Buying your first home will most likely be the biggest financial commitment you make in your life, so it pays to be aware of the grants available to take the edge off. With changes for individuals announced in the 2022 Federal Budget, here are three grants we think you should be on top of.
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First Home Loan Deposit Scheme (FHLDS) and New Home Guarantee (NHG)
The First Home Loan Deposit Scheme (FHLDS) and the New Home Guarantee Scheme (NHG) were created to help Australians enter the property market sooner with a smaller deposit. The FHLDS is for new and existing homes and the NHG is for building or purchasing new homes. For eligible home buyers, the deposit is as low as 5% for first-time buyers or 2% for single parents.
Property price caps
Maximum purchase prices (property price caps) vary according to where your property is located, and which financial year is applicable to your scheme place.
This table serves as a guide only and doesn’t mean you will qualify for these schemes or loans. If you’re unsure of the relevant price cap for the property you are looking to purchase, speak to your finance broker to confirm the price cap.
Region |
FY19-20 & 20-21First Home Loan Deposit Scheme
|
FY21-22FHLDS & Family Home Guarantee
|
|
|---|---|---|---|
| NSW – capital city, regional centres (Newcastle, Lake Macquarie & Illawarra) |
$700,000 | $800,000 | $950,000 |
| NSW – other | $450,000 | $600,000 | $600,000 |
| VIC – capital city, regional centres (Geelong) |
$600,000 | $700,000 | $850,000 |
| VIC – other | $375,000 | $500,000 | $550,000 |
| QLD – capital city, regional centres (Gold Coast & Sunshine Coast) |
$475,000 | $600,000 | $650,000 |
| QLD- other | $400,000 | $450,000 | $500,000 |
| WA – capital city | $400,000 | $500,000 | $550,000 |
| WA – other | $300,000 | $400,000 | $400,000 |
| SA – capital city | $400,000 | $500,000 | $550,000 |
| SA – other | $250,000 | $350,000 | $400,000 |
| TAS – capital city | $400,000 | $500,000 | $550,000 |
| TAS – other | $300,000 | $400,000 | $400,000 |
| ACT | $500,000 | $500,000 | $600,000 |
| Northern Territory | $375,000 | $500,000 | $550,000 |
| Jervis Bay Territory & Norfolk Island | $450,000 | $550,000 | $600,000 |
| Christmas Island & Cocos (Keeling) Island) | $300,000 | $400,000 | $400,000 |
Source: National Housing Finance and Investment Corporation (NHFIC) 2
Usually, first home buyers with a deposit of less than 20% must pay Lenders Mortgage Insurance (LMI), however, under this scheme, the Government acts as a guarantor of the loan, meaning the bank won’t ask for LMI to be paid. 1 Based on the maximum regional price cap under the scheme, first home buyers can save anywhere between $10,000 and $30,000 in LMI fees. 3
Announced in this year’s Federal Budget, from 1 July 2022, 50,000 FHLDS places will be available to eligible first home buyers.
- 35,000 guarantees to support first home buyers with a deposit as low as 5%.
- 10,000 guarantees to support first home buyers in regional areas with a 5% deposit.
- 5,000 guarantees to help eligible single partners with children buy their first home or re-enter the market with a deposit of as little as 2%.
Most eligible first home buyers will also be able to use the scheme together with other Government grants such as the First Home Super Saver Scheme (FHSSS) and First Homeowner Grant (FHOG).
Learn more about the First Home Loan Deposit Scheme here.
First Home Owner Grant (FHOG)
The First Home Owner Grant (FHOG) is a national scheme, funded and administered independently by the states and territories. Under this scheme, a one-off grant is on hand to encourage eligible first home buyers to buy or build their first home. As this is a national scheme, information may vary depending on what state you reside in so make sure you do your research and check the eligibility criteria here.
Keep in mind that if you purchase over the threshold for first home buyer incentives, you’ll have to pay stamp duty. The stamp duty rate varies from state to state and might even be waived if you meet the criteria, so check with your mortgage broker before making any decisions.
First Home Super Saver Scheme (FHSSS)
The First Home Super Saver Scheme (FHSSS) is a tax-effective way for Australians to use the superannuation system to save for part of their home deposit. If you have made super contributions of up to $15,000 per financial year (since 1 July 2017), you can withdraw these amounts from your super and put that towards your deposit.
By saving money for your first home inside a super fund, first home buyers will be able to save faster with the concessional tax treatment of superannuation. 4
Before saving, make sure you:
- Check that your nominated super fund(s) will release the money.
- Ask your fund about any fees, charges and insurance implications that may apply.
- Check that your super fund has your current contact details.
- Be aware that if you receive FHSSS amounts, it will affect your tax for the year in which you make the request to release.
- You will receive a payment summary and you will need to include both the assessable and tax-withheld amounts in your tax return. If you’re worried about staying tax compliant, make sure you speak with an accountant. 5
From 1 July 2022, the maximum voluntary contributions that can be released will be increasing from $30,000 to $50,000. The amount of eligible contributions that can count towards your FHSSS maximum releasable amount for each financial year will remain at $15,000.
Voluntary contributions that can be withdrawn include:
- Salary sacrifice contributions.
- Tax-deductible super contributions.
- Personal super contributions.
Learn more about the First Home Super Saver Scheme here.
Thinking of applying for these schemes? Get your tax returns done soon
Before applying for conditional approval, you’ll need to request to join the FHLDS or NHG waitlist queues from lenders such as NAB, and Commonwealth Bank so make sure you get in quick and speak to your broker about how to go about this.
To apply for any of these schemes, consider preparing your tax returns as soon as possible. While you may not need it for pre-approval for the First Home Loan Deposit Scheme, your tax return will be required when seeking formal or unconditional approval.
For the First Home Super Saver Scheme, you will need to include the assessable FHSS released amount shown on your payment summary as assessable incoming in your tax return for the year you request the release. You will also need to include the tax withheld amount, so you pay the correct amount of tax. 6
As a multi-service firm, our accountants will work with your finance broker to make sure they are across all your financial needs and can ensure you’re staying compliant.
Speak with an expert
It can be incredibly stressful navigating the home loan world, which is why our team is here to help. Our finance brokers can support you on your home buying journey and can help identify the best grants for you and assist you with the application process. Get in touch with our Finance & Lending team today.
