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Government Schemes for Home Buyers in 2023 - featured image
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Government Schemes for Home Buyers in 2023

Are you looking at buying your first home in Australia?

It’s exciting, terrifying, daunting, frustrating, and expensive – all at the same time!

Despite Australia’s property market has cooled from its pandemic-induced peak, thanks to relentlessly soaring interest rates and still-inflated prices, many first-home buyers are still struggling to get their foot onto the property ladder.

Coupled with today’s sky-high inflation and cost of living, where our rental crisis continues to squeeze budgets from both sides, many would-be first-home buyers' savings goals are just lagging behind.

But to help, both federal and state governments have implemented a whole suite of schemes, incentives, and fee waivers to help eligible Aussies realise their home-ownership dream faster.

Here’s a rundown of everything available, including eligibility requirements.

The Home Guarantee Scheme (HGS)

The HGS is a federal government initiative put in place to help Aussies buy or build their first home.

Split into three categories, depending on eligibility, first-home buyers can get assistance for buying a home and get onto the property ladder faster, with as little as a 2% deposit.

Each home guarantee scheme is eligible only for applicants that meet the criteria, and who are looking to purchase an eligible property within the price cap - the price cap is the same for each new home buyer scheme.

State Capital City and Regional Centre* Rest Of State
NSW $900,000 $750,000
VIC $800,000 $650,000
QLD $700,000 $550,000
WA $600,000 $450,000
SA $600,000 $450,000
TAS $600,000 $450,000
ACT $750,000
NT Regional $600,000
Jervis Bay Territory & Norfolk Island $550,000
Christmas Island and Cocos (Keeling) Islands $400,000

First Home Guarantee (FHBG)

The FHGB home buying scheme has been expanded to add 35,000 more places each year to give first-home buyers the chance to buy a new or existing eligible property with a deposit as low as 5% while avoiding lenders' mortgage insurance (LMI) - the new home buyer scheme can’t be used to buy an investment property.

To be eligible for the first home guarantee, applicants must comply with the following criteria:

  • Be first home buyers, or have not owned a property for the past 10 years
  • Earn less than $125,000 for singles or $200,000 for couples
  • Couples can be married, defacto, friends, siblings, or groups of family members
  • Aged 18+
  • Australian citizens or permanent residents
  • Have a deposit of 5-20%
  • Buy a home within the corresponding price cap

Regional First Home Buyer Guarantee (RFHBG)

The federal government will issue 10,000 first-home buyer guarantees to regional Australians from October 1, 2022 until June 30, 2025, to help first-home buyers buy their first home in a designated regional area with as little as a 5% deposit.

This new home buyer scheme can’t be used to buy an investment property.

To be eligible for the regional first home buyer guarantee, applicants must comply with the following criteria:

  • Have lived in or adjacent to a regional area for the past 12 months
  • Be first home buyers, or have not owned a property in the past 10 years
  • Earn less than $125,000 for singles or $200,000 for couples
  • Couples can be married, defacto, friends, siblings, or groups of family members
  • Aged 18+
  • Australian citizens or permanent residents
  • Have a deposit of 5-20%
  • Buy a home within the corresponding price cap

Fhg

Family Home Guarantee (FHG)

The FHG is a little different in that it is home buyers assistance specifically for single parents with at least one dependent child, whether they have previously owned a home or not.

Under the FHG, up to 18% of an eligible home buyer’s home loan is guaranteed by the National Housing Finance and Investment Corporation (NHFIC), which means buyers can purchase a property with as little as 2% without paying LMI - there are 5,000 additional places each year.

To be eligible for the regional first home buyer guarantee, applicants must comply with the following criteria:

  • An individual with at least one dependent child, including those who are the single legal guardian of a child
  • Aged 18+
  • Australian citizens or permanent residents
  • Earn less than $125,000
  • With no current property ownership, or with no ownership in the past 10 years
  • Have a deposit of 2-20%
  • Buy an eligible home within the corresponding price cap

Help-to-buy scheme

Last year, Labour announced plans to help more low- to middle-income earners onto the property ladder by buying a stake in their new home.

Under the ‘Help to Buy' scheme, due to begin in the new financial year but with no confirmed date, the government would assist people earning less than $90,000 a year ($120,000 for couples) to purchase a property by stumping up to 30% of the purchase price for existing properties and up to 40% for new builds - that means buyers can purchase a property with as little as 2% deposit.

Obviously, there will be price caps per city and region, with the Sydney and regions’ cap being $950,000.

While you would not be required to pay rent on the portion of the home held by the Government, it is expected that the Government’s equity contribution be paid down over time, or paid back if you sell.

Labour announced that 10,000 places for the Help to Buy Scheme will be available each year for eligible homebuyers.

To be eligible to use this home-buying scheme you must comply with the following criteria:

  • Be an Australian citizen aged 18+
  • Earn less than $90,000 per year for singles of under $120,000 for couples
  • Be a first home buyer with no property owned either in Australia or overseas
  • Have a minimum 2% deposit

First Home Super Saver Scheme

The First Home Super Saver (FHSS) scheme is another way of getting assistance for buying a home, using voluntary contributions from your superannuation as your deposit - rather than having to save that amount in a bank account.

It’s important to note that only voluntary contributions are eligible to be used for the scheme, buyers cannot withdraw employer, government, or spouse contributions.

All contributions to super will count towards the ordinary contribution caps that apply, but there is a cap to how much you’re allowed to withdraw - the maximum contribution and withdrawal amount for the FHSS scheme is $15,000 per financial year or $30,000 in total.

To be eligible to use this home-buying scheme and withdraw from your superannuation you must comply with the following criteria:

  • Be a first-home buyer, and not have owned property in Australia before
  • Aged 18 years or older; and
  • Have not previously used this home-buying scheme to release money from your superannuation.

Grant

First Home Owner Grant

The government introduced the First Home Owner Grant (FHOG) in 2000 to give first-home buyers assistance in buying a home by offsetting GST.

The rules around how it works and who is eligible continually evolve, and it also differs for each state and territory, so it can be difficult to keep on top of the current updates.

How it essentially works is that the local government will give a one-off grant (around $10,00-15,000) to eligible home buyers at the settlement point of their property purchase.

To be eligible to use this home-buying scheme you must comply with the following criteria:

  • Be a first-home buyer
  • Have not previously received a FHOG
  • Be an Australian citizen aged 18+
  • Live in the house for at least 6 months after it’s built
  • Be buying a house up to your local government’s price cap - between $575,000 and $750,000 depending on the state or territory)

HomeBuilder

The HomeBuilder new home buyer scheme gave eligible owner-occupiers (including first-home buyers) a $25,000 grant to build, buy off the plan or substantially renovate an existing home.

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Note: The HomeBuilder program closed on April 14, 2021, and will not reopen.

Stamp Duty Waiver

Some states and territories have introduced a stamp duty waiver or reduction in addition to the First Home Owner Grant.

For example, the NSW government has abolished stamp duty on properties valued under $800,000 and has reduced, on a sliding scale, stamp duty incurred on properties with a sale price up to $1 million.

The Labor government will axe NSW’s previous annual land tax under the First Home Buyers Choice scheme which will expire on June 30.

Stamp duty reductions and exemptions are also available for first-home buyers in Victoria, Queensland, Western Australia, Tasmania, and the Northern Territory.

I’ll discuss more about these in the rundown of state-specific government grants and schemes below.

States

State-specific government grants and schemes

In addition to the federal government schemes for home buyers, there are state-specific home-buying schemes and grants that Aussies can use to help get their foot on the ladder.

Here’s a breakdown of the additional home buyer's assistance in each state.

Victoria (VIC)

In addition to all the nationwide government incentives, Victorians can also take advantage of the Victorian Homebuyer Fund (VHF).

The home buying scheme is a shared equity scheme to help Victorians with a minimum 5% deposit onto the property ladder quicker.

How it works is the Victorian government may make a contribution of up to 25% of the purchase price in exchange for an equivalent share in the property.

This was designed to help reduce costs associated with the mortgage.

To apply for the VHF, you’ll need to meet the following criteria:

  • Be an Australian or New Zealand citizen, or Australian permanent resident aged 18+
  • Have a minimum 5% deposit saved (or 3.5% for Aboriginal and Torres Strait Islander participants)
  • Earn under $128,000 for singles or under $204,800 for couples

Victorian first-home buyers can also benefit from stamp duty concessions under its First Home Buyer Duty Reduction.

The concession applies on a sliding scale - with an exemption for properties priced $600,000 or less and a concession for those $600,001 to $750,000 of up to 50%.

New South Wales (NSW)

The Labor government has axed NSW’s previous annual property tax under the First Home Buyers Choice scheme, with it expiring on June 30.

Instead, the NSW government has raised the threshold for stamp duty exemptions (from July 1) under its First Home Buyers Assistance Scheme to $800,000, from $650,000, with concessions applicable on a sliding scale up to $1 million.

To be eligible you need to be an Australian citizen or permanent resident aged 18+, buying your first home.

Queensland (QLD)

Buyers in Queensland can take advantage of transfer duty concessions under its Home Concession or First Home Concession schemes.

For homes costing less than $500,000 and vacant land less than $400,000, buyers will not have to pay any transfer duty.

The concession rate applies to the first $350,000 of the value of the property, with the transfer duty only applying to the balance.

Queenslanders who can afford to buy but can’t get private finance are able to use the Queensland housing finance loan in order to help secure a property with just a 2% deposit and without having to pay LMI.

Act

Australian Capital Territory (ACT)

The ACT government decided to axe its First Home Owner Grant and instead offer residents a Home Buyer Concession Scheme to reduce or remove stamp duty costs.

Buyers need to be aged 18+ and live in the new property for a year after settlement.

Depending on how many children the buyer has, they have a sliding scale of income threshold and can get a concession of up to $34,790 on the stamp duty payable on the property at purchase.

Northern Territory (NT)

Buyers in the NT are able to access the nationwide home buyer incentives listed above.

The Territory Home Owner Discount on stamp duty ended on 30 June 2021 so any property purchased after this date won’t be able to get a stamp duty discount.

South Australia (SA)

In addition to all the nationwide government incentives, buyers in South Australia can also take advantage of the government’s HomeStart initiative.

The scheme allows South Australians with a deposit under 20% to avoid having to pay LMI by instead offering a secondary loan to help pay for all the costs associated with buying a house, such as stamp duty.

To be eligible for a HomeStart loan, buyers must have a net household income under $75,000 for singles and $100,000 for couples, not own another property, and have enough funds to cover the deposit, but not enough for the remaining upfront costs, like Stamp Duty.

Tasmania (TAS)

In Tasmania, in addition to nationwide incentives, buyers can get a 50% discount on stamp duty on established properties valued at up to $500,000.

Schemes

Get to know what schemes are available to you

Can you apply for multiple government grants and schemes?

Yes, you can apply for multiple government grants and schemes if you’re eligible for them.

For example, a first-home buyer can apply for a First Home Guarantee, or a First Home Owners Grant and also waive or reduce their stamp duty depending on whether their income, location, and property price points mean they’re eligible for each.

You cannot apply for the same concession twice, however.

What are the drawbacks of government schemes?

While numerous home-buying schemes go some way to help provide assistance for buying a home, there are a few cons to using one.

  • Despite increased caps, they're still lower than average prices in many areas
  • Small volume of properties are eligible for stamp duty waivers in desirable locations
  • It encourages people to get into debt. This is especially worrying for those who may struggle to keep up with loan repayments
  • Higher monthly repayments thanks to a smaller downpayment
  • Schemes may put upwards pressure on the lower end of the property market
  • Buyers who purchase with a very small deposit risk falling into negative equity
  • Mortgage holders may face bankruptcy amid surprisingly fast rate rises
  • Borrowers with low equity will be stuck in their property for longer than planned
  • Most of the incentives aren’t applicable to investors
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Note: With high prices, dwindling borrowing power, and soaring interest rates, stepping onto the property ladder for the first time might seem to be slipping further out of reach for many Aussies.

And while there are options out there for first-time buyers to purchase a property without the added pressure of saving a huge 20% deposit, there are plenty of risks involved.

Before going down the route of one of the many available government schemes on offer, make sure you speak to an expert such as the team members at Metropole to ensure your potential property purchase makes good long-term investment sense.

About Leanne is a highly experienced Buyers Agent in the Brisbane Real Estate market. Leanne became a passionate lover of property in 2001. Since then, both professionally and personally, she has been involved in all aspects of property including purchasing, negotiating, renovating, and selling.
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