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August 12, 2021

First Home Loan Deposit Scheme

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State
Amount
Conditions
ACT
n/a
From July 1 2019, the FHOG ACT has been replaced with exemptions on stamp duty(see below section 1.5).
NSW
$10,000
To be eligible, your first home must have a total value below $600,000, and beeither newly constructed or ‘substantially renovated’*. If you plan to build a newhome from scratch, you can still be eligible as long as your land plus the home youbuild have a combined value of less than $750,000.
NT
$10,000
Your income and the price of your home don’t affect the FHOG NT, and the grant isavailable if you buy or build a new house, apartment, duplex or townhouse.
QLD
$15,000
To be eligible, you need to buy a brand new home or build a home from scratch withthe total value (including the land) below $750,000. You may also be eligible if youbuy off the plan or an established home that’s been substantially renovated*.
SA
$15,000
You are only eligible when you buy or build a brand new home, the grant is notavailable if you buy an established home. You can choose from a house,apartment, townhouse or villa, but you will only be able to claim the FHOG SAif you pay below $575,000 for your home.
TAS
$20,000
You are only eligible when you buy or build a brand new home, the grant is notavailable if you buy an established home. The FHOG in Tasmania is currentlyavailable until 30 June 2022. Off the plan purchases are also eligible. In Tasmaniathere is no limit on the purchase price and the grant is not means tested.
VIC
$10,000
The FHOG is available if you buy a newly built home or if you choose to build a homefrom scratch in Victoria. Your first home can be a house, townhouse, apartment, or unitbut it must be valued at $750,000 or less, and it must be a new home – being sold asa home for the first time, and less than five years old
WA
$10,000
You are only eligible when you buy or build a brand new home, the grant is notavailable if you buy an established home. However, a home that has beensubstantially renovated* may be considered a new home. There are limits on whatyou can pay for your first home to be eligible. If you’re located south of the 26thparallel, which basically covers all the Perth metropolitan area, you can claim theFHOG WA if your new home is worth up to $750,000 – this includes the value of theland plus buildings. If you buy or build a home north of the 26th parallel, the propertymust be valued up to or below $1 million.

*Substantially Renovated means all, or most, of the building, has been removed or replaced. As a guide,substantial renovations include replacing or altering foundations or replacing or altering floors.

5% Deposit Scheme

What is the 5% Deposit Scheme?

The First Home Loan Deposit Scheme is a federal initiative from the Australian Government to assist first home buyers across Australia in purchasing their first home sooner.
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This scheme will do this by allowing first time buyers to pay a deposit as little as 5% without paying lenders mortgage insurance (LMI). Most banks and lenders require a minimum deposit of 20% of the property’s value for the borrower to be exempt from LMI.
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LMI is an insurance that protects the lender, not you. It’s usually a one-off payment made by the borrower at the time of loan settlement to allow the lender to have confidence in offering you a home loan with less than 20% deposit.
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This scheme works as the government will underwrite the loans instead of the borrower.

FY2021-22 Price Caps

The government has also capped the number of homebuyers it will support at 20,000 per year, which means a relatively small number of people will benefit (more than 110,000 first homes were bought in 2018).
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As part of the 2021-22 Federal Budget, the Government has announced from 1 July 2021, 20,000 First Home Loan Deposit Scheme places will be available for the 2021-22 financial year.
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Due to this, not all properties will be eligible to be purchased under the government’s home deposit scheme. The scheme will only underwrite loans for ‘entry properties’, excluding high-value properties. There is no fixed maximum value for properties eligible under the scheme, as price caps will be determined relative to the property’s local market.
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It is important to note that 10,000 of the 20,000 available spaces for this scheme will only be applicable to first home buyers who are looking to build or purchase a newly built home, under the FHLDS (New Homes guarantee section of the scheme (see 2.4) while the remaining 10,000 are allocated for first home buyers looking to purchase an existing property.
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Below is a guide on the price caps associated in each state for all applications submitted in FY2021-22, however, you will need to check what the property price cap is in your area.

Eligibility

The following criteria is used to determine eligibility as a first home buyer under the scheme:

Income test: Singles with a taxable income less than $125,000, couples less than $200,000 for the previous financial year. Please note to apply for a place in this scheme from 1 July 2021 to 30 June 2022, you will need to provide the relevant Notice of Assessment from the ATO for the previous financial year.

Prior ownership test: This scheme requires you to be a genuine first home buyer. Therefore, you must provide proof you have never owned or held interest in property in Australia before. This includes commercial property, investment or company title properties.

Citizen test: The scheme is only open to current Australian citizens. Minimum age: You need to be at least 18 years or older to apply.

Deposit requirement: To be eligible, first home buyers must show that they have saved at least 5% of the value of the property they are purchasing.

Owner occupier requirement: Similar to the FHOG to be eligible you will need to move into the property within six months of owning your home and continue to live in that property for so long as your home loan has a guarantee under the Scheme.

The FHLDS for new homes

As mentioned above 10,000 of the 20,000 places are allocated for the New Homes Guarantee section of the FHLDS, available from 1 July 2021 to 30 June 2022, specifically targeting first home buyers who build or buy a newly constructed home.
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The eligibility requirements for the new home guarantee section of the scheme are similar to first home buyers purchasing an existing home in terms of the above requirements.
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However, to be eligible for the 10,000 places in the New Homes guarantee scheme, you will need to build or buy one of the following and meet the basic conditions associated:

Newly-constructed dwelling: Property has completed construction on or after 1 January 2020 and has not been sold as a residential premises, rented or leased, and never been lived in. The property may also be eligible if it has been substantially renovated to replace a demolished premises.

Off-the-plan dwellings: When entering into a contract of sale and the title of the property has not been issued or the property can’t be legally occupied. To be eligible the contract of sale must be dated on or after 7 October 2020 and you need to move into the property within 6 months of the occupancy certificate being issued.

House and land packages or Land and separate contract to build a home:
To be eligible for the FHLDS you must enter into an eligible building contract dated on or after 7 October 2020 to build a new home, start building within 6 months of entering the contract, finish building within 24 months and move into the property within 6 months of the occupancy certificate being issued.

Building contracts: Building contract must be with a licensed or registered builder and specify a fixed price for the construction of the dwelling.

How to apply

The scheme is administered by the National Housing Finance and Investment Corporation (NHFIC) and theyhave appointed 27 participating lenders that will approve loans under this scheme.

You are able to apply for the 5% deposit scheme through your Buyer Ready Team. They will be able to submitan application for the scheme to one of the participating lenders with your home loan application.

Alternatively you are able to apply directly with one of the lenders.
The full list of lenders can be found atwww.nhfic.gov.au/what-we-do/fhlds/

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Other Grants

Family Home Guarantee

This new scheme announced in the 2021-22 Federalbudget allows single parents to be able to get a home loan with a 2% deposit, as the government’s scheme aims to support single parents with dependants (who are predominantly women) to enter or re-enter the housing market. Commencing on 1 July 2021, the Family Home Guarantee scheme will provide 10,000 places to eligible single parents over four financial years to 30 June 2025. Similarly, to the 5% deposit scheme, the family home guarantee is administered by the NFHIC and allows single parents to purchase an existing home or build a new property with a low deposit while avoiding LMI. Although this grant is not specifically for first home buyers, eligible first home buyers are able to apply.

Stamp Duty Concessions

Stamp duty is one of the upfront costs that apply when you buy a home or vacant land. It is a state government tax and thereforethe rates of duty differ. The amount you will pay for stamp duty will depend on where you are buying, and how much you pay for your home or vacant land. As stamp duty is a state government tax, the concessions on stamp duty will differ from state to state and can be provided with and without the FHOG in most cases.

First Home Owners Grant

The First Home Owners Grant is a financial helping hand from your state or territory government to help you buy your first home. It is a lump sum of cash available to first home owners to help with the cost of buying a first home or vacant land to build on. The grant doesn’t have to be repaid and is not taxable, but there are strings attached. As the FHOG is funded by state governments, there are different amounts available in each state and territory. What you will receive depends on where you are buying.

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