Rising costs of living, increasing interest rates and high prices have all combined to create the imperfect storm for struggling first-home buyers. However, if every cloud has a silver lining then the ray of light this new financial year is the boosted array of government assistance schemes.
The First Home Owner Grant was introduced back in 2000 and has gone through many versions since, with supplementary add ons. As the buyer bonuses change almost annually, it can be difficult to keep up because the helping hand your friend, neighbour or cousin got when entering the market, isn’t necessarily what you’ll be eligible for just months down the track.
Unsurprisingly, first-home buyer affordability was on the table at the recent Federal election and now with a change of government there will likely be more amendments. To get your head around what is on offer from July 1, 2022 here is an updated overview of schemes.
First Home Owner Grant (FHOG)
Although the FHOG is a national scheme, it’s funded by the states and territories and is therefore administered under their own legislation with independent eligibility requirements. While some still offer a one-off payment for the purchase of newly built homes or vacant land, others now only have stamp duty (also known as transfer duty) concessions available. To find out what is available in the state or territory you are buying in, visit firsthome.gov.au.
First Home Guarantee (FHG)
Formerly known as the First Home Loan Deposit Scheme, the FHG is a low-deposit loan initiative allowing first timers to buy a home with a 5% deposit, with the Federal Government guaranteeing the remaining 15 per cent. Without the scheme, banks expect first-home buyers to provide a 20% deposit or pay pricey lenders mortgage insurance (LMI).
Originally providing for just 10,000 places per financial year, from July 1, 2022 until June 30, 2025 there will be 50,000 spots annually including 35,000 allocated for the FHG and 15,000 set aside for the Family Home Guarantee and the Regional Home Guarantee (see below).
There are eligibility requirements for the FHG starting with the buyers’ income. Singles can earn up to $125,000, or $200,000 for couples combined. Property price limits also apply with purchase thresholds differing depending on location. To find out local thresholds visit the National Housing Finance and Investment Corporation.
Property price caps
| Region | Price cap from 1 July 2022 |
| New South Wales—capital city and regional centre | $900,000 |
| New South Wales—other | $750,000 |
| Victoria—capital city and regional centre | $800,000 |
| Victoria—other | $650,000 |
| Queensland—capital city and regional centre | $700,000 |
| Queensland—other | $550,000 |
| Western Australia—capital city | $600,000 |
| Western Australia—other | $450,000 |
| South Australia—capital city | $600,000 |
| South Australia—other | $450,000 |
| Tasmania—capital city | $600,000 |
| Tasmania—other | $450,000 |
| Australian Capital Territory | $750,000 |
| Northern Territory | $600,000 |
Help to buy scheme
New Prime Minister Anthony Albanese has promised to assist struggling buyers (and not just first-timers) with a shared equity scheme. The initiative means the Government will effectively co-purchase a property with a homebuyer, however first-time investors are not eligible.
Buyers who meet requirements could put down a deposit of as little as 2% and access a government contribution of up to 40% towards the purchase of a home. Just like the FHG, the Help to Buy scheme means buyers can avoid paying LMI. Homeowners can then either buy the additional portion of the home (which was co-purchased by the Government) during the loan period or sell the property and give back the portion of equity and a share of any capital gain.
Individuals with a taxable income of up to $90,000, or couples earning up to $120,000, can apply for 10,000 spots each year, but be sure to check the purchase price thresholds in your area.
Regional First Home Buyer Support Scheme
The new Government is also introducing an initiative tailored to buyers in the regions. This initiative is the first of its kind solely devoted to the regions where dwelling prices have skyrocketed since the pandemic and outpaced capital city growth. Under the offer, the Government will pledge up to 15% of the home’s value so local first-home buyers (who have already lived in the area for at least 12 months) can buy with a 5% deposit and avoid paying LMI. Income thresholds are the same as the FHB and again be sure to check purchase price caps in your area.
Family Home Guarantee
Single parents with at least one dependent child, who meet the eligibility requirements, can access the Family Home Guarantee regardless of whether they are a first home buyer or not.
Under this Scheme, which works much like the FHG, buyers will only need a 2% deposit because the Government will guarantee up to 18% of the property’s value. Purchase price and income thresholds apply.
First Home Super Saver Scheme
Given that the deposit can be the biggest barrier to getting onto the property ladder, there’s a way first-home buyers can beef up savings by tapping into their superannuation. In the right circumstances, the First Home Super Saver Scheme can help first timers save for a home faster, but they will essentially be dipping into their retirement to get there.
It should also be noted that only the voluntary contributions made to the super fund can be withdrawn, not the mandatory contributions made by an employer. First-home buyers can release up to $15,000 each financial year and from 1 July 2022, the maximum accessible amount will jump from $30,000 to $50,000. Further details of the scheme can be found on the ATO website.
With so many schemes on offer across the country with varying caveats regarding purchase prices, taxable income and eligibility requirements, the first-home buyer landscape can be a little overwhelming. To find out which initiatives you can claim, give us a call.
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