First Home Buyers in Australia: A Short Guide

Buying your first home is an exciting milestone. However, it can also be a daunting process, especially when it comes to financing. Fortunately, first home buyers in Australia have several options available to help fund their purchase. This article will explore these options and provide some guidance for those embarking on their home buying journey.

Government Grants and Schemes

The Australian government offers several grants and schemes to assist first home buyers. These initiatives aim to make homeownership more accessible and affordable. Here are some of the major nationwide government schemes available for first-home buyers as of 2023:

1. First Home Guarantee: Previously known as the First Home Loan Deposit Scheme, this initiative allows eligible first home buyers to purchase a home with a deposit as low as 5%.

2. Family Home Guarantee: This scheme is designed to support single parents with dependents in entering or re-entering the housing market.

3. Regional First Home Buyer Support Scheme: This scheme aims to encourage first home buyers to consider purchasing homes in regional areas.

4. First Home Super Saver Scheme: This scheme allows individuals to make voluntary contributions into their superannuation fund, which they can later withdraw for a first home deposit.

In addition to these nationwide schemes, each state and territory in Australia also offers its own set of incentives, such as the First Home Owner Grant (FHOG) and stamp duty concessions. For first home buyers in NSW stamp duty is not payable for properties valued under $800,000 and a concessional rate of stamp duty is payable for property purchases under $1 million. The FHOG is a one-off grant payable to buyers of newly built homes that satisfy all the eligibility criteria.

A Focus on the First Home Guarantee

Of the schemes listed above, the option with the greatest interest is likely to be the First Home Guarantee. Usually, home buyers with less than a 20 per cent deposit need to pay lenders mortgage insurance. Under the First Home Guarantee, eligible home buyers can purchase a modest home with a deposit of as little as 5 per cent (lenders criteria apply). This is because the scheme guarantees a participating lender up to 15 percent of the value of the property purchased that is financed by an eligible home buyer’s home loan.

Eligibility is limited to first home buyers with individual taxable income of up to $125,000 per annum for the previous financial year and joint applicants with a combined taxable income of up to $200,000 per annum. Limits apply to the value of the home being purchased to $900,000 in Sydney and Wollongong with other limits applying for different regions. Putting this all together, the table below shows some worked examples of home affordability under the scheme at different property values:

Buying your first home is a significant step, but with the right information and support, it can be a rewarding experience. By understanding the various funding options available, first home buyers can navigate the property market with confidence and secure their dream home. Remember, it is always a good idea to seek professional advice tailored to your personal circumstances before making any major financial decisions. Happy house hunting!