First Home Buyers Grant

First-Home Buyers

For many people, buying their first home is guaranteed to be a reasonably stressful experience. Like most things you haven't done before, there is a bit to learn and mistakes can be costly. The best strategy is to systematically do your research and be prepared!

Deposit: Where do I get it from?

This is a fair question, especially if you live in one of the more expensive metropolitan cities. You do have options, and some you may not know about:

• Save for your deposit in the traditional way
• Gifted money
• Equity from another property (usually your parents)
• Pledges from relatives
• You may not need a deposit if you have a good income (see section on Deposit - how much do I need to buy a house)
• Use your First - Home Buyer's Grant
• Use the new First Home Saver Deposit Scheme

Deposit - how much do I need to buy a house?

It used to be that lenders looked for a 20% deposit on a house. These days, lenders will accept as little as 0% deposit but you need to bear in mind that you will still need to cover some or all of your fees associated with your home loan like legal fees, statutory fees and duties. And the interest rates and loan terms might be more competitive than you think.

Honeymoon rates - are they good value?

"Honeymoon" or Introductory rates are widely available and are offered to entice you with a low advertised rate. They are often more than 1% below the standard home loan rate and the rate can be fixed, capped or variable for the first 6-12 months of the loan. After that, they usually revert to the standard rate offered by that lender. One way a lender can offer such cheap interest rates is by limiting the options and features on a loan, which means little flexibility if your situation changes. This may not matter, of course, if you know your circumstances are not going to change.

In this increasingly competitive home loan market, honeymoon home loans are becoming increasingly competitive. One X Inc lender now offers a low rate 5 year honeymoon home loan.  The initial rate is not as low as some other honeymoon home loans but it is substantially lower than the standard variable rate and not only does it last longer, the rate actually drops another .1% at the end of the 5 years.  For more information about this home loan, click here.

" I had no idea I was able to purchase my own first home. I first met Anna Rimac when she was in my shop. Now I've finally been able to get all my favourite things out of storage (as well as out of my parent's way) and into my home because of Anna." Katrina Lawson, NSW

Legal processes, lender fees, inspections and checks

There are a whole range of activities that are associated with buying a house and getting a loan.  From researching loans, finding out how much you can borrow, getting home loan pre-approval, through lender fees and legal fees, stamp duty, building and pest inspections. You can find help on what to expect on how to manage your way through what you need to do on this site.

First Home Buyers Deposit Saver Scheme

The federal government offers a deposit saving scheme for first home buyers called First Home Saver Accounts. It is designed to assist Australians aged 18 and over to save for their first home.

First Home Saver Accounts are designed to provide a simple, tax effective way for Australians to save a deposit for their first home through a combination of a Government contribution and low taxes.

In summary, here is how it works.  The Government will pay a contribution on up to $5,000 (indexed) of individual contributions made each year, and individuals can contribute a maximum of $10,000 each year (indexed).  Investment earnings (or interest) that accrue in the accounts will be taxed at 15 per cent. Withdrawals will be tax free where they are used to purchase a first home to live in.

For more information on the scheme, go to the X Inc First Home Buyer Deposit Saver Scheme web page or to get a fact sheet, you can go to the First Home Saver Accounts Fact Sheet on the federal government website.

(federal) First Home Buyer's Grant Overview

Through the state governments, the Federal Government has a grant available to first-home buyers of $7000 to go towards the purchase of their first property.  In short, to qualify for grant:

• Your application must be made within 12 months of completion of construction or settlement of the home
• You or a joint applicant must be an Australian Citizen or permanent resident. Requirements vary among states and territories regarding the number of applicants who must be an Australian citizen or permanent resident and age of the applicant
• You must be buying or building your first property as a person, not as a company or trust
• You or your spouse must not have previously owned an interest in land in Australia that had a residence on it prior to July 1, 2000
• You or your spouse must not have owned and occupied a home after July 1, 2000
• If you have purchased investment property(ies) after 1 July 2000 as long as you have never owned property before 1 July 2000 and have never lived in the investment property(ies), you should eligible.
• Neither you or your spouse must have claimed this grant previously
• Entering into a building, in the case of owner-builders, must have occurred on or after July 1, 2000
• An eligible home must be located in Australia and be a new or established house, home unit, flat or other type of self-contained fixed dwelling that lawfully can be used as a place of residence
• An eligible home must be occupied by you as your principal place of residence within 12 months of construction of the home. There are minimum periods of occupancy required by each state or territory
• Joint applicants are restricted to a single application for a single property and only one payment of $7000 is made

nsw First Home Buyer's additional incentives

In addition to the federal government grant, each state offers different additional support to first home buyers.  The New South Wales government offers:

First Home Plus

The first home plus scheme provides eligible purchasers with exemptions on transfer duty and mortgage duty on homes valued up to $500 000 and concessions on duty for homes valued between $500 000 and $600 000.

Eligible purchases buying a vacant block of residential land valued up to build their home on will pay no duty on vacant land valued up to $300 000, and will receive concessions on duty for vacant land valued between $300 000 and $450 000.

To qualify for First Home Plus you must meet the criteria listed below:

• The contract and the transfer must be for the purchase of the whole of the property.
• All purchasers must be 'eligible purchasers'.
• At least one eligible purchaser must occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months of completion of the agreement.
• An 'eligible purchaser' is a natural person (ie not a company or trust) at least 18 years of age who has not, and whose spouse/de facto has not:
• At any time owned (either solely or with some one else) residential property in Australia other than property owned solely as trustee or executor.
• Previously received an exemption or concession under First Home Plus

Note: If all purchasers are not 'eligible purchasers' you may still qualify for a concession under First Home Plus One.
 
First Home Plus One
From 1 May 2007, First Home Plus One allows eligible purchasers to buy property with other parties and still receive a concession. To qualify the eligible purchasers must buy at least 50 per cent of the property. The value limits and purchasers eligibility criteria of First Home Plus apply. Transfer duty is calculated with reference to the proportion of the property purchased by other parties. However, this interest is disregarded if it is not more than five per cent.

Full mortgage duty concessions and exemptions apply to mortgages given to assist the purchase of property under First Home Plus One.
You can calculate the exact amount of your concession using the First Home Plus calculator .

Note: if the first home buyer's spouse has previously owned a home or received a benefit under First Home Plus, the first home buyer will not be entitled to First Home Plus One, regardless of whether or not the spouse is also a purchaser.

victoria first home buyer's additional incentives

First Home Bonus
From 1 May 2004, all eligible first home buyers who qualify for the $7000 First Home Owner Grant may also be eligible for an additional payment.  This additional payment is called the First Home Bonus. To be eligible to receive the Bonus payment, the value of the property must not exceed $500,000.

The Victorian Government's election commitments for the 2006 State election extended the current First Home Bonus of $3000 until 30 June 2009 for established homes, and increased the First Home Bonus to $5000 where the property is a new home and the eligible transaction is entered into on or after 1 January 2007 and before 1 July 2009.

The $5000 First Home Bonus is available for transactions such contracts to build, off-the-plan purchases, owner-builders and home which are considered to be new residential premises for GST purposes. A 'new residential premises' has the same meaning as that in section 40-75 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth).

The following table gives a summary of the applicable amount of the First Home Bonus depending on the date the contract of sale was entered into.

CONTRACT DATE	FIRST HOME BONUS AMOUNT	CONDITIONS
From 1 January 2007 to 30 June 2009	$5000	New homes only
	$3000	Established homes only
From 1 January 2007 to 30 June 2009	$3000	Established homes or new homes
From 1 May 2004 to 31 December 2005	$5000	Established homes or new homes

First Home Buyers Information Websites

Below are the government websites that will give you information on First Home Owner schemes in your state, including detail on common questions about general eligibility, qualifying homes, residency requirements, how to make an application, supporting documentation, payment of grant and spouse information.

specific first home buyers Information

For more information specific to first home buyers, visit these pages:

• Fees, Charges and Loans information
• How much can I borrow?
• Deposit - what is the minimum I need to buy a house?
• Legal processes, inspections and checks
• Finance & Home Loans Tips
• Honeymoon rates - are they good value?