As a first home buyer (FHB), getting into the property market can be difficult for a range of reasons. With property prices rising, the economy still recovering from major crises like COVID-19, your homeownership dreams may feel out of reach.
However, the Victorian and federal governments have introduced a range of schemes for first home buyers in Victoria that could help you enter the property market faster and get the keys to your dream home. In this article, we’ll take you through some of these schemes. We will discuss who is eligible for them and how you can find out more so you can make the most of this government support:
- First Home Owner Grant (New Homes)
- Stamp Duty Concessions
- First Home Loan Deposit Scheme (now the New Home Guarantee)
- First Home Super Saver Scheme
- Family Home Guarantee
- What are your next steps?
First Home Owner Grant (New Homes)
The Victorian Government is currently offering $10 000 to first home buyers who are purchasing or building their first new home in metropolitan areas. This offer has been increased to $20 000 for first home buyers purchasing or building new homes in rural or regional areas.
This property can be a townhouse, unit, duplex, apartment, or a similar property type. However, its contract price must be $750 000 or less. If you’re buying a property that has been significantly renovated or built to replace a demolished house, you can still be eligible for this grant, but you may need to meet some additional eligibility criteria.
If the property has been previously used as a place of residence, occupied as a home or used for short-term accommodation, such as an Airbnb residence, you will be ineligible for the scheme. Investment properties and holiday houses are also ineligible for this grant.
It’s important to note that you can receive this grant in addition to other government schemes offered to first home buyers. However, the First Home Owner Grant payment you receive depends on the type of contract you sign and whether you apply directly with the Victorian Government or through an agent. Visit the Victorian Government website for further details or speak to a broker for personalised advice.
Stamp Duty Concessions
Furthermore, first home buyers in Victoria may also be eligible for stamp duty concessions in addition to the First Home Owner Grant (New Homes). Here’s a summary of the concessions provided by the Victorian Government:
Full stamp duty exemption
- New and established homes valued at $600 000 or less
- New and established homes valued at $550 000 or less
- Must be a buyer’s primary residence or intended place of primary residence
- Must be moved into within the first 12 months of settlement
- Must be lived in continuously for 12 months
50% concession on stamp duty
- Residential homes in all of Victoria valued at $1 000 000 or less
First home buyers with a family
- A stamp duty concession or full exemption for properties valued at $200 000 or less
Young farmers (under 35)
- A stamp duty concession or full exemption for properties valued at $750 000 or less
- Must be a farmer’s first property purchase
Buying off the plan
- Off-the-plan duty concessions may apply
- May be eligible for stamp duty concessions or exemptions
- Must be a first home purchase
First Home Loan Deposit Scheme (or New Home Guarantee)
The First Home Loan Deposit Scheme, or New Home Guarantee as of May 2021, is a scheme that will be offered to 10 000 first home buyers over the next financial year. It allows a first home buyer to buy or build a home with as little as a 5% deposit. As such, they can buy or build their dream home sooner.
Previously, buyers unable to pay a 20% deposit on their home loan would have to pay Lender’s Mortgage Insurance (LMI). LMI is a hefty one-off cost that only protects the bank, not the borrower, if they were to default on their loan. Now, when an eligible first home buyer makes a 5% deposit, the government will supply the remaining 15% to ensure the buyer can access their dream home without extra charges like LMI.
You can apply for this scheme as a single or couple. You will have your income assessed accordingly to determine if you’re eligible. On top of that, you must also prove that you:
- Are at least 18 years old
- An Australian citizen
- Haven’t owned property in Australia before
- Can meet the 5% deposit requirement
- Meet the income requirements
- Move into the property within six months of settlement and continue to live in the property for as long as you’re covered by the scheme/guarantee
Currently, there are 27 lenders participating in this scheme. For more information about how this scheme works and where you can apply, visit the National Housing Finance and Investment Corporation page or message one of our brokers for personalised advice to suit your financial needs.
First Home Super Saver Scheme
This scheme allows Australians to make extra contributions to their super funds. This could help you save for a deposit faster. Therefore, getting your dream home sooner than you might by saving normally.
Through this scheme, buyers can make concessional (before tax) and non-concessional (after-tax) contributions to their super funds. You can then apply to release these voluntary contributions and other related earnings to pay for your home loan deposit. Buyers can release up to $15 000 per year from their super funds for this purpose.
To be eligible for this scheme, you must:
- Live in the property or plan to live in it as soon as you’re able
- Move into the property within the first 12 months of securing it
- Live in the property for at least six months upon moving in
You can discover more about this scheme and apply for it through the Australian Taxation Office (ATO) website.
Family Home Guarantee
If you’re a single parent looking to buy a home, then, you may be eligible for this scheme. With the Family Home Guarantee, you could be one of 10 000 single parents who buy a home with as little as a 2% deposit.
Over the next four years, the Australian Government is offering this scheme to 10 000 single parents. This scheme is open to all single parents with dependents at home, including first home buyers. To be eligible you must be:
- At least 18 years old
- An Australian citizen
- Have an annual taxable income of no more than $125 000
For more information about the family home guarantee offer, check out this fact sheet from the National Housing Finance and Investment Corporation.
What are your next steps?
Although all these schemes could provide you with exciting new avenues to get into the property market sooner, they can be tricky to understand and time-consuming to apply for. By speaking with an experienced mortgage broker who specialises in services for first home buyers, you can be confident that your home buying journey will be smooth sailing.
As an ethical mortgage broker, we put our customers, the community, and the planet before profits. Our free services allow you to compare home loans from over 30 banks and save you time by preparing your application and chasing up banks for you. And if you manage to secure a home loan with us, we’ll help a family doing it tough in Australia or the Asia Pacific get a home, too.
So, send us a quick message, give us a phone call or schedule a consultation or even apply online for personalised advice regarding your financial situation. And while you’re here, check out the ethical mortgage services we provide to customers in Melbourne.
Disclaimer: The information provided is general in nature and does not constitute financial advice. Please speak to us for recommendations on your individual circumstances and requirements.