A Guide to Government Grants & Schemes for First Home Buyers

Unlocking the Door to Your First Home: A Guide to Government Schemes for First-Time Buyers

Written by Maria Anderson and Jonathon Hides

Are you dreaming of owning your first home but feeling overwhelmed by the financial hurdles? Don’t worry, because help is at hand. In this comprehensive guide, we will unlock the door to your first home by exploring the various government schemes available for first-time buyers.

These government schemes are designed to make homeownership more accessible, providing financial assistance and support to those taking their first step onto the property ladder. From Stamp duty concessions to Deposit Guarantee schemes, there are a range of options to suit different budgets and circumstances.

Whether you’re a young professional, a couple starting a family, or single parent, these schemes can make all the difference in turning your dream of homeownership into a reality.

So, grab a cup of coffee and get ready to dive into the world of government schemes for first-time buyers. We’ll guide you through the eligibility criteria, the benefits of each scheme, equipping you with the knowledge and confidence to take that important first step towards owning your own home.

First Home Guarantee Scheme

What is it?

The First Home Guarantee Scheme (FHBG) is designed to help people buy their first home with as little as little as 5% deposit. Usually a 20% deposit is required to purchase a home and avoid Lenders Mortgage Insurance (LMI). However, under the First Home Guarantee the government can provide a limited loan guarantee of up to 15% of the home value. This helps people to break into the housing market with a minimal deposit and avoid LMI. 

Key points:

  • Price caps are put in place depending on the property’s location
  • You must move into the property within 6 months of  owning your home
  • You must use the property as your primary residence until your home loan no longer has a government guarantee under the scheme

To be eligible, you must:

  • be an Australian citizen aged 18 years or older
  • have earned less than $125,000 (singles) or $200,000 (combined couples) in the last financial year
  • have never had any ownership in property. This includes: residential, investment and/or business property

Numbers:

  • Price caps are in place for properties that can be purchased through the FHBG scheme.
  • The price caps for capital cities are also applied to regions with populations above 250,000. Examples of these include: The Gold Coast, Sunshine Coast, Newcastle, Lake Macquarie, Geelong and Illawarra.
  • The price caps applied to states and regions can be seen below:
State/TerritoryPrice Caps for FY22-23
Capital City/Regional CentreRest of State
NSW$900,000$750,000
VIC$800,000$650,000
QLD$700,000$550,000
WA$600,000$450,000
SA$600,000$450,000
TAS$600,000$450,000
ACT$750,000N/A
NT$600,000N/A
Jervis Bay Territory and Norfolk Island$550,000N/A
Christmas Island and Cocos (Keeling) Islands$400,000N/A

Downside:

It’s important to remember that a smaller deposit means a larger loan and higher loan repayments. It’s possible that the additional interest burden associated with a higher loan can outweigh the benefit of saving on LMI. Due to this, we recommend speaking to a Financial Adviser before deciding if the FHG is right for you.

Family Home Guarantee Scheme

What is it?

The Family Home Guarantee Scheme (FHG) is designed to help single parents purchase a home with as little as a 2% deposit. Under this scheme, the government will provide a limited loan guarantee of up to 18% of the value of the home. This helps eligible single parents purchase a home with a minimal deposit and avoid paying Lenders Mortgage Insurance (LMI).

Key Points:

  • The home must be used as your main residence
  • Price caps are put in place depending on the property’s location

To be eligible, you must:

  • be an Australian citizen aged 18 years or older
  • have shared or full-time care of at least one eligible financial dependant
  • not have a spouse or de facto partner
  • not be married, even if separated
  • have earned less than $125,000 (excluding any child support payments) in the last financial year
  • not currently have any ownership in property. This includes: residential, investment and/or business property

Numbers:

  • Price caps are in place for properties that can be purchased through the FHG scheme.
  • The price caps for capital cities are also applied to regions with populations above 250,000. Examples of these include: The Gold Coast, Sunshine Coast, Newcastle, Lake Macquarie, Geelong and Illawarra.
  • The price caps applied to states and regions can be seen below:
State/TerritoryPrice Caps for FY22-23
Capital City/Regional CentreRest of State
NSW$900,000$750,000
VIC$800,000$650,000
QLD$700,000$550,000
WA$600,000$450,000
SA$600,000$450,000
TAS$600,000$450,000
ACT$750,000N/A
NT$600,000N/A
Jervis Bay Territory and Norfolk Island$550,000N/A
Christmas Island and Cocos (Keeling) Islands$400,000N/A

Downside: It’s important to remember that a smaller deposit means a larger loan and higher loan repayments. It’s possible that the additional interest burden associated with a higher loan can outweigh the benefit of saving on LMI. Due to this, we recommend speaking to a Financial Adviser before deciding if the FHG is right for you.

First Home Super Saver Scheme

What is it?

The First Home Super Saver Scheme (FHSSS) is designed to allow people utilise their super fund to save for a deposit on their first home. Under the FHSSS, people can make voluntary contributions to their super and withdraw these funds (plusany associated earnings) to put towards a first home deposit. This allows people to take advantage of the favourable tax environment and potential for higher returns that super provides, while saving for a deposit.

Benefits:

  • Earnings in super are taxed at 15%, whereas earnings on investments or bank accounts are taxed at your marginal tax rate
  • Concessional contributions to superannuation are tax deductable. By saving money for your home in Super, you can also get a tax deduction for the money deposited as a concessional contribution.

Note: when you make a concessional contribution to Super, you will have a contributions tax of 15% inside your super fund on the amount contribution. For this reason, it is important you speak to a financial adviser or an accountant to make sure this is the right strategy for you.

Key Points:

  • Contributions must be voluntary, meaning mandatory employer contributions don’t count
  • Voluntary Concessional or Non-Concessional contributions can be used
  • You can voluntarily contribute up to $15,000 per financial year into your super to use towards a deposit, within normal contribution limits
  • You can withdraw up to $50,000 + associated earnings from super to put towards a deposit
  • Eligibility is assessed on an individual basis, meaning couples could access $100,000 + associated earnings, provided both are deemed eligible
  • The final amount that you can withdraw from your super is determined by the ATO
  • FHSSS determination must be approved before signing a contract for sale, construction or purchasing a home at auction  

To be eligible, you must:

  • be 18 years or older at the time you apply to withdraw the funds
  • have never had any ownership in property. This includes: residential, investment and/or business property
  • make voluntary super contributions
  • occupy the property for at least 6 months of the first 12 months of owning your home

Eligible Contributions:

IncludedNot Included
Salary SacrificeMandatory Employer Contributions (Super Guarantee of 11.5%)
Concessional Contributions (personal tax deductable contributions)Spouse Contributions
Non-Concessional Contributions (personal after-tax contributions)Government Co-Contributions
Employer Contributions above the minimum required (11.5%)Contributions made for you by another person

Downside:

It’s important to remember that to withdraw money from superannuation, a condition of release must be met. This means that if you contribute funds into super with the goal of saving for a house and then change your mind, you most likely will not be able to withdraw them. Furthermore, if you go through the FHSSS process and withdraw the funds, but decide not to use them to purchase a home, you will be liable for FHSSS tax. We recommend speaking to a Financial Adviser before deciding if the FHSSS is right for you.

First Home Concession

What is it?

You can claim a first home concession for transfer duty (stamp duty) when you buy your first home, if you meet certain requirements. With this concession you may pay a reduced transfer duty, or none at all. The First Home Concession only applies to homes valued under $550,000.

Benefits:

  • You can save up to $15,925 in transfer duty
  • Reduce the amount of transfer duty you pay on homes valued between $500,000-$550,000.

To be eligible, you must:

  • be legally acquiring the property as an individual
  • have never claimed the first home vacant land concession
  • have never held an interest in another residence anywhere in Australia or overseas
  • be at least 18 years of age (we explain below when we may waive this requirement)
  • move into it with your personal belongings and live there on a daily basis within 1 year of settlement (this time cannot be extended)
  • not dispose (sell, transfer, lease or otherwise grant exclusive possession) of all or part of the property before you move in
  • be paying market value if the residence is valued between $500,001 and $549,999.

For more information on the First Home Concession, eligibility and calcutions vist the Queensland Revenue office website; https://qro.qld.gov.au/duties/transfer-duty/concessions/homes/first-home/

Conclusions

It can be daunting and even a frustrating prospect of entering the property market in Australia. If you are considering purchasing your first home, it is important to understand the types of government grants and schemes available to you.

If you are considering buying your first home, or want to know more about the Schemes and grants discussed in this blog, reach out to one of our knowledgeable Financial Advisers through the website or call the office on 07 3378 9681 to arrange a meeting.

Disclaimer: The information in this article is general and does not take into account your particular circumstances. We recommend specific tax or legal advice be sought before any action is taken and refer to the relevant Product Disclosure Statement before investing in any product. Current as at 31 January 2024.