The First Home Buyers Grant

First Home

Are you building or buying your first home? It can be an interesting but expensive endeavor, with home loans, stamp duties, inspections, and conveyance costs. The First Home Grant is a nationwide initiative offered by state governments to give you faster access to your new home.

What is the first homeowner grant?

Launched in 2000, the First Homeowner Grant (FHOG) is a tax-free amount of money offered to first-time homebuyers on behalf of state governments to alleviate some of the financial pressure associated with purchasing their first home.

FHOG is available to first-time buyers of a new home that has not been previously lived in or to home buyers who purchase vacant land to build a new home.

New homeowners can benefit from receiving their grants at different stages of the buying and building process. For anyone who purchases a newly constructed home, the grant is usually paid at the time of payment to the mortgagee so that it can be deducted directly from the mortgage.

The grant will be approved after the first mortgage payment expires when you build your home with a construction loan.

Can I use FHOG to cover my new home deposit?

A first homeowners grant can be used as part of your first home purchase loan deposit; however, you will need to have existing savings as FHOG on its own will not meet the home loan application.

How to apply for a First Home Owner Grant?

To receive the first homeowner grant, you can apply directly to the government revenue office of your applicable state or territory. Alternatively, you can apply for the FHOG through the lender along with the mortgage application.

Depending on the state or territory you live in, the process for applying for FHOG will be slightly different. In general, in order to apply, you must submit:

  • A copy of the sales contract or the construction contract if you are building a new house.
  • Documents proving your identity and your eligibility

Are you qualified for the First Home Owner Grant (FHOG)?

Each territory and state has its own conditions, but there are common requirements for using FHOG.

To be eligible, you must:

  • Be a permanent resident or Australian citizen
  • Be older than 18
  • Plan to live on the property as a home for at least six months.
  • You have never had your own home in Australia before.

What is classified as a new home?

To receive the first homeowner grant, a new home is classified as a house, unit, apartment, townhouse, or off-plan house that has never been sold or used as a place of residence.

Homes that have been significantly renovated and completed by the seller in limited circumstances may also be eligible for FHOG. However, the rules vary by state and territory.

Real estate investments are not classified as new housing and are therefore not eligible for FHOG.

New South Wales First Home Owners Grant

Maximum amount: $10,000

New South Wales FHOGs face some of the highest house prices in the country, which the state government has taken positive steps to mitigate. The NSW Homeowners Grant (FHOG) grants consumers up to $10,000, provided that:

  • They buy a new house worth $600,000 or less
  • Construction of a new house worth up to $750,000.

There are also additional stamp duty concessions for properties under $1,000,000, while buyers are not required to pay stamp duty for homes under $800,000. Depending on the property’s initial value, this can save an additional $30,000 for FHOG.

First Home Buyer Scheme

FHBs may also be eligible for the first-time rate of transfer duty or exempt from payment under the First Home Buyers Assistance Scheme. With this plan, you may be entitled to:

  • Full relocation duty for new or existing homes up to $650,000 or partial relocation for homes up to $800,000.
  • There is no transfer duty for free land acquisitions up to $350,000 or land grant fees between $350,000 and $450,000.

Who can apply?

To qualify for the grant as a first-time homebuyer, you must purchase the first home that you or your spouse owns or jointly owns in Australia, although there are some exceptions.

You must move into the new property within 12 months and live there for at least six consecutive months.

You have to be:

  • Australian citizen or permanent resident of Australia
  • Be at least 18 years old.

Are there other benefits and plans?

There are a number of government programs designed to help Australians secure their first home. Many of them can be used jointly, saving maximum time on the return trip.

First Home Loan Deposit

The FHLDS (First Home Loan Deposit Scheme) allows eligible first-time homebuyers to purchase a house with a down payment of just 5%.

Debtors with less than 20% deposit will usually have to pay lenders’ mortgage insurance (LMI), which protects the creditor in the event of a credit default. Under the FHLDS, the government will provide the bank with a guarantee for the remainder of the required deposit.

To be eligible for the loan deposit plan, you must:

  • Apply individually or in pairs (married or de facto).
  • First home buyers who don’t previously own a house or had an interest in Australia.
  • Be an Australian citizen at a time when entering the loan.
  • Be at least 18 years old.
  • You have a maximum income of $125,000 for individuals or $200,000 for couples.
  • You intend to be the owner-occupant of the acquired property.

The First Home Super Savings Plan

Launched in 2017, the First Home Super Saver program helps Australians accelerate their dream of owning a residence through the pension fund.

Under the program, you can make additional contributions of up to $15,000 per year at the expense of part of your salary. Once you have contributed $50,000 through the program, you can withdraw it from the Super Fund and place it in the First Home Deposit.

Couples can join the program, saving individually and combining the money after withdrawing it.

There are also significant tax benefits. Pre-tax contributions made through the wage sacrificing will be taxed at 15% in your super. And after you withdraw your funds, you’ll be charged a marginal income tax rate minus a 30% tax deduction.

To be eligible for First Home Super Saver, you must:

  • Be at least 18 years old.
  • You have previously never owned a property in Australia.
  • You have not yet received payment from FHSS.

Family Home Guarantee 

Announced as part of the 2021-2022 federal budget measures, the Family Housing Guarantee allows eligible single parents to purchase housing with a minimum down payment of 2%. The government intends to issue 10,000 guarantees over a four-year period.

To qualify for the Family Home Guarantee, you must:

  • Be a single parent/mother with at least one dependent child.
  • Be at least 18 years old.
  • Become an Australian citizen.
  • Earn less than $125,000 per year.
  • You do not own the current property, even if you own previous properties.
  • You intend to be the owner-occupant of the acquired property.
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