Government home loans
Because the government recognises that it can be difficult to buy a home when you’re on a low income, especially if you’re a first-time buyer, there are several schemes available to make it easier. You will still have to go through an application process as you would for any other loan, with no guarantee of success, but if you are a responsible person who can manage money well, a government loan could be the solution to your problems.
What type of government home loan you are eligible for will depend on where you live. Here are some examples of government-partnered schemes. Before you apply for any, make sure you do your own due diligence.
Keystart is a Western Australian scheme designed to help people who are struggling to save a deposit. Some users need a 2 per cent deposit if they are buying in a metro area or a 10 per cent deposit if they're buying in a regional area. To be eligible, you'll have to meet a set of criteria including being at least 18 years old and intending to use the property as your main home.
Also available through Keystart are shared equity home loans. These work on a shared ownership principal. Loans are made available so that residents can buy a stake in their homes, with the Housing Authority remaining in partial ownership. This arrangement provides some of the security of home ownership and could put you in a better position to buy a home independently in the future.
HomeStart Finance is a South Australian scheme that allows some applicants to purchase properties with as little as a 3 per cent deposit. There’s no insurance to pay and initial repayments are worked out based not on the interest rate but on what you can afford. You’ll need to be over 18 and either have a good history as a renter or have had savings of $3,000 for at least three months (to prove that you’re reliable). These loans are open to citizens, permanent residents and skilled migrants but can only be used to buy a property you’re going to live in.
Queensland Housing Finance Loan
Queenslanders are also eligible for a scheme that requires no loan insurance. It’s available with a deposit as low as 2 per cent and there are no monthly fees attached. Payments are based on your income, starting at 30 per cent of what you have coming in and never rising above 35 per cent. You’ll need to have a good credit record and a good savings history, have the capacity to keep earning for the full term of the loan, and have enough money in your savings to be able to pay for home insurance, stamp duty and legal fees. The loan is only available if you’re a citizen or permanent resident, own no other property and intend to live in the property you’re buying.