Indigenous home loans – how do they work?

An IBA home loan could help you get into a home with a lower deposit, and gain approval on finance to buy your own home. Available through the Indigenous Home Ownership Program, these loans are part of a wide range of measures introduced by the Australian government to assist Indigenous people in Australia to buy their own homes.

Indigenous Business Australia Home Loans

IBA introduced the Indigenous Home Ownership Program to provide financial assistance to Indigenous Australians and ensure they have access to the property market. Over its history, IHOP has helped over 18,000 Indigenous families into home ownership

These loans can be used for the purpose of purchasing a home that meets your family’s needs, including for the construction of a new home. IBA home loans will not be issued for the purpose of purchasing an investment property or a property that will be used for business purposes.

These home loans and incentives are unique and have a few features that make them stand out from other home loans:

• Low deposit requirement. These types of home loans have lower deposit requirements compared to standard home loans. This means that applicants don’t have to save up for as much of a deposit, helping them to get into the property market sooner.
• Low-interest rate. The interest rate for these types of loans is a concessional interest rate. Your interest rate will be linked to your income so you will be able to afford repayments. This interest rate gradually increases to reach the market variable rate, giving you time to adjust spending and get used to making the mortgage repayments.
• Standard loan terms. These home loans have standard loan terms of up to 32 years, but the loan term may be extended to assist you in repaying your loan.
• Additional finance assistance. There’s also additional finance assistance available for individuals wishing to build a home on communal land.

What are the eligibility requirements for IBA housing loans?

• You must be over 18 years of age.
• At least one applicant must be of Aboriginal or Torres Strait Islander descent.
• You must be able to meet minimum deposit requirements; you may be able to get assistance from the first home buyers grant scheme of your state or territory.
• You must have the capacity to meet housing loan repayments.

What are the steps you need to take in order to apply for an IBA Home Loan?

1. Download and submit an Expression of Interest form, a Confirmation of Aboriginal or Torres Strait Islander Descent form and a completed Consent to use your personal information form, all of which you can find on the IBA website.
2. Along with the forms you will also need proof of income, evidence of your ability to pay legal fees and stamp duty costs, evidence of your ability to pay the deposit and details of current land or home ownership not financed through IBA.
3. If you are deemed eligible, your name will be added to the Expression of interest register and you will be invited to apply for an IBA housing loan as funds become available.
4. When funds become available IBA will contact you and ask you to submit a Housing Loan Application, this will then be used to see if you qualify and how much you may be eligible to borrow.

IBA may only offer you a loan for part of the amount you've requested or need to make your purchase, you will then be required to seek the remainder of the funds from an alternate lender. During the application process, your credit history will be assessed by IBA. You can find out how you stand with your current credit history you can order a credit history check.

What fees do IBA Home Loans have?

There are other fees and charges associated with an IBA Home Loan or purchasing a home in general that will need to be taken into consideration when making this decision.

There are the legal costs associated with home purchase as well as building and pest inspections that should be carried out on the property you are looking at purchasing. You will also have to pay for stamp duty or land tax and mortgage registration fees, if you are a first home buyer you may be eligible for some concessions on some of these.

You can also speak to you lending specialist to discuss any other assistance they can offer for these other costs. Also, speak to IBA about the fees associated with their loans.

Keystart Aboriginal Home Loans

If you live in Western Australia, you can take advantage of a Keystart Aboriginal Home Loan. This gives you two options: to buy the property in a shared ownership scheme with the Department of Housing, or full ownership of the property. The deposit required depends on the size of the loan but begins at 2% for properties below $480,000. No lender’s mortgage insurance (LMI) is charged.

The maximum amount you can borrow depends on whether or not the property is purchased with the Department of Housing in a shared ownership scheme, or you take full ownership, and where in WA you’re buying the property. The maximum loan term is 30 years.

In a shared ownership scheme the Western Australia Housing Authority will fund up to 40% of the property's value.

Find out more about Keystart Home Loans

Frequently Asked Questions about Indigenous Home Loans

• How does an IBA loan work for a first time home buyers?

  You can apply for and receive an Indigenous Home Loan alongside any First Home Owner Grant Scheme as long as you are able to fulfill the eligibility requirements of both schemes. IBA also offers some special offers on their loans for First Home Buyers.

• Can I refinance my current loan with another lender over to an Indigenous home loan?

  Yes you may be able to do this but there may be fees and charges attached to your current home loan that you will need to pay, so it would be best to contact your current lender to discuss this with them before you contact IBA or Keystart.

• Can I take advantage of this scheme to get a home loan if I am a single parent and my children are of Indigenous descent but I am not?

  Unfortunately, you won’t be able to purchase a property under this scheme unless your children are a joint property owner. At least one applicant needs to be of Aboriginal or Torres Strait Islander descent in order to qualify for this scheme. And your children will need to be at least 18 years old before they’re eligible for the scheme or be named on the loan or property documents.

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