Government housing loans and assistance

Low-income earners and eligible home buyers may qualify for state and federal government housing assistance policies. This ranges from grants for home buyers to government support to get a low-deposit home loan while avoiding some of the extra costs involved.

Can I get a home loan through the government?

The Australian government doesn't issue home loans. But the government does work with lenders and the National Housing Finance and Investment Corporation (a government initiative) to help low-deposit borrowers get home loans.

Federal government home loan assistance

The following are the schemes available:

• First Home Loan Deposit Scheme/New Home Guarantee. Under the First Home Loan Deposit Scheme, a limited number of eligible first home buyers can buy or build a home with just a 5% deposit. You borrow the remainder through an approved lender and then apply for the scheme. This allows you to get a home with a low deposit while avoiding the added cost of lenders mortgage insurance (LMI).
• Family Home Guarantee. This scheme allows eligible single parent borrowers to buy a home with just a 2% deposit and avoid LMI too.
• Regional Home Guarantee. The Regional Home Guarantee lets you buy or build a new home in regional Australia with a 5% deposit while avoiding LMI costs.

State government home loan support

Several state governments have housing loan support policies. These are typically (though not in all cases) shared equity schemes. A shared equity scheme means the buyer and the government share the costs of getting together a deposit. But the catch is that the government gets a share of the property's value.

And don't forget that most state and territory governments offer grants for first home buyers and stamp duty discounts or exemptions.

Western Australia - Keystart

Keystart was established in 1989 to help Western Australians who are unable to meet the deposit requirements of mainstream lenders. The scheme provides low-deposit home loans to WA residents who fall below an income cap. The loans are available with a 2% deposit in metro areas and a 10% deposit in regional areas. First home buyers can also use the state’s first home owner grant scheme to help fund their deposit.

Keystart loans differ from the low-deposit home loans traditional lenders may provide because they do not require lenders mortgage insurance (LMI).

Shared equity home loans

Keystart also offers a shared equity home loan called a Shared Ownership home loan. This loan helps finance properties offered by the Housing Authority. The program enables loan recipients to finance part of the price of the property through a Keystart Home Loan, with the Housing Authority contributing a percentage and sharing ownership.

Keystart’s website offers a full rundown of products as well as questionnaires to determine eligibility.

South Australia - HomeStart Finance

South Australians can increase their borrowing power and reduce the amount they need to save for a deposit through HomeStart, a lender backed by the South Australian government.

HomeStart was launched in 1989 as a government organisation to help South Australians achieve home ownership sooner. The program enables borrowers to avoid paying LMI and instead pay a much less expensive loan provision charge. It also offers loans at 97% LVR for certain groups of customers.

HomeStart also has shared equity loans. HomeStart can contribute between 5% and 25% of your home's value.

Queensland Housing Finance Loan

The Queensland Housing Finance Loan is a low-deposit home loan to help eligible Queenslanders build or buy a home. The loan has variable or fixed rate options and requires only a 2% deposit with no LMI.

The loan is structured to help borrowers meet their repayments. Rather than calculating repayments solely on loan size, term and interest rates, the Queensland Housing Finance Loan also takes into account borrowers’ income. Initial monthly repayments start at 30% of the borrower’s income and will not exceed 35% of their income.

The Queensland government’s website has information on the Queensland Housing Finance Loan, including eligibility requirements and how to apply.

Victorian Homebuyer Fund

If you live in Victoria and have a 5% deposit, the government could contribute up to 25% of your property's value to help you buy the home. The Homebuyer Fund is a shared equity scheme. When the property is sold, the fund receives a portion of the sale price in proportion to the amount it contributed.

Here's a simple example:

• You buy a $600,000 home.
• Your deposit is 5%, or $30,000.
• The Homebuyer Fund contributes 25%, or $150,000.
• You borrow the remaining 70% from a participating lender.
• After 4 years, you sell the home for $700,000. The fund receives 25% of the sale or $175,000.

The scheme has income caps, caps on price values and other eligibility restrictions. You can learn more about the scheme here.

Indigenous Business Australia home loans

If you are an Aboriginal or Torres Strait Islander home buyer, you may qualify for home loan support through Indigenous Business Australia (IBA). IBA offers home loan support through the Indigenous Home Ownership Program, which lets eligible borrowers qualify for loans with low deposits.

Tips for low-income borrowers

The road to home ownership can be a long and challenging one, especially for people on low incomes. Beyond the options listed above, here are some tips to help you.

• You can use the First Home Super Saver Scheme to build your deposit via extra super contributions.
• Read our guide on how to save your house deposit.
• Compare home loans for low-deposit borrowers.
• Learn how people on Centrelink payments can get home loans.
• Talk to a mortgage broker to get expert help.
• Check out more of Finder's money savings tips.