first home buyers
Image – Canva.
  • There has been significant rebranding of various federal government deposit schemes
  • Many have lifted price and income caps
  • The federal government is set to introduce its own shared equity scheme

There are many changes unfolding in the Australian property-buying landscape which could benefit thousands of Australians.

These include the rebranding of existing federal government deposit schemes to increases in price caps for the Home Guarantee scheme.

Also, earlier in the year, the Regional Home Guarantee was introduced.

So, what does this mean for first-home buyers?

Matthew Patterson, Head of Broker at Great Southern Bank, said that government schemes are a key way savvy first-home buyers can stay ahead of the game and put property ownership within reach.

“Great Southern Bank’s survey of 1,500 Aussies shows budding first homebuyers are relying on government schemes more than ever before, with 72% hoping to use the support compared to just 55% who purchased in the past five years,” he said.

“More than half of the first homebuyers (55%) said they made use of government schemes and financial support, while another 31% have not ruled out taking the step.”

Mr Patterson said that with extensive changes underway, it is crucial that those considering federal and state government support do their homework in order to understand what financial support might be available.

“Buying your first home isn’t just a significant financial investment, it can also be an incredibly complex and time-consuming process to navigate,” he said.

“What stops many from taking advantage of the various government schemes on offer is that they simply haven’t figured out which scheme is best suited to their unique needs.

“By making smart strategic decisions and exploring all schemes and support available, it might just be possible to map out a buying journey that could shorten the time to save a deposit by up to a decade.”

Matthew Patterson, Great Southern Bank

What home loan deposit schemes are there in Australia?

Designed to help eligible home buyers purchase sooner, the Home Guarantee Scheme is an Australian Government initiative that is administered by the National Housing Finance and Investment Corporation (NHFIC).

This scheme includes the First Home Guarantee (FHBG) and Family Home Guarantee (FHG).

What is the First Home Guarantee (FHBG)?

Recently rebranded from the First Home Loan Deposit Scheme, the FHBG is a popularly used initiative that allows eligible first home buyers to purchase their first home sooner with as little as a 5% deposit, without the added cost of Lenders Mortgage Insurance (LMI).

Both new and existing properties can be purchased by first-time buyers through the Scheme, although there is a limit of the number of places.

Annual places did increase from 10,000 to 35,000 as of 1 July 2022.

What is the Regional First Home Buyer Guarantee (RFHBG)?

The Regional First Home Buyer Guarantee seeks to support eligible first home buyers that already live in the country, but allowing them to purchase a home with as little as a 5% deposit.

To be eligible, buyers must purchase in the area they have lived in during the past 12 months or in an adjacent area. Currently, this is available for 10,000 regional first-home buyers each year.

It should be noted that eligible regional first home buyers can use the scheme in conjunction with other government programs such as the First Home Super Saver Scheme or state and territory first homeowner grants and stamp duty concessions.

What is the Family Home Guarantee (FHG)?

Falling under the Home Guarantee Scheme umbrella, FHG allows a single parent with dependents to purchase a property with just a 2% deposit. The government will then guarantee up to 18% of the remaining value of the loan. Allocations have increased to 5,000 places annually until 2025.

Single parents with at least one dependent child are eligible. You must be single or divorced to use this initiative – you won’t be eligible if in a de facto relationship or separated.

There are property price caps for the FHG, which vary state by state, and depend whether buying in the city or country. Regardless of where you live, you won’t be able to buy a property for more than $900,000.

What is the Help to Buy program?

A future initiative, the Help to Buy program is a shared equity scheme where home buyers can purchase a property with as little as 2%

Once legislation passes, the proposal is for the government to contribute an equity stake of up to 40% of the purchase price for a new home and 30% for an existing property under a co-ownership model. This is similar to the Keystart scheme in Western Australia, and other state counterparts.

Under this model, the government will own a share of your property until you decide to sell it or refinance later on.

Low to middle-income earners are eligible, provided individuals don’t earn more than $90,000 and couples don’t earn more than $120,000.

“The Grattan Institute has reported the program will best suit older Australians who risk renting into retirement, as well as younger Australians who only have enough savings for a 2% deposit,” said Mr Patterson.

However, it should be noted that If your income increases above the set threshold you’ll have to buy out the government’s stake in part of whole within two years, or sell the property.

“Great Southern Bank has previously supported state-level shared equity schemes, such as the Buy Assist program, which offers financial support for eligible buyers on new properties by providing up to 25% of the purchase price through investor partners, including the Victorian Government and charitable equity programs,” he added.

What about the state and territories?

As mentioned previously, there are various schemes in place at a state and territory level, such as co-ownership programs.

In addition to this, all states offer first homeowner grants for newly built, never-before-lived-in homes.

Grants can reach up to $20,000 and most have strict property value thresholds of around $750,000, although this varies state-by-state.

Although this can limit their use in expensive locations such as inner Melbourne or Sydney, they can go a long way if looking in other cities, outer-suburb or regional areas.

There are also various concessions available for stamp duty, which is probably the most universally dreaded upfront cost for all home buyers.

What other non-government support is there?

Alongside additional state and federal government support, Australians can seek to engage in privatised shared equity and deposit arrangements.

It is important to remember that these platforms are ne in the home ownership sector and are not as regulated as existing government schemes.

Typically, they will seek a return of their money plus a percentage of your home’s increase in value over the years.

“We encourage buyers to undertake extensive research, talk to their broker or lender and consider alternative options first,” he said.

You May Also Like

Australian building costs have continued to soar, but has your insurance cover kept pace?

MCG Quantity Surveyors analysis found underinsurance could cost homeowners over $100K to replace a property, with the issue even more profound in the commercial property sector.

When will Australian property prices fall? One major challenge continues to prop prices up

Property prices are up by over 35% across the country since Covid, and while not the same story in each city, that’s little solace to prospective buyers pulling their hair out.

A window of opportunity could be open for savvy Australian property investors, but time is ticking

One expert has noticed investors are on the move while there’s less competition and fewer buyers in the marketplace.

Why Aussie property buyers aren’t waiting for rate cuts anymore

A surge in home loans shows buyers aren’t waiting for interest rates to drop before taking the plunge.