Australia has a series of grants and concessions aimed at alleviating some of the financial pressure that comes with buying your first home. Buying a property is no easy feat here, with property prices being high in many cities and regions. This article will introduce you to the schemes that can help you with the purchasing or constructing of your first home.
Most of the existing schemes are aimed at those intending to be owner-occupiers, rather than investors. This means that the property you buy is the one you will live in. Of course, after a period of time you may wish to move houses and turn your initial home into an investment property.
The First Home Owner Grant (FHOG) is a nation-wide, state-administered grant offered to first home buyers to alleviate the impact of GST on home ownership. It can go towards covering your deposit, but you’ll usually also need to have further savings. If your savings paired with the FHOG aren’t enough for a deposit, you could look into getting a guarantor home loan.
A guide to deposits, pre-approval, & choosing the right property.
The eligibility requirements for the First Home Owner Grant varies slightly between the states. Some of the common criteria includes:
Check the requirements specific to your state/territory to know whether you’re eligible for a grant.
The size of the grant varies between states and territories:
The First Home Loan Deposit Scheme (FHLDS) is a national government scheme aimed at getting low to middle income first home buyers into the market. With the scheme, some first home buyers are able to purchase a home with as low as a 5% deposit and avoid paying Lenders Mortgage Insurance (LMI).
In February 2021, the Federal Government announced that they would be reissuing approximately 1800 First Home Loan Deposit Scheme guarantees from the 2019-2020 financial year.
It's important to note that if you purchase a home with a low deposit, you'll likely take longer to pay off your mortgage and therefore spend more in interest overall.
To be eligible for the FHLDS, you must fulfil the following criteria, in addition to being a first home buyer:
In addition to income criteria, first home buyers must also purchase a property that is within the limits set out by their state or territory. See the table below for details:
|State/territory||Capital city and regional centres||Rest of state/territory||Other|
|NSW||$700,000 - New homes: $950,000||$450,000 - New homes: $600,000||-|
|VIC||$600,000 - New homes: $850,000||$375,000 - New homes: $600,000||-|
|QLD||$475,000 - New homes: $650,000||$400,000 - New homes: $650,000||-|
|WA||$400,000 - New homes: $550,000||$300,000 - New homes: $400,000||-|
|SA||$400,000 - New homes: $550,000||$250,000 - New homes: $400,000||-|
|TAS||$400,000 - New homes: $550,000||$300,000 - New homes: $400,000||-|
|ACT||$500,000 - New homes: $600,000||-||-|
|NT||$375,000 - New homes: $550,000||-||-|
|Jervis Bay Territory and Norfolk Island||-||-||$450,000 - New homes: $600,000|
|Christmas Island and Cocos (Keeling) Islands||-||-||$300,000 - New homes: $400,000|
Other than the deposit, stamp duty, otherwise known as transfer duty, is usually the largest upfront cost associated with buying a property. Stamp duty is a one-off fee you pay to the government when you buy land or property. It is a state-regulated tax that you must pay for each property you purchase. Luckily, many states in Australia have stamp duty concession or exemption schemes available to first home buyers and other purchasers.
Find out how stamp duty works in your state or territory:
The cost of stamp duty in Australia varies between the states and territories. Stamp duty is calculated considering the following factors:
Unless you are exempt from paying stamp duty or are eligible for concessions, it can be a major expense. For example, let’s say you are in NSW, moving into your second home that you’ve just purchased for $800,000. If this is an established home (i.e. not newly built), you’d pay about $31,000 in stamp duty costs.
On the other hand, if you are a first time home buyer purchasing a $300,000 empty lot of land in NSW, you’d be fully exempt from paying stamp duty. You would also be eligible for a $10,000 First Home Grant.
As you can see, stamp duty costs can range substantially. It’s important to establish how stamp duty works in your state or territory to understand how much you could be charged. Determine how much stamp duty you could be charged with our calculator here.
Find out how much stamp duty you might need to pay.
Several Australian states and territories offer concessions and exemptions on stamp duty for first home buyers. These participating states will give first home buyers concessions or full exemptions if they are purchasing an owner-occupied home valued under a certain threshold.
For example, in Queensland eligible first home buyers can apply for a transfer duty concession if their home is valued below $550,000.
Some states (e.g. Northern Territory) don’t have stamp duty concessions in place specifically for first home buyers. However, you may still be eligible for other concessions. In the Northern Territory, for example, there is a concession available for all home buyers so long as the property will be their principal place of residence.
The HomeBuilder Scheme is not exclusive to first home buyers, but it can be useful if you intend to build a home. It is a $25,000 grant on offer to homeowners who want to renovate or construct a new home.
It was initially launched as part of Australia’s COVID-19 recovery package, applying to building contracts entered into up until the 31st of December 2020. It has since been extended, in a modified version, until 31 March 2021. The grant amount of the modified version is $15,000.
In all states except New South Wales and Victoria, there is a $750,000 property value cap. In NSW, the cap is now at $950,000 and $850,000 for Victoria (as part of the modified package). If you entered into a building contract in November 2020, for example, and didn’t apply for the HomeBuilder grant, you can still apply for it retrospectively.
There are a few conditions associated with the HomeBuilder grant:
Yes, in general you can apply and qualify for multiple first home buyer assistance schemes. However, you may not be eligible for all of the available schemes due to property price caps and other factors.
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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.
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