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BSB 805 050

First Home Buyer Guide: Grants, Schemes & Incentives

If you’re saving for your first home, we’re here to help. We've made understanding the Government’s grants and schemes nice and easy.

A common first home buyer tip you’re likely to hear is that you should save as much as possible for your deposit. That way, you’ll have less debt overall, pay less interest and less fees. While this is a good principal, not everyone has a financial situation that makes this possible.

Luckily, there’s some great Government-funded grants, schemes and incentives that can help boost your deposit, avoid taxes and fees, as well as use your super to boost your deposit. We’ve outlined some of these programs to help show how each could help you get into your own place sooner.

Each program has its own criteria and conditions, so always do plenty of research on each one before factoring them into your budget. When in doubt, you can always chat with our team for more personalised information on your own eligibility.


What first home buyer incentives am I eligible for?

We speak to first home buyers (like you!) every day. Something that comes up regularly is that it’s confusing to work out which grants and schemes you’re eligible for. To simplify things, we’ve come up with some general criteria you’ll need to meet if you’re interested in any incentives.

While incentives vary by state and territory, you must meet these criteria to be eligible for most:

  • You must be an adult, aged 18 years and over;
  • You must be an Australian citizen (permanent residents may be eligible for some programs);
  • Any grants you’re paid may only be put towards a home which you will live in.

If you don’t meet these criteria, you’re going to have limited options for assistance to purchase your property. If you can meet these guidelines, you’ve passed the first hurdle and have a better chance of being eligible for the grants and schemes below. That said, always read the fine print and talk to a first home buying expert before you assume you’re eligible for assistance.

 


First Home Loan Deposit Scheme (FHLDS)

Putting down a deposit of 20% or more on your home loan can do more than save you interest. If you put down less than a 20% deposit, you’re liable to pay for something called Lenders’ Mortgage Insurance (LMI). This is insurance to protect your lender in case you can’t make your mortgage repayments — and it can be expensive!

To help you avoid paying for LMI, there’s a Government program called the First Home Loan Deposit Scheme (FHLDS). If you can provide a minimum of 5% of your home loan value as a deposit and apply to borrow through an approved lender — that’s us! — the Australian Government will guarantee up to 15% of the value of the property. This doesn’t mean that the Government pays for the remaining part of your deposit, they are only guaranteeing the lender that you will pay it off.

It’s very important to realise that this scheme is in hot demand and only has a limited number of spaces available. In July 2020, another 10,000 scheme places were released and interest in applying for the scheme must be registered in advance. There are a number of conditions you’ll have to meet before you can apply, including:

  • You must be an adult, an Australian citizen, and be buying your first ever property;
  • You must live in the property;
  • You must earn less than $125,000 in the previous tax year as an individual or less than $200,000 as a couple;
  • You must have saved a 5% deposit made up of genuine savings;
  • The property must not exceed the maximum purchase price for your state or territory.

You can visit our detailed page on the FHLDS and register your interest here.


HomeBuilder Grant

This is the newest of all the grants and schemes on this list — it came into effect on 4 June 2020 and only runs until 31 December 2020. This grant was designed in response to COVID-19 to help boost the housing market and economy, which might include helping you! It’s essentially a tax-free $25,000 cash grant for anyone who is eligible.

HomeBuilder Grant eligibility conditions are pretty strict, but (on top of the general criteria we already mentioned) here’s a quick rundown of some important points:

  • The grant is available for a new build where the house and land value does not exceed $750,000;
  • This grant is not limited to first home owners;
  • The grant is not available if your building contract has already commenced;
  • Construction needs to start within three months of the signed contract date.

If you can meet these requirements, plus the other conditions outlined in our page about the HomeBuilder Grant, the $25,000 could help cover the costs of a new home.


First Home Owner Grant (FHOG)

The FHOG is a cash grant designed to help people who have never owned property before get into their first home. Every state and territory offers their own version of the FHOG — so really, this grant actually refers to a few different grants that all go by the same name.

If you’re on the market to buy or build your very first home, the FHOG is designed for you! Unfortunately, if you (or your co-purchaser if you have one) have owned any real estate or claimed this grant before, you won’t be eligible.

If you think you might qualify, you can read more about eligibility for the First Home Owner Grant here. Keep in mind, the grant varies depending on which state or territory you purchase in, so pay attention to the relevant section for where you live. For example, in SA there is up to $15,000 available to buy or build a new home, while in the ACT this value is only $7,000, and in regional VIC the grant is worth $20,000! Again, keep an eye on the maximum property values in your state/territory so that you don’t overspend and miss out.


Stamp duty exemptions: First Home Buyer Assistance Scheme

When you buy a property in Australia, you need to pay a tax known as either stamp duty (in NSW, ACT, VIC, SA, NT and SA) or transfer duty (in QLD, TAS and WA). The amount you pay depends on how much you pay for the property. It’s paid to the state/territory Government that the property is located in.

Stamp duty can be one of the largest upfront costs of purchasing any property. Luckily, there are exemptions from these taxes for first home buyers depending on which state or territory you purchase in.

In NSW, stamp duty exemptions come under the First Home Buyer Assistance Scheme (FHBAS). This scheme can potentially save you tens of thousands of dollars on the purchase of your first home. You should do your research to see if you’re eligible for the FHBAS and find out how much it could potentially save you. As an example, if you’re buying your second home in NSW and it’s worth exactly $650,000, you’d pay nearly $25,000 in stamp duty. However, under the FHBAS, you wouldn’t pay any stamp duty. It’s certainly worth reading into if you’re a first-time buyer.


First Home Super Saver Scheme (FHSS)

You probably know that your employer contributes an extra 9.5% of your pay into your superannuation fund, and that you can’t really access that money until you retire. What you might not know is that you can use your super fund to save money for a deposit on your first home.

Under the First Home Super Saver Scheme, you can make voluntary contributions of up to $15,000 per year (up to a total of $30,000) to your super fund now, then withdraw that money in the future just before you purchase your first home.

If you’re interested, you can read more about how the FHSS can help you save for a home loan deposit. Otherwise, you can reach out to our team to discuss any of the grants or schemes we’ve talked about above. There’s plenty of support available but it’s best to ensure that you’re applying for grants that are right for your own financial situation.


This article is for information only and is not intended to constitute financial advice. Any views expressed are the views of People’s Choice Credit Union solely. This information must not be relied on as a substitute for financial planning, legal, tax or other professional advice.

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