First home owner's grant for first home buyers

What is the First Home Owner Grant?

The First Home Owner Grant (FHOG) is a one-off grant given to first home buyers to help them purchase their own home. The size of the grant differs depending on the state or territory in which your new property is located. There are other first home buyer benefits available to you as well. Again, these depend on the state you’re buying to live in. Some of these benefits may include:

• Stamp duty exemptions (stamp duty is sometimes referred to as transfer duty in some states)

• Stamp duty concessions

• Grants for building a new house on purchased property

All these benefits are intended to incentivise and assist first home buyers to purchase their first home.

Can you get the First Home Owner Grant on an established house?

Grants aren’t limited to just buying houses. They may be used for any form or residential property including townhouses, apartments, units and the like.

While the exact benefits differ across the country, the First Home Buyers Grant may be used to purchase an existing home, so long as it meets the following key points:

To qualify as being substantially renovated, a number of structural (walls, roof, floor, slab, beams, columns, etc) and non-structural (doors, windows, fixtures, etc) improvements must have been made.

As such, buildings that have undergone only cosmetic renovations, or renovations to a single room (such as a kitchen refurbishment) do not qualify for the FHOG.

What other government grants are available for first time home buyers?

In addition to the FHOG, there are a number of other government schemes intended to help Australians finance and purchase their first home. These include: First Home Loan Deposit Scheme (FHLDS) - allows eligible first home buyers to purchase with a deposit of 5%, rather than the typical 20% deposit.

Usually when a buyer makes a deposit under 20% of the purchase price, the buyer has to pay Lenders Mortgage Insurance (LMI) in case they default on the loan. Under the FHLDS, the government guarantees the loan, negating the need for LMI. This can save you thousands of dollars off the cost of your home purchase.

You can find out more about Lenders Mortgage Insurance (LMI) in our guide here. First Home Super Saver Scheme - allows people to leverage their superannuation in the purchase of their first home.

Through the Super Saver Scheme, you're able to make a salary sacrifice up to $15,000 per year. Once this contribution to your fund reaches $50,000, this scheme allows you to withdraw that amount to use towards a first home deposit.

Family Home Guarantee - this newly announced plan allows eligible single parent families to purchase a first home with a deposit as low as 2%.

The Family Home Guarantee was announced as part of the 2021/2022 Federal Budget and is intended to help around 10,000 single parent families over the next four years.

Who qualifies as a first-time buyer?

Specific criteria for eligibility varies according to each state or territory, but there are a number of common criteria across the country. To be eligible for a First Home Owner Grant, common criteria include:

• Applicants must be at least 18 year of age

• Applicants must include at least one Australian citizen or permanent resident

• Any home purchased using the FHOG must be used to live in and not as an investment property

• You must live in the purchased property within 12 months of completed construction or purchase of the property

• You must live in the purchased property for at least six consecutive months (12 months in some areas)

• You may not have previously owned (or have been part owner of ) another property

These eligibility criteria are separate from personal wealth. The First Home Owner Grant is not means tested, so how much you have in the bank will not affect whether or not you receive the grant.

How much deposit do I need as a first-time home buyer?

Typically a deposit is at least 20% of the purchase price of the property, but with the First Home Loan Deposit Scheme (FHLDS), this amount reduces to 5%.

(Note that the lower your deposit, the more you need to borrow and the higher your loan amount, and your repayments.)

The median national property price in Australia is just shy of $550,000. Using this as a benchmark for comparison, a typical 20% deposit would be $110,000. A 5% deposit under the FHLDS amounts to $27,500. That’s quite a saving!

Are you a first-time buyer if you have owned a property before?

If you have previously been a full or part owner of a property, no matter if it was an investment property, rent-to-own, or had a joint mortgage with someone else, you are not eligible for a First Home Owner Grant.

Can permanent residents get the first home owners grant?

Both Australian citizens and permanent residents are eligible for FHOG. In fact, only one person in a couple that applies for a grant is required to be an Australian citizen or permanent resident.

Is the first home owners grant taxable?

The First Home Owner Grant is intended to incentivise and aid first home buyers. As such, the grant is not taxable.

How do first home owner grants work with getting a home loan?

Eligibility for a FHOG is separate from eligibility for a home loan, so having the former in no way guarantees the latter.

While First Home Owner Grants aid first home owners in paying for a property, they are separate from home loans. Whether or not the FHOG can be used as a deposit depends on the individual lending institution responsible for the home loan. 

Some lenders are happy for you to use the grant as a deposit. Others may require you to demonstrate genuine savings when applying for a loan.

If this is the case, the FHOG is not considered part of those genuine savings and you will need to show that you have at least 5% of the purchase price saved.

How do I find the best home loan rates?

If you’re looking to buy your first home and don’t know where to start when it comes to home loans, Compare Club is here with the tools and knowledge to help you on your way.

Everyone's needs are different, and no two lenders are the same. That's why we look across 40 lenders to find the right loan to suit you

We can show you how much you could save when you apply for a mortgage through our extensive lending panel.

All you have to do is click the button below and start comparing home loans. The first home of your dreams is just a click away.