First home buying incentives

By loans.com.au

First published 14 Feb 2023

If you’re a first home buyer, it’s important to be aware of any government incentives that are available to you, as they are designed to help ease some of the financial pressures that come with buying a property.

These grants or schemes are offered by most governments across the states and territories for first home owners, they are cash grants available to those who have never bought a property before. Depending on where you live, the grant amounts and the eligibility criteria change. The following are national incentives that are available for first home buyers:

First Home Owner Grant

The First Home Owner Grant is a nationwide grant, however, the states and territories individually fund this and therefore have their own specific eligibility criteria. So it’s important for first home buyers to educate themselves on the eligibility criteria for the state or territory their property is in.

First Home Loan Deposit Scheme

The First Home Loan Deposit Scheme (FHLDS) is a government initiative designed to help eligible first home buyers secure their first home with a deposit as low as 5% by guaranteeing up to 15% of the value of the home, thus avoiding costly Lenders Mortgage Insurance (LMI).

The 2021-22 Federal Budget announced an extra 10,000 places are to be made available in the scheme from 1 July 2021 to 30 June 2022.

First Home Super Saver Scheme

The first home super saver (FHSS) scheme allows people to save money for their first home inside their super fund and reduce their taxable income.

Eligible first home buyers applying for a home loan can make voluntary concessional and non-concessional contributions to their superannuation fund to help them save for a home.

If the invested amount is made concessionally, it is likely that you will be paying less tax on that amount (as opposed to paying your normal top marginal rate of income tax on it) - which of course goes towards your deposit, instead of ending up in the tax-man's hand.

And secondly, any income earned from your investment in the FHSS (whether that principal investment was made on a concessional or non-concessional basis) will only be taxed at 15% (as opposed to your top marginal rate of income tax). Both of these factors can help you save for a deposit more quickly.

Contributions are made via a super fund, and it's possible to make contributions into more than one fund. Home buyers can make voluntary concessional contributions (before tax) and non-concession contributions (after you've already paid income tax on it) in order to save for a home loan deposit.

The maximum contribution a home buyer can make is limited to $15,000 in one financial year and $30,000 in total. Salary sacrifice contributions are taxed at 15% and non-concessional contributions are taxed at 0%.

Family Home Guarantee

The Family Home Guarantee Scheme was created to help single parents with dependents build or buy a home with a deposit as low as 2% without needing to pay lenders mortgage insurance (LMI). This could benefit single parents that struggle to save up a hefty 20% deposit in order to avoid paying LMI - a near impossible task for someone on a single income with children to look after.

This particular scheme is different to most other government schemes, which are more geared towards first home owners, as it is available to single parents that might have owned a property in the past.

One-off transfer duty concessions

If you aren’t eligible to qualify for any grants but are still a first home buyer, you might be able to take advantage of a one-off transfer duty discount or exemption, formerly known as stamp duty. This is also dependent on the type of property you buy and the purchase price. This can save first home buyers a lot of money. However, the discounts vary state by state so it’s important for first home buyers to educate themselves on the discount for the state or territory their property is in.

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