As many first home buyers are aware, it’s hard to buy property in Australia nowadays. Thankfully, first home buyers aren’t being left behind. The Australian government introduced the First Home Loan Deposit Scheme as a way to support first home buyers to purchase a home sooner rather than later.
This is great news as the First Home Loan Deposit Scheme provides a guarantee for first home buyers with low to middle incomes to be able to purchase their first home with a small 5% deposit. If you were to do this without the Scheme, you would have to suffer the disadvantages of a low deposit home loan. These disadvantages include having to pay Lender’s Mortgage Insurance, a low deposit premium, or having to rely on a guarantor. The scheme essentially helps save you money. This scheme offers up to 10,000 home loans per financial year to those eligible to receive it.\
So what makes you eligible?
The following conditions will generally apply:
- You have to be at least 18 years old
- If you are single, you can’t earn over $125,000 in taxable income per annum. If you are a couple, you can’t earn over $200,000 per annum together.
- You can’t have owned or had an interest in any residential property beforehand.
- If you are a couple, you’re only eligible for the Scheme if you are married or in a de facto relationship. Buying with siblings or parents doesn’t count.
- You have to have a deposit between 5% to 20% of the property’s value
- The First Home Loan Deposit Scheme only applies to owner-occupied homes and not investment properties.
- The maximum purchase price will be subject to the suburb and location of the property, meaning you will have to check to see what the property price threshold for each area is.
But what if you want to build your first home? Well, there’s a scheme for that too. Along with the First Home Loan Deposit Scheme, there is the New Home Guarantee.
These requirements include:
- You must be building or purchasing a new They can be:
- Off-the-plan dwellings
- House and land packages
- Newly constructed dwellings
- Land and a separate contract to build a home
- In order for a property to be considered new, the construction must have been completed on or after January 1, 2020, and cannot have been previously rented or lived in.
What is considered ‘off-the-plan’ is when you enter into a contract of sale dated from October 7, 2020, and the title of the property must be either:
- Not yet issued
- Issued, but yet not able to be legally occupied i.e., the building hasn’t been finished
A house and land package is when you sign a contract to purchase the land from the same person (or company) that is building your new home. To be valid, this contract must be:
- Dated on or after October 7, 2020, and
- Construction is scheduled to begin within 12 months of the signing of the contract and also completed within 24 months of starting.
A land and separate contract to build a home is when the contract to purchase the land is to a different person (or company) who has the contract to build the home. These contracts are subjected to the same requirements as those of the house and land package listed above.
In addition to the First Home Loan Deposit Scheme, first home buyers can supplement their deposit with the First Homeowner’s Grant. The grant gives eligible first home buyers a lump sum payment to add to their deposit. The amount varies from state to state:
- ACT – $0
- NSW – $10,000
- VIC – $10,000 or $20,000 for regional Victoria
- SA – $15,000
- WA – $10,000
- TAS – $20,000
- NT – $10,000
- QLD – $15,000
If you’re a first home buyer and interested in any of the schemes above, contact It’s Simple Finance and begin your journey to owning your very first home.
The New Home Guarantee provides an additional 10,000 home loans for eligible first home buyers either building or purchasing a new home. There are additional requirements for eligibility on top of the requirements listed for the First Home Loan Deposit Scheme.