What’s the catch? The ins and outs of Government grants
For any prospective first home buyers out there, researching home loans and the ins-and-outs of the buying process can quickly become an overwhelming process. With the latest HomeBuilder grant being added to the list of Government schemes available to new builds, there’s now multiple options for first home buyers looking to enter the market. However, as with most Government assistance, this new scheme comes with a long list of eligibility criteria which can cause a large amount of confusion during the research phase of the home buying journey.
But don’t worry, we got you! We’ve broken down the different grants applicable to Australian first home buyers by either national or state governments, to provide some clarity on what you may be eligible for.
Here are some key things to note:
- These grants are only applicable to Australian citizens, and sometimes permanent residents
- Most grants are only applicable to you if you live in your new home for at least 12 months
- Most grants are only applicable to those individuals who have never owned a property in Australia
- All first home buyers should consult their relevant state government to assess their eligibility
- If you are a couple looking to purchase a new home, you will not be eligible if one person has owned a home before, and you will need to both be citizens or permanent residents
First Home Loan Deposit Scheme (FHLDS)
Under this scheme, first home buyers can purchase a home with a deposit of as a little as 5%. Usually, first home buyers with less than 20% of the total loan cost saved are required to pay Lenders Mortgage Insurance (LMI), however, the FHLDS basically means the Government acts as a ‘guarantor’ to cover the remaining 15% of your deposit. It also means you can avoid paying LMI!
There are currently 27 participating lenders across Australia offering places under the FHLDS. However, the Government will only support up to 10,000 first home loan guarantees each financial year, so if this grant is something you’re banking on to get your first home, make sure get your application in early!
- Both new and existing residential properties are eligible, however they must be within the price thresholds specific to each state, capital city and regional centre
- Investment properties are not eligible
- Only available to owner occupiers
- Singles must earn under $125,000
- Couples must earn under $200,000
- Couples must be married or in a de facto relationship — siblings, friends or relatives buying together are not eligible
First Home Super Saver Scheme (FHSSS)
The First Home Super Saver Scheme helps Australians boost their savings for a first home by allowing them to build a deposit inside superannuation, subsequently giving them a tax cut. This is because voluntary super contributions are taxed at a lower rate compared to income, and paying less tax means growing your savings faster.
Individuals can make voluntary contributions up to $30,000, with a limit of $15,000 deposited into their super each financial year. This can be done through salary sacrificing which sees more of your take home salary deposited into your super, rather than your bank account.
Downloadable content: FHSSS fact sheet
The newly announced HomeBuilder grant will see $25,000 provided to people who are undertaking new builds or renovations, contracted between now and the end of the year. It is not exclusive to first home buyers.
To be eligible, singles must earn under $125,000 each year, and couples under $200,000. If you’re looking to renovate, you must spend at least $150,000 where the final renovation is valued at less than $1.5 million. New constructions must be worth under $750,000, including the value of the land you’re building on.
There’s quite a few different requirements to be across with this one, so it’s important to check your eligibility. View our updates on HomeBuilder FAQs here.
First Home Owner Grants by State
First Home Owner Grant
A $10,000 grant is available for new first homes, and $20,000 for new homes built in regional Victoria valued at $750,000 or less.
Stamp Duty Exemption
A stamp duty exemption is available to first home buyers for all properties valued up to $600,000. For properties between $600,000 and $750,000 stamp duty is tapered, which means it increases on a sliding scale all the way up to $750,000. Think of it like a tax bracket — the more you earn, the more you are taxed. It’s the same principle for stamp duty.
With off-the-plan projects, you may only pay stamp duty on the difference between the contract price and the cost of construction.
Let’s break it down further:
- $10k grant when buying a new property for under $750k
- $20k grant when buying a new-built regional property under $750k
- No stamp duty is paid on properties under $600k
- Discounted stamp duty on property between $600-$750k
Click here to calculate your stamp duty.
New South Wales
First Home Owner Grant (New Homes)
A $10,000 grant is available for first home buyers purchasing new properties costing less than $600,000, and owner-builder contracts worth less than $700,000. When purchasing land with the intent of building a new home, the total price of the house and land combined must be no more than $750,000.
First Home Buyer Assistance Scheme
First home buyers looking to purchase a new or existing property valued under $650,000 will pay no stamp duty at all, while a reduced stamp duty will apply for new or existing properties valued up to $800,000.
Let’s break it down further:
- $10,000 grant available when buying a new property under $600,000
- $10,000 grant available if you enter a contract to build a property worth up to $750,000
- No stamp duty on properties under $600,000, or vacant land under $350,000
- Discounted stamp duty paid on properties between $650,000 – $800,000 or vacant land between $350,000 – $450,000
- $15,000 grant for newly-built properties under $750,000
- No stamp duty on properties under $500,000 or vacant land under $250,000
- Discounted stamp duty on properties under $549,999 or vacant land under $399,999
- A $15,000 grant is available when buying a new property under $575,000
- All first home buyers pay some amount of stamp duty
- $10,000 grant available when buying a new property for under $750,000, south of the 26th parallel
- $10,000 grant available when buying a new property for under $1,000,000 north of the 26th parallel
- No stamp duty paid on properties under $430,000 or vacant land under $300,000
- Discounted stamp duty on properties between $430,000 – $530,000, or vacant land between $300,000 – $400,000
- No stamp duty paid on new or established homes as well as vacant land, subject to certain income thresholds
- $20,000 grant available when buying a new property until June 30, 2020
- $10,000 grant available when buying a new property after July 1, 2020
- $10,000 grant available on new properties of any value, subject to eligibility and conditions
- Up to $10,000 grant for first home buyers to renovate or improve an established home (ends November 30th, 2020)
- Stamp duty reduction of up to $18,601 for new and established homes or land
- Household Goods Grant of up to $2,000 available
- BuildBonus grant of up to $20,000 when buying or building a new home
As a first home buyer, these grants are definitely worth knowing about in detail, as they may end up saving you money or giving you that extra helping hand needed to secure your new home. We recommend speaking to a mortgage broker about what grants are available to you in your current situation so you are fully aware of all that’s on offer to you.