Buying your first home is exciting, but can be daunting. Just what you may be entitled to as a first home buyer can be quite confusing.
Let’s take a quick look at the latest updates.
Family Home Guarantee
The Australian Government announced the Family Home Guarantee as part of the 2021-22 Federal Budget. This is specifically designed to support eligible single parents purchase their first home or re-enter the property market with a deposit of as little as 2 percent.
There will be 10,000 Family Home Guarantee places available through a panel of participating lenders beginning in the 2021-22 financial year. Get more information and eligibility requirements on the National Housing Finance and Investment Corporation website
First Home Loan Deposit Scheme (New Homes)
An additional 10,000 First Home Loan Deposit Scheme (New Homes) places will also be made available for the 2021-22 financial year, specifically for eligible first home buyers building or purchasing new homes. This is in addition to the 10,000 spots available under the First Home Loan Deposit Scheme (FHLDS).
Find more information about FHLDS (New Homes) and FHLDS, including eligibility requirements, on the National Housing Finance and Investment Corporation (NHFIC) website.
So What is the First Home Loan Deposit Scheme?
This is an Australian Government initiative to support eligible first home buyers with purchasing a home sooner.
NHFIC (National Housing Finance and Investment Corporation) provides a guarantee for eligible first home buyers on low and middle incomes so that they can purchase a home with a deposit of as little as 5%.
The Scheme supports up to 10,000 home loans each financial year through a panel of participating lenders.
Normally you would need to save at least 20% of the property’s value to secure a home loan and avoid paying Lenders Mortgage Insurance or Low Deposit Premium or to avoid relying on a guarantor.
With the First Home Loan Deposit Scheme, you need to contribute a minimum of 5% of the property’s value towards the deposit. NHFIC then provides a guarantee to the lender covering up to 15% of the property’s value.
Check your potential eligibility for the First Home Loan Deposit Scheme, on the NHFIC website.
The following conditions will generally apply:
- Australian citizens, at least 18 years of age. Permanent residents are not eligible
- Applicants must not have previously owned or had an interest in a residential property, either separately or jointly with someone else (this includes residential strata and company title properties, regardless of whether it was an investment or owner-occupied property and whether it was ever lived in)
- Only singles with a taxable income of up to $125,000 per annum and couples with a combined taxable income of up to $200,000 per annum may be eligible
- Couples are only eligible if they are married or in a de facto relationship. Other persons buying together, including siblings, parent/child or friends, are not eligible
- The Scheme will only apply to Owner Occupied home loans paid on a principal and interest basis (property investment and Interest Only loans are excluded). If the loan relates both to the purchase of vacant land to the construction of a house on the land, the loan may still be an eligible loan even if the terms of the loan agreement permit Interest Only payments for a specified period
- Applicants must have a deposit of between 5% and 20% of the property’s value
- Your maximum property purchase price is subject to the suburb and postcode of your new property. You can check the property price threshold for your property’s suburb and postcode using NHFIC’s property price threshold tool
Note: You can only receive the Government Guarantee once. If you have entered the Scheme but were unable to purchase a property in time, you can request another place.
Are you eligible for the FHLDS (New Homes)?
Check your potential eligibility for the FHLDS (New Homes) on the NHFIC website. In addition to the First Home Loan Deposit Scheme eligibility requirements listed above, the following conditions will generally apply:
- Applicants must build or purchase a new home including:
- newly constructed dwellings
- off-the-plan dwellings
- house and land packages
- land and a separate contract to build a new home.
- A newly constructed dwelling refers to properties that completed construction on or after 1 January 2020 and have not previously been rented, leased or lived in. You can learn more about these requirements on the NHFIC website.
- An ‘off the plan’ purchase is one where you enter into a contract of sale dated on or after 7 October 2020 for the purchase of a property where:
- the title to the property has not yet been issued, or
- if title to the property has been issued, it cannot yet be legally occupied, for example the building of the property has not yet finished.
- A house and land package is where you build a new home by entering into a contract of sale to purchase land from the same person (or persons within the same corporate group) as the person who you enter into a contract with to build your new home, and:
- the building contract is dated on or after 7 October 2020; and
- construction is scheduled to commence within six months of entering into the contract and complete within 24 months of starting.
- A land and separate contract to build home is where you build a new home by entering into a contract of sale to acquire land from a person who is different to the person you enter into a contract with to build your new home, and;
- the building contract is dated on or after 7 October 2020; and
- construction is scheduled to commence within six months of entering into the contract and complete within 24 months of starting.
- Separate property price thresholds apply for the FHLDS (New Homes). You can check the property price threshold for your property’s suburb and postcode using NHFIC’s property price threshold tool.
Note: You can only receive the Government Guarantee once. If you have entered the Scheme but were unable to purchase a property in time, you can request another place.
How do you apply?
Speak to a Home Lender/broker who will guide you through the application process.
Your Home Lender/broker will assist you with the documents required, lodge them on your behalf and keep you updated on progress of your application.
Note: You will need to purchase your home within 90 days of approval on the Scheme.
More first home buying assistance grants & concessions
First Home Owners Grant
The First Home Owner Grant is a government scheme that was introduced in 2000 to offset the effect of Goods and Services Tax (GST) on buying or building a home. It’s a one-off payment for eligible first home buyers who purchase or build a residential property to live in. Eligibility isn’t based on financial considerations such as your income.
Visit the First Home Owners Grant website for more information.
Stamp duty concessions
Stamp duty is a tax levied by state or territory governments on certain purchases, including buying a home, land, or investment property. Depending on your state or territory, you may be eligible for concessions as a first home buyer.
The First Home Super Saver Scheme
The First Home Super Saver Scheme allows you to save money for your first home using your superannuation fund. This scheme, run by the Australian Taxation Office (ATO), helps first home buyers save faster by allowing them to withdraw voluntary super contributions they’ve made to their super.
For more information, visit the ATO website.
Note: It’s always best to speak with a Home Lending Specialist, your Bank / Broker who will guide you through your first home purchase.
Acknowledgements: Commonwealth Bank, NHFIC (National Housing Finance and Investment Corporation), St. George Bank