3 reasons being a first home buyer right now isn’t as bad as you think
Yes, property prices have surged and the outlook for first home buyers is tough, but it may not be as dire as it seems.
If you're a wannabe first home buyer in Australia and you're feeling disheartened about your prospects, I can completely empathise.
Over the last half a decade, property prices have gone through the roof (pardon the pun, couldn't resist) and some homes are selling for genuinely mind-boggling prices.
Back in July, we launched our FREE First Home Buyer's 8-week ecourse. Short, sweet and easy to follow, the course was designed to help first home buyers understand what options they have to get into the property market sooner.
Hundreds of people have signed up, and I seriously love getting feedback from people, like Marcelo's message in the pic above. We're on a mission at Finder to educate and inform so these kinds of messages make my day.
How to kickstart your first home buyer journey
But what I will do is try to show you that there might still be a way forward for you, on your journey to become a homeowner.
Here are the 3 things I want you to know before you get too discouraged and decide to bow out from the first home buyer journey.
1. You don't need a 20% deposit
You don't even need a 10% deposit.
For first home buyers, it's possible to buy your own little patch of bricks and mortar with just a 5% deposit (without having to pay lenders mortgage insurance), thanks to the First Home Loan Deposit Scheme.
- On a $300,000 home, this is a deposit of $15,000.
- On a $500,000 home, it's $25,000.
- And on a $750,000 home, it's $37,500.
If you're a single parent and you qualify for the loan, you may even be able to buy a home with a 2% deposit, thanks to the Family Home Guarantee.
I'm not saying these are small or easy amounts to save. But they're much more achievable and affordable than the massive 6-figure deposit numbers that are often reported.
Our own Finder data points to the need for a $100,000-plus deposit on an average home in Sydney, and it's true. But these figures are based on averages, not individual circumstances. And, our research has uncovered some proven ways to save for a $100,000 deposit too.
Take a look at your own situation: Where do you want to buy? How much do you earn? What can you afford to spend? Once you've crunched all the numbers, you might realise buying a home is a pipedream right now.
Or you might realise it's completely possible.
2. You don't have to do it alone
In addition to the schemes mentioned above, there are tons of different government incentives, grants and discounts designed to make home ownership more affordable.
I bought my first home in 2004 and the only incentive I could take advantage of back then was a $7,000 FHOG. Not knocking it, it was super helpful. But today, there are lots of "helping hands" you can take advantage of:
- First home owner's grant (FHOG). For new homes, worth up to $15,000.
- First Home Super Saver Scheme. Allows you to salary sacrifice savings to pay less tax, thereby boosting your home deposit savings by thousands of dollars.
- Stamp duty discounts and concessions. Every state and territory has a different program and different criteria, but you could save up to $25,000.
- Victorian Homebuyer Fund. Allows you to buy with a 5% deposit. The government will contribute up to 25% of the purchase price, and will own a share of the home.
Your parents could also potentially help you, without giving you a cent. With a guarantor home loan, they can help you buy a home without having to save a hefty deposit. They don't have to lend you any money – instead, they guarantee part of your loan by giving the bank their property as a security.
3. This might not be your "dream first home"
We all know that, unless we've been gifted a hefty inheritance, the chances of landing our dream home straight off the bat are slim to none.
But even realistic first home buyers can still be attached to different features and aspects that just may not be achievable with your first home.
Specific suburbs, off-street parking, internal laundries, lots of storage and backyards or courtyards: These are just some of the "luxuries" you might have to do without when you buy your first home.
This is what first home buyer Francesca found, at the tail end of her 12-month-plus property search.
"I really wanted to buy around Maroubra – it's where I grew up and I've rented there previously as well. So I was looking there, or around Randwick and Kingsford," she told Finder.
"But I did compromise and moved over just a little bit, because the properties there were so much better value. I wanted something with a bit more space and an entertainment area, and I found something within my budget in Botany, which is only about a 10-minute drive from my family in Maroubra. "