI: Waived
    - Purpose: Intending to be the owner occupiers of the purchased property
    - Applicant: Individual or joint applicants
    - Citizenship: Australian/ New Zealand citizens or permanent residents at least 18 years of age
    - Income: Earning no more than $125,000 for individuals or $200,000 for joint applicants, as shown on the Notice of Assessment issued by the Australian Taxation Office
    - Home Ownership: First home buyers or previous homeowners who haven’t owned property in Australia in the past 10 years

    - Regional Areas

    o Regional checker
    https://www.housingaustralia.gov.au/support-buy-home/regional-checker -

    Home buyers can enter the suburb or postcode they would like to purchase in to check eligibility for the RFHBG.

What are the maximum property prices for the First Home Guarantee and Family Home Guarantee?

Source NHFIC. You can also see here the property price caps for the Regional First Home Buyer Guarantee

*The capital city price thresholds apply to regional centres with populations over 250,000 (Newcastle; Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast and Sunshine Coast), recognising that these dwellings in regional centres can be significantly more expensive than other regional areas.

You can only be eligible for one of the Federal Government Guarantees

If you was/were eligible for the RFHBG or FHG, and a FHBG was already issued, this will impact the validity of the FHBG so it’s imperative that you know which Guarantee you’re eligible for.
Evidence will be required to demonstrate which scheme you will be eligible for.

Participating lenders

If you was/were eligible for the RFHBG or FHG, and a FHBG was already issued, this will impact the validity of the FHBG so it’s imperative that you know which Guarantee you’re eligible for.
Evidence will be required to demonstrate which scheme you will be eligible for.

What documentation is needed?

In addition to the regular documentation required for a loan application such as your licence, payslip(s), bank statements etc, here are the more specific documents required:

- Your Medicare card, and position on the card

- Your ATO Notice of Assessment for the previous financial year. You can obtain this through the ATO portal accessed via MyGov.

  • - Smaller deposit required (Minimum 5%)

    - Avoid paying LMI when the deposit is lower than 20%

    The other way to avoid paying LMI is to have a guarantor that is a family member who can provide the lender with another property to take as security.

    With 20% + costs saved, or a guarantor, the bank is only lending you 80% against the property you’re buying, or, 80% or less against both the property you’re purchasing and the guarantors property.

    In this instance now with these schemes, the Federal Government is providing the guarantee and being the guarantor. Under FHG you are only required to have 2% saved and the Federal Government is guaranteeing 18%. Under FHBG and RFHBG you only need 5%, and the Federal Government is guaranteeing 15%.

    The other benefit is you can add other state government support initiatives on top of this. See below, such as the First Home Buyers Assistance scheme, First Home Owners Grant (new home) scheme, First Home Super Savings Scheme.

  • The Cons:

    - Higher loan amount against the value of the property (Loan to Value ratio – LVR)

    - Access to limited panel of lenders that support the scheme

    Some experts in the industry believe these schemes will only drive-up prices and potentially add to inflationary pressures.

    Other industry pundits have argued that these price caps are too small, limiting your entry into the market.

    Another factor is that because these loans are at 95% or 98% of the property value, in the event property values do fall, there is a risk of the buyer having negative equity in the property for a short period of time. It would mean that they would need to ride out the cycle they were in if they wanted to sell to make a profit

“What about my superannuation savings?”

“Can this amount be put towards a first home buyer’s deposit?”

The answer is, YES!

The First Home Super Saver Scheme allows first home buyers to use money in their super fund to save up for a deposit to buy their first home.

To be eligible:

- Citizenship: You do not need to be an Australian citizen or resident for tax purposes to use the FHSS scheme

- Home Ownership: Cannot have previously owned property in Australia (unless determined by the ATO the lost due to financial hardship)

- First time: You have not previously made a FHSS release request.


  • - You can start saving under the FHSS scheme by:

    o Entering a salary sacrifice arrangement with your employer to make voluntary concessional contributions.

    o Making voluntary personal contributions. These can be:

    a) concessional - if you have claimed income tax deduction for them, or

    b) non-concessional - if they are after tax contributions and no tax deduction has been claimed.

    - Maximum contribution limit taken into account for the scheme annually: $15,000
    - Maximum total contribution release amount across all years: $50,000

    - Only contributions made after 01 July 2017 are eligible for release under the FHSS scheme
    - Super guarantee contributions made by your employer are NOT eligible for the FHSS scheme
    - Check that your nominated super fund/s will release the funds.
    - If you have an outstanding debt with the ATO or another Commonwealth agency, your FHSS release amount may be offset against this debt. Payment of your FHSS amount could be delayed or reduced (including to nil) or both if you have an outstanding Commonwealth debt.

    - Determination: To withdraw your voluntary super contributions under the FHSS scheme, a determination request needs to be made to the ATO. The request can be made by signing into myGov -> Australian Taxation Office (ATO) -> select Super -> select Manage -> select First Home Saver.
    The determination request is to be made prior to signing a Contract of Sale for the property purchase.

    - A release request can only be made once under the FHSS scheme. You can request a release of the maximum amount as stated in your determination or choose a lower amount. The process is the same as requesting for a determination. The ATO will issue a release authority to your super fund/s requesting they send the FHSS release amount to them. It will usually take between 15-20 business days for the fund to release your money and for the ATO to pay it to you.

    - You have 12 months from the date you make a valid release request to notify the ATO if you have signed a contract to purchase or construct your home, or to recontribute the required amount back to your super fund.

“Can I combine the federal schemes on offer, with those offered by my state”?

the answer is, YES!

State Government Schemes

Each state has its own First Home Owner initiatives.

In NSW there are 3:

This scheme is available for first home buyers buying a new home, an existing home or even vacant land. First home buyers may be entitled to a concessional rate of stamp duty (also known as transfer duty) or even exempt from it altogether if they are under the price threshold.

What is the price cap or thresholds?

Source Revenue NSW

  • Contracts exchanged on or after 1 July 2023

    Eligible first home buyers must:

    • move into the home within 12 months after settlement, and

    • live in the property as your principal place of residence for at least 12 continuous months.

    Contracts exchanged between 1 July 2017 and 30 June 2023 (inclusive)

    Eligible first home buyers must:

    • move into the home within 12 months after settlement, and

    • live in the property as your principal place of residence for at least 6 continuous months.

    Members of the Australian Defence force

    If you are a member of the permanent forces of the Australian Defence Force when you exchange contracts, you won’t have to meet these residence requirements if you and everyone you’re buying with is on the NSW electoral roll.

    Changes in living arrangements

    If your circumstances change and you will not be able meet the residence requirement you will no longer be eligible for the scheme. You must let Service NSW know straight away to arrange for the correct duty to be paid. Otherwise, you will face the possibility of interest and penalties.

$10,000 grant available to purchase or build a new first home. The new home can be a house,townhouse, apartment, unit or similar that is newly built, purchased off the plan or substantially renovated.

  • - $600,000: For a purchase of a newly built house, townhouse, apartment, unit or similar

    - $750,000: For a purchase of vacant land with a building contract - the value of the vacant land plus the value of the comprehensive home building contract plus the cost of any building variations done together must not exceed $750,000.

Help To Buy Scheme - not yet formalised

The "Help to Buy" scheme, in its attempt to solve the housing crisis, offers up to 30 per cent equity for existing homes and 40 per cent for new builds, with buyers needing just a 2 per cent deposit. This equity share must be repaid though, and critics argue the scheme doesn’t address the core issue - housing supply. The program is capped at 10,000 eligible households per year over four years.

It's important to note that this 30 or 40 per cent, or whatever the portion is, will be required to be repaid over time and if you sell, the government needs their portion back. While this will help many first home buyers, the argument against this initiative is that it simply doesn’t propose to build any new homes and supply is one of the reasons, amongst many, which is causing the housing crisis.

Instead of paying the LMI, the government will instead co-own the house in proportion to your contribution. The size of the equity contribution available can vary from up to 30% for existing homes to up to 40% of the purchase price for a new home. This aims to assist eligible home owners to enter the property market sooner with a smaller deposit and benefit from a smaller mortgage and smaller mortgage repayments. While you would not be required to pay rent on the portion of the home held by the Government, it is expected that the Government’s equity contribution be paid down over time or paid back if you sell.

More information to come.

  • - Minimum Deposit: 2%
    - Purpose: To live in the property being purchased
    - Home Ownership: Not own any other land of property
    - Citizenship: Australian/ New Zealand citizen or Australian permanent resident

    Eligibility:

    o Single parents: must have a dependant child or children

    o Older singles: must be 50 years of age or above

    o First home buyer key workers: must be employed as nurses, midwives, paramedics, teachers, early childhood educators or police officers

    - Gross income: No more than $93,200 for single applicants or $124,200 for couples

    - Property price limits: Participants must buy a home in NSW with the maximum property price determined by the home’s location:

    o $950,000 - Sydney and major regional centres (Newcastle & Lake Macquarie, Illawarra, Central Coast and North Coast of NSW)

    o $600,000 – other regional areas of NSW

    Property types:

    o a house, townhouse, apartment/unit/flat or duplex

    o a vacant block of residential land, together with an eligible comprehensive home building contract for a new home

    o a property that is set to be demolished, together with an eligible comprehensive home building contract for a replacement home.

    Lending Partners:

    o The Shared Equity program is currently available through Bendigo Bank and Unity Bank

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