Qualifying for the First Home Buyers Grant.
What Is the First Home Buyers Grant?
The First Home Owner Grant is a one-off government payment designed to encourage and assist potential first home buyers across the country to purchase a property. The grant was introduced in 2000 to partly offset the effect of the Goods and Services Tax (GST) on buying or building a home.
The size of the grant and the eligibility criteria is different in each state and territory, but generally, the first home buyers grant applies to first-time property owners who are:
- either purchasing an existing home that has never been lived in;
- or building an entirely new home.
In addition to the first home buyers grant, several Australian states and territories offer eligible first-time homeowners reduced rates or exemptions on stamp duty, which could further reduce your costs.
Stamp duty is the one acquisition expense that is likely to poke a significant hole in your budget, so it’s worth checking with your Finance Hub and Networks mortgage broker if you qualify for this concession as well.
How Does the First Home Buyer Grant Differ Across States?
The First Home Owner Grant is a national scheme funded and managed by each state and territory under its own legislation, so you can generally access the conditions on the relevant government website.
Here is an example of the differences between a few states:
| State or Territory | Purchasing a Home | Building a Home | Stamp Duty |
|---|---|---|---|
| New South Wales | You may qualify for a $10,000 grant if you purchased the property on or after 1 January 2016. | You can claim the First Home Owner Grant if your newly constructed home or a substantially renovated home has a total value of less than $600,000. Or if the land you bought for building and the home you plan to build has a combined value of less than $750,000. | $0 for new or established first homes costing up to $650,000. |
| Queensland | You may qualify for a $15,000 grant when you buy a new home costing up to $750,000. | You may qualify for a $15,000 grant when you build a new home costing up to $750,000. | $0 for properties costing up to $500,000 |
| Tasmania | Any first home buyer can claim a $10,000 grant - there is no maximum cost that you can claim the grant on. | $10,000 | 50% exemption for properties costing up to $400,000. |
What Is the First Home Loan Deposit Scheme?
Under the First Home Loan Deposit scheme, the Australian Government partially guarantees some low-deposit home loans each year for eligible low- and middle-income earners who have saved up a deposit of at least 5% of a property’s value.
Having your home loan guaranteed helps secure your deposit, giving you a bit more borrowing power. This can also reduce your Loan to Value Ratio, which means you can avoid paying Lenders Mortgage Insurance on top of your deposit.
Lenders generally require a 20% deposit to avoid LMI costs, which may set buyers back by up to tens of thousands. You’ll have to have a minimum deposit of 5%, and your state government will guarantee the shortfall.
The scheme does have property price thresholds, so it’s important to check if the price bracket you’re aiming for falls below the cap.
For example, in Sydney, the cap is currently at $950,000. In Brisbane, it’s at $650,000 and in Melbourne, it’s $850,000.
There are generally only 10,000 scheme places available in a financial year. However, the 2020 federal budget added 10,000 places to the scheme and updated the price thresholds, to better-reflect the property values in capital cities.
What Is the First Home Loan Deposit Scheme?
The NSW Government allows eligible first home buyers to apply for an exemption or reduction of transfer duty charges under the assistance scheme.
You can apply for assistance under the scheme if you’re a first-time buyer:
- buying an existing home;
- buying a new home;
- buying vacant land on which you intend to build a home.
You can apply for a full exemption if the value of your home (purchased between 1 August 2020 and 31 July 2021) is:
- less than $650,000 for existing homes; and
- less than $800,00 for new homes.
- the value of your new home is between $800,000 and $1 million; or
- the value of your existing home is between $650,000 and $800,000; or
- the value of your block of land is between $400,000 and $500,000.
What Is the HomeBuilder Program?
The HomeBuilder program provides eligible owner-occupiers, including first home buyers, with a grant to build a new home, substantially renovate an existing home or buy an off the plan or new home. The Australian Government recently announced that the HomeBuilder program would be extended to 31 March 2021.
- To be eligible for the $25,000 grant, you must have entered into a contract between 4 June 2020 to 31 December 2020 to build a new home, substantially renovate an existing home or buy an off the plan home/new home.
- To be eligible for the $15,000 grant, you must enter into a contract between 1 January 2021 to 31 March 2021 to build a new home, substantially renovate an existing home or buy an off the plan or new home.
How Can A Finance Hub and Networks mortgage broker Help You with Government Grant?
We Help At Every Stage
At Finance Hub and Networks, we investigate whether you are eligible to claim a grant or concession, as part of our Finance Hub and Networks mortgage brokering process.
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We can advise you on the best suitable option for your circumstances.
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