A Complete Guide to First Home Buyers Schemes in Australia
The first time you buy a home, it can be an expensive and daunting investment. Thankfully, there are a few government initiatives that make the process more affordable. These schemes aim to help first-time homebuyers get on the property ladder by either reducing the price of a property or helping them obtain a mortgage.
Here’s a guide to the most popular schemes for first-time homebuyers in Australia.
- First Home Guarantee Scheme
The scheme, which was launched in January 2020, is intended to assist eligible first-time homebuyers in purchasing a house with a 5% deposit without having to obtain a Lenders Mortgage Insurance. First Home Guarantee is a part of the Home Guarantee Scheme, an Australian initiative that supports eligible first-time homebuyers in purchasing a property sooner. The Australian Government administers it through the National Housing Finance and Investment Corporation. FHBG allows first-time homebuyers to buy Property with just a 5% deposit. Home Guarantee Scheme will be offering 40,000 new spaces for the year 2022. This includes 35,000 First Home Guarantee places and 5,000 Family Home Guarantee places.
Example:
John, a first-time home buyer from New South Wales, has found a property for $500,000. John has $25,000 in savings that he could use as a deposit. He would normally have to pay Lenders Mortgage Insurance to secure a loan with a small deposit. This could cost him around $12,500. John applies for the FHBG. He is approved for a $500,000 home loan with only a $25,000 deposit (5% of property value) thanks to the scheme. He was able to buy his first house much earlier than he could have without the FHBG.
FHBG can be used by up to 35,000 first-time homebuyers per year. This means that many people like John are able to take advantage of the scheme and realize their dream of becoming homeowners.
- First-Home Owner Grant:
This is a one-time payment that helps first-time homebuyers buy or build new residential properties. The grant is a one-off payment that can help offset some of the costs of purchasing a home, but it cannot be used to pay for your deposit. The amount of the grant varies according to the state or territory where the Property is located. Some states offer up to $20,000. The eligibility requirements vary as well but in general,
- You must be an Australian citizen or a permanent resident.
- Not previously owned any property in Australia.
- Plans to reside in the Property for a specified period as your principal residence.
First Mortgage Loan Deposit Scheme:
This scheme, formerly known as the First Home Loan Deposit Scheme (FHLDS), helps first-time homebuyers who qualify to purchase a house with as little as a 5% deposit. The Government guarantees the remainder of the deposit under the scheme. Borrowers can, therefore, avoid paying lenders’ mortgage insurance. First-time buyers who qualify must meet certain income and price limits, and the scheme has a limited number of places per financial year.
You must meet the following requirements to be eligible for FHLDS:
- You must be an Australian citizen or a permanent resident.
- It would be best if you were at least 18 years old.
- You have not owned Property in Australia before.
- The property and income caps vary depending on where the Property is located.
- Family home guarantee:
The Family Home Guarantee, which will be launched on 1 July 2020, allows eligible single parents who have children and previously owned a house to buy a property for just 2% of the purchase price. The Government guarantees up to 18% of the value of the Property, which allows borrowers to avoid LMI. The scheme has a cap on the purchase price and income and is only available in a limited number of locations each year.
New Home Guarantee Scheme
New Home Guarantee is an initiative of the Federal Government that allows first-time homebuyers to buy or build a home for as little as a 5% deposit, and they do not have to pay Lenders Mortgage Insurance. New applications will no longer be accepted after 1 July 2022. The scheme began on 1 January 2019 and will continue until 30 June 2022.
The Australian Government offers several schemes that help first-time homebuyers enter the real estate market. Each scheme has different eligibility requirements, income, and purchase price caps, as well as a limit on the number of places that are available in each financial year. You should carefully research each scheme to find out which one is right for you.
We will be happy to assist and answer any questions you may have. Places are limited by the scheme and on a first-come, first-serve basis. Limited lenders participate. Our brokers have experience in all schemes and are eager to help you make your dream of owning a home a reality.
