Buying your first home can be a daunting experience and expensive investment, but thankfully there are several Government initiatives in Australia that can make it more affordable. These schemes are aimed at helping first home buyers get a foot on the property ladder, whether by reducing the cost of purchasing a property or providing assistance with getting a home loan.
Here is a complete guide to popular first home buyers’ schemes in Australia:
- First Home Guarantee Scheme:
This scheme was launched on 1 January 2020 and is designed to help eligible first home buyers purchase a property with as little as 5% deposit and without the need to take out a Lenders Mortgage Insurance (LMI). The First Home Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS), an Australian Government initiative to support eligible first home buyers purchase a home sooner. It is administered by the National Housing Finance and Investment Corporation (NHFIC) on behalf of the Australian Government. The FHBG allows eligible first home buyers to buy property with a deposit of just 5%. From 1 July 2022, 40,000 new places in the Home Guarantee Scheme became available for the financial year, made up of 35,000 places in the First Home Guarantee and 5,000 places in the Family Home Guarantee.
www.nhfic.gov.au/support-buy-home/first-home-guarantee
Example:
Let’s say John is a first home buyer in New South Wales and he found a property he wants to purchase for $500,000. John has a savings of $25,000 that he can pay as deposit. Normally, he would need to pay Lenders Mortgage Insurance (LMI) to secure a home loan with such a low deposit, which could cost around $12,500. John decides to apply for the FHBG and is approved for a home loan of $500,000 with a deposit of only $25,000 (5% of the property value), thanks to the scheme. This means that he was able to purchase his first home much sooner than he would have been able to without the FHBG.
The FHBG is available to up to 35,000 eligible first home buyers per financial year, which means that there are many others like John who are able to take advantage of this scheme and achieve their dream of homeownership.
- First Home Owner Grant:
This grant is a one-off payment to help first home buyers buy or build a new residential property. While the grant can be helpful in offsetting some of the costs associated with buying a property, it typically cannot be used as part of your deposit. The grant amount varies depending on the state or territory in which the property is located, with some states offering up to $20,000. Eligibility requirements also vary, but generally,
- Be an Australian citizen or permanent resident.
- Has not previously owned a property in Australia.
- Has plans to live in the property as a principal place of residence for a certain period.
www.sro.vic.gov.au/first-home-owner/applying-first-home-owner-grant
- First Home Loan Deposit Scheme:
Previously known as the First Home Loan Deposit Scheme (FHLDS), this scheme helps eligible first home buyers purchase a property with a deposit of as little as 5%. Under the scheme, the Government guarantees the remaining 15% of the deposit, meaning that borrowers can avoid the cost of lenders’ mortgage insurance (LMI). Eligible first home buyers must meet income and purchase price caps, and the scheme is limited to a certain number of places each financial year.
To be eligible for the FHLDS, you must:
- Be an Australian citizen or permanent resident.
- Be at least 18 years old.
- Has not previously owned property in Australia.
- Meet the income and property caps (which vary depending on the location of the Property)
- Family Home Guarantee:
Launched on 1 July 2021, the Family Home Guarantee provides eligible single parents with dependents and who have previously owned a home with a guarantee to purchase a property with a deposit of just two per cent. The Government guarantees up to 18% of the property value, allowing borrowers to avoid LMI. The scheme is limited to a certain number of places each financial year and has income and purchase price caps.
www.nhfic.gov.au/support-buy-home/family-home-guarantee
- New Home Guarantee Scheme:
The New Home Guarantee (NHG) is a federal Government initiative that provides eligible first home buyers with a guarantee to purchase or build a new home with a deposit as low as 5%, without having to pay Lenders Mortgage Insurance (LMI). The scheme is no longer available for new applications from 1 July 2022. The scheme commenced on 1 January 2020 and will run until 30 June 2022.
www.nhfic.gov.au/our-schemes/new-home-guarantee
In conclusion, the Australian Government offers several schemes to help first home buyers enter the property market. Each scheme has its own eligibility requirements, purchase price and income caps, and limits on the number of places available each financial year. It’s important to research each scheme carefully to determine which one might be right for you.
Contact us and let us assist you and provide you with answer to any questions and eligibility criteria accordingly. The places are usually restricted by the scheme and a first come, first serve basis with limited lenders participating. Our brokers are experienced in all schemes and eager to assist you in making your first home dream come true.
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By
Aman Singh @Credit Hub Australia