3 ways first home buyers can get help buying their home

Posted: 17 February 2022 5:07 pm
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It's possible to get tens of thousands of dollars in grants, incentives and discounts to buy your first home. Here's how to find where this "free money" is hiding.

Sponsored by home loans from People's Choice. There are few things to consider while you're saving for your first house. We're here to help you with every step of your journey towards buying your first home.

It may not seem like it, but the government really wants you to buy a home.

In fact, every year federal and state governments give away hundreds of millions of dollars worth of revenue in exchange for helping first home buyers get onto the property ladder.

Here are just a few ways you can get their help, to make the prospect of buying your first home more attainable than you thought:

1. Bank up to $15k with the first home owner's grant (FHOG)

first home owner with dog

First home owners grants are a lump sum payment offered by state and territory governments. They're designed with 2 purposes in mind: to help first-timers buy a home and to stimulate the construction of more properties.

In the past, the FHOG was available on both new and established homes, but these days you must be buying a new home (or off the plan, or substantially renovated) to qualify for a grant.

To get access to these funds, you'll have to buy a home valued below a specific cap. This varies between states and territories. For instance, in Victoria it's $750,000 and in South Australia it's $575,000.

It also has to be the first home purchase for everyone named on the sales contract. This means if you're keen to buy a home with a partner and they've been a home owner in the past, then you won't qualify for the grant.

Worried you might miss out on this grant? Don't worry, there are other incentives available. Let's move on to our next helping hand.

2. First Home Loan Deposit Scheme (FHLDS)

man happy home deposit

This scheme allows you to buy a home with a deposit of less than 20% without having to pay lenders mortgage insurance (LMI).

For those unfamiliar with LMI, it's a very expensive insurance premium that borrowers must pay if they want to buy a home with a smaller deposit. The smaller your home deposit, the bigger "risk" you are to banks. LMI gives them peace of mind when approving your loan.

That's because LMI provides your bank with coverage if you default on your loan. That's right: you're paying the LMI premium so they feel more comfortable in taking on the risk of your loan.

LMI premiums can be sky-high. If you have a 10% deposit worth $60,000 saved to purchase a $600,000 home, the LMI premium would be around $24,000. That's a huge amount of money.

That's where the FHLDS comes into play. If you qualify for this scheme, you'll be able to purchase your home with a deposit as low as 5% and you'll pay no LMI. Instead, the government guarantees the difference between your home loan deposit (say 5%) and the 20% deposit the bank would prefer you hand over.

As the example shows, this could translate to a saving of $20,000 or more.

But the government savings don't stop there.

[Sponsored]
There are few things to consider while you're saving for your first house. We're here to help you with every step of your journey towards buying your first home.

3. Stamp duty discounts

home owner with key

The state government charges stamp duty and it applies to every property transaction in Australia. It is charged when you buy a property, but not when you sell.

Stamp duty is typically calculated at a rate of 2–4% of the property's purchase price, depending on your state or territory. It's one of the biggest costs when buying property in Australia.

Unless you are a first home buyer, that is.

Most state governments offer first-time home owners a discount or even a 100% exemption as a way to help make buying a home more affordable.

The actual saving you stand to make depends on:

  • Where the property is located (each state and territory sets its own stamp duty rates)
  • The type of property you buy (new and established homes can have different rates)
  • Your residency status (some states charge a higher levy for foreign buyers)
  • The purpose of the purchase (investment properties usually attract a higher fee than owner occupiers)
  • The purchase price

As I mentioned, every state and territory has a different fee structure and criteria, with some states offering discounts or exemptions worth 100% of the amount owing.

As a guide, in Victoria, you'd pay a stamp duty of $32,695 on a purchase price of $600,000.

For first home owners, this reduces to just $1,625 – a saving of $31,000.

But over in South Australia, you'd pay $26,830 as an owner occupier. Unfortunately, SA currently offers no discounts for first home buyers, so you'd be up for the full charge.

Other state governments provide a discount or concession up to a certain property price cap.

If you were able to access all 3 of these schemes, you have the potential to save up to $45,000 and buy a home with a smaller deposit.

There are other ways to make the prospect of owning a home more achievable too, such as asking your parents to go guarantor on your home loan (which increases your chance of a loan approval) or using the First Home Super Saver Scheme to boost your home deposit.

Compare People's Choice home loans

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Name Product Interest Rate (p.a.) Comp. Rate p.a. Fees Monthly Payment

People's Choice Credit Union Home Loan Package Variable P&IHome≥ 20% Deposit

People's Choice Credit Union Home Loan Package Variable
1.99%
2.45%
  • App: $0
  • Ongoing: $395 p.a.

People's Choice Credit Union Basic Variable P&IHome≥ 20% Deposit

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2.19%
2.20%
  • App: $0
  • Ongoing: $0 p.a.

People's Choice Credit Union Home Loan Package Fixed P&IInvestment 2Y Fixed≥ 10% Deposit

People's Choice Credit Union Home Loan Package Fixed
3.84%
3.29%
  • App: $0
  • Ongoing: $395 p.a.

People's Choice Credit Union Home Loan Package Variable IOHome≥ 5% Deposit

People's Choice Credit Union Home Loan Package Variable
3.04%
3%
  • App: $0
  • Ongoing: $395 p.a.

People's Choice Credit Union Basic Variable P&IHome≥ 5% Deposit

People's Choice Credit Union Basic Variable
2.34%
2.35%
  • App: $0
  • Ongoing: $0 p.a.
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