How to reduce the costs for first home owners
There are a few option first home owners can take advantage of to bring down the out-of-pocket costs you have to settle upon buying a property, such as:
1. First home owner grants.
This is a one-off payment grant offered in many states and territories for first-home buyers. Usually, this grant is paid at the time of settlement of your home.
The amount varies depending on which state you are in, and the property type, e.g. new or established home, vacant land and building or existing property.
We can help you check with the respective state governments to confirm the criteria for your state as it may differ. In particular the cap on the value of your property does vary between states and in some states there is no cap.
More on first home owner grants here
2. First home owners super saver scheme.
Under this scheme, First Home Savers can make voluntary concessional (taxed at a discounted rate of 15%) and non-concessional (already taxed at your marginal rate) contributions into their super fund which one can later withdraw for a deposit on a first home.
Note that there is a cap on the amount of "concessional" or tax-advantaged contributions you can make each year. From 1 July 2021, the concessional contributions cap is $27,500 (up from $25,000 in 2021).
There is also a cap on the amount you can withdraw to put toward your deposit – currently $30,000 (plus earnings) but the government recently announced this will change from July 1, 2022 to $50,000.
Click here for more detailed information from the ATO website.
3. First home loan deposit scheme
A government initiative with the aim of helping first home buyers purchase a home sooner by lowering the deposit necessary to secure a loan. When approved for the scheme, the National Housing Finance and Investment Corporation (NHFIC) essentially goes 'guarantor' on up to 15 percent of your deposit, meaning you can purchase with as little as 5 percent deposit and not have to pay Lender's Mortgage Insurance (LMI).
Beginning in the financial year 2022-23, the government will provide a total of 60,000 places each year under the various schemes:
35,000 total places a year under the First Home Guarantee; this is an increase from the 10,000 currently available
5,000 additional places a year under the Family Home Guarantee, from 1 July 2022 to 30 June 2025
10,000 places under the Help to Buy Scheme
10,000 places under a planned Regional First Home Buyer Support Scheme are expected to start in January 2023.
Who is eligible?
Australian citizens at least 18 years of age
Singles earning up to $125,000
Couples with a joint taxable income of $200,000
Deposit:
At least 5%
Evidence of funds to cover stamp duty, legal fees, bank fees etc.
Ownership:
First home buyers only
Principal place of residence
Property
An existing house, townhouse or apartment
House and land package
Vacant land with a contract to build a home
Off-the-plan apartment or townhouse
For more resources, the NHFIC has released more information:
4. Family home guarantee
This federal scheme allows eligible single-parent borrowers to buy a home with just a 2 percent deposit and avoid LMI, whether they're first-time buyers or not.
There will be 10,000 Family Home Guarantees made available over four financial years from 1 July 2021 to 30 June 2025. More info here on the NHFIC website including how the Family Home Guarantee is differentiated from the First Home Guarantee.
Who is eligible?
Australian citizens 18 years or older.
Taxable income must not exceed $125,000
Child support payments are not included in the income cap
Ownership:
The scheme is not limited to first-home buyers. You can be a previous homeowner. You can’t currently own a property.
Deposit:
Minimum deposit of 2% of the property value
If deposit is 20% or more you are not eligible for the scheme.
5. Stamp duty concessions.
Most states and territories offer stamp duty discounts for first-home buyers. Depending on the purchase price of the property and where you are buying, you may even be exempt from paying stamp duty at all.
June 2021 Update: Introduced in the 2020-21 Budget, the NSW Government announced a proposal to change the way the current tax system is set up when purchasing properties. This proposal involves giving property buyers the choice to pay stamp duty (and any existing land tax, where applicable) as per the current process, or alternatively elect to pay a smaller annual property tax.