The incentives available to Australian first home buyers, state-by-state
First home buyers are out in full force despite COVID-19, and that may well be thanks to the many financial incentives available to them.
The desire for home ownership among Australians is still strong. About 45 per cent of Australian millennials said they will be focusing on buying a property as a financial goal for the next five years, up by three percentage points since February 2020, UBank’s latest Know Your Numbers survey showed.
While there is extensive financial support out there for first home buyers, wading through complicated government and banking resources can be a chore in itself.
Accessing these incentives could potentially be the difference between getting tens of thousands of dollars no help at all, so knowing how the system could work to your favour is important.
Before considering any of these support measures, make sure you understand their eligibility criteria and other terms and conditions they may carry.
Government support for first home buyers
First Home Loan Deposit Scheme
One of the more talked-about government measures, the First Home Loan Deposit Scheme (FHLDS) allows eligible first home buyers across Australia to buy a property with a minimum deposit of 5 per cent without being charged lenders mortgage insurance (LMI).
Usually, a 20 per cent deposit is required if you want to sidestep LMI costs, which can, in some cases, cost up to tens of thousands of dollars. Under the FHLDS, the federal government guarantees the difference .
The scheme does have property price thresholds, so it’s important to check if the price bracket you’re aiming for falls below the cap.
The 2020 federal budget added an additional 10,000 places to the scheme and updated the price thresholds, which better reflect property values in capital cities.
You can access the FHLDS through 27 participating lenders across Australia.
The Commonwealth HomeBuilder Grant provides a one-off $25,000 to eligible first home buyers and other owner-occupiers wanting to build or substantially renovate a new home.
Some conditions include:
- Individuals must earn an annual income of less than $125,000, and $200,000 for couples.
- Property value must not exceed $750,000; or if you are substantially renovating your existing home, the value of your home must not exceed $1.5 million before construction.
- Contract must be signed between 4 June 2020 and 31 Dec 2020.
- Construction work must happen within three months of the contract’s signing.
State-based government support
Aside from the deposit, many Australians seeking to purchase their first property believe stamp duty is one of the biggest barriers between them and home ownership. But most states and territories offer at least some assistance on this cost, including some exemptions, for eligible first home buyers.
- Stamp duty exemption for new homes worth up to $800,000 (temporary measure until July 31, 2021).
- Stamp duty concessions available for new homes up to $1 million. (temporary measure until July 31, 2021).
- Stamp duty exempt for existing properties worth up to $650,000.
- Concessions apply for existing properties between $650,000 and $800,000.
- One-off grants of $10,000 if you buy a new or “substantially renovated” property worth up to $600,000.
- You may also receive the grant if you buy land to build a new home worth up to $750,000 in total (land and home).
- First home buyers may pay $0 in stamp duty on all homes worth up to $600,000. Properties can be new or established.
- Concessions apply for properties worth between $600,000 and $750,000.
- $10,000 first home owner grant when you buy or build your first new home worth no more than $750,000.
- $20,000 for new homes built in regional Victoria (until 30 June 2021).
- No transfer duty payable on all homes valued up to $500,000.
- Concessions available for homes worth between $500,000 and $550,000.
- One-off grant of $15,000 for first home buyers purchasing or building a new home of up to $750,000.
- $5,000 may be granted after you buy or build a new home worth less than $750,000.
- No transfer duty for all homes less than $430,000.
- Sliding scale concessions for homes worth between $430,000 and $530,000.
- One-off first home owner grant of $10,000 if you buy or build a new or “substantially renovated” home.
- Value of property must be below $750,000 if south of the 26th parallel (including all Perth metropolitan areas). The 26th parallel marks the border between northern and southern Australia.
- Value of property must be not exceed $1 million if north of the 26th parallel.
- $20,000 Building Bonus grant for eligible applicants who build a new home on vacant land, or buy an off-the-plan home that is part of a single-tier development (such as a townhouse) before 31 December 2020.
- an off-the-plan duty rebate of 75 per cent of the duty paid (capped at $50,000) for those buying a new unit/apartment, entering a pre-construction contract between 23 October 2019 and 23 October 2021.
- an off-the-plan rebate of 75 per cent of the duty paid (capped at $25,000) for those buying a unit/apartment under construction, entering a contract before December 31, 2020.
- First home owner grant of $15,000 for those buying or building a new home of up to $575,000.
Australian Capital Territory
- Pay no stamp duty on new or established properties of any value if you and your partner's gross (before tax) income is below $160,000. If you have children, the threshold is lifted on a sliding scale, depending on the number of kids you have. The maximum income threshold is $176,650 for households with five or more children.
- Owner-occupiers exchanging contracts before 30 June 2021 may pay no stamp duty on vacant residential blocks for a single house or off-the-plan units up to $500,000. They may also have their stamp duty reduced by $11,400 for off-the-plan unit purchases between $500,000 and $750,000.
- Half price discount on stamp duty for purchases of established homes up to $400,000 until 30 June 2022.
- One-off first home owner grant of $20,000 for new builds or purchases of new builds until 30 June 2022.
- Tasmanian HomeBuilder Grant of $20,000 for eligible new home builds (valued up to $750,000) for contracts entered into before 31 Dec 2020 (subject to income caps).
- Stamp duty discount of up to $18,601 for existing or new homes buyers and those buying land to build a new home, at the value of $650,000 or less.
- $10,000 first home owner grant for new home constructions or purchases of new builds.
- A home renovation grant of up to $10,000 if you purchase an established property as your first home (not for owner-builders or DIY renovators). Applications close 30 November, 2020.
- Similar to the FHLDS, the HomeBuild Access allows new home buyers or those building their new home to take out a home loan with a deposit of as low as 2 per cent, without paying LMI. Property price caps apply.
Home loans for use across Australia
Non-government incentives for first home buyers
It’s not just governments offering first home buyer incentives. Some banks and lenders may also extend financial perks to this growing cohort, as they strive for business in the competitive market.
Lenders mortgage insurance discounts
Incentives from lenders can come in the form of an LMI discount. LMI is a cost that’s typically required by lenders if buyers purchase a home with a deposit smaller than 20 per cent of the property value. LMI can cost some buyers up to tens of thousands of dollars.
It’s a good idea to double check the lender’s loan-to-value ratio (LVR) requirements before deciding whether to apply for an LMI discount offer.
|ME Bank||LMI discounted by 25% for LVRs up to 95%, offer valid to 30 Nov 2020|
|St George||LMI reduced to $1 for LVRs up to 85%|
|Bank of Melbourne||LMI reduced to $1 for LVRs up to 85%|
|BankSA||LMI reduced to $1 for LVRs up to 85%|
|Virgin Money||$0 LMI for LVRs up to 85%. Apply by 29 Nov 2020|
|BankVic||30% of LMI premium refunded to you if LVR is between 85-90% and take out a FHB loan, no LMI on LVRs up to 85%|
|RAMS||If LVR is between 80%-95%, LMI will be refunded up to $5k with a premium of at least $1 payable for LMI by the customer|
|Bank First||No LMI for LVRs up to 85% for Premier Package Home Loan holders where approval conditions are met|
|Unity Bank||Offers a no LMI home loan for FHBs with LVRs up to 85%|
|Southern Cross Credit Union||10% off LMI for first 20 applicants - between 28 Sept and 3 Nov 2020|
While most cashbacks are targeted at refinancing mortgage borrowers, there are 10 mortgage lenders on the RateCity database which offer cashback incentives to first home buyers.
This extra cash could go a long way for many people purchasing their first home, but it’s not a good idea to simply go with the lender offering the highest cashback. Make sure to go through the terms and conditions before applying.
|Illawarra Credit Union||$2,000|
|Credit Union SA||up to $3,000|
|Southern Cross Credit Union||$2,000|
|Reduce Home Loans||up to $2,000|
|Police Bank||up to $2,000|
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Previously a financial writer for RateCity, Alison Cheung specialised in housing and real estate. Since 2015, she has written about commercial and residential property for Domain Group and NewsCorp in print and online, and has been published in both Domain and RealEstate.com.au. Alison is passionate about property investment and innovations in the real estate industry, and firmly believes in the most basic yet vital financial advice ever given: saving for a rainy day.
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Can I get a NAB first home loan?
The First Home Loan Deposit Scheme of NAB helps first home buyers purchase a property sooner by reducing the upfront costs required. This scheme is offered based on a Government-backed initiative, with10,000 available places announced in October 2020.
Suppose your application for the NAB first home buyer loan is successful. In that case, you’ll only need to pay a low deposit, between 5 and 20 per cent of the property value and won’t be asked to pay lender's mortgage insurance (LMI). You’ll also receive a limited guarantee from the Australian government to purchase the property.
If you’re applying for the NAB first home buyer home loan as an individual, you need to have earned less than $125,000 in the last financial year. Couples applying for the NAB first home loan need to have earned less than $200,000 to be eligible. To be considered a couple, you need to be married or in a de facto relationship. A parent and child, siblings or friends are not considered a couple when applying for a NAB first home loan.
The NAB First Home Loan Deposit Scheme is currently offered only to purchase a brand new property, rather than an established property.
Cash or mortgage – which is more suitable to buy an investment property?
Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. However, there may be other factors to think about, such as whether there are other debts to pay down and whether it will tie up all of your spare cash. Again, it’s a personal choice and may be worth seeking personal advice.
A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.
What are the features of home loans for expats from Westpac?
If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.
The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.
When do mortgage payments start after settlement?
Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.
Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.
Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.
What do people do with a Macquarie Bank reverse?
There are a number of ways people use a Macquarie Bank reverse mortgage. Below are some reasons borrowers tend to release their home’s equity via a reverse mortgage:
- To top up superannuation or pension income to pay for monthly bills;
- To consolidate and repay high-interest debt like credit cards or personal loans;
- To fund renovations, repairs or upgrades to their home
- To help your children or grandkids through financial difficulties.
While there are no limitations on how you can use a Macquarie reverse mortgage loan, a reverse mortgage is not right for all borrowers. Reverse mortgages compound the interest, which means you end up paying interest on your interest. They can also affect your entitlement to things like the pension It’s important to think carefully, read up and speak with your family before you apply for a reverse mortgage.
When does Commonwealth Bank charge an early exit fee?
When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.
The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:
- If you switch your loan from fixed interest to variable rate
- When you apply for a top-up home loan
- If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
- When you prepay the entire outstanding loan balance before the end of the fixed interest duration.
The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay.
Remaining loan term
The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.
Where can I get all the information about an ANZ first home buyer’s loan?
As a first home buyer, you may require help and hand-holding, and as such ANZ has the buying your first home section on its website full of important information. ANZ also has a form in this section you can fill out to get a free consultation from an ANZ First Home Coach and create your own plan for buying your first home. This coach will help you understand where your current income is being spent and plan for your home loan repayments. You’ll get a clear picture of the costs involved in purchasing a property and how to budget or save for these costs. The coach will help you understand different deposit options and manage your accounts to enhance your savings.
There are three types of ANZ first home loans - Standard Variable, Fixed, and Equity Manager. The features, interest rates, and terms for each are different, and you can compare them here.
When they apply for an ANZ home loan, first home buyers can also get guidance on applying for the First Home Owner Grant (FHOG). This is a one-off government grant that may be available to you when you’re buying your first home. The eligibility criteria for FHOG differs between the different states and territories, which is why it’s helpful to have expert advice when applying.
Can first home buyers apply for an ING home loan?
First home buyers can apply for an ING home loan, but first, they need to select the most suitable home loan product and calculate the initial deposit on their home loan.
First-time buyers can also use ING’s online tool to estimate the amount they can borrow. ING offers home loan applicants a free property report to look up property value estimates.
First home loan applicants struggling to understand the terms used may consider looking up ING’s first home buyer guide. Once the home buyer is ready to apply for the loan, they can complete an online application or call ING at 1800 100 258 during regular business hours.
How can I apply for a first home buyers loan with Commonwealth Bank?
Getting a home loan requires planning and research. If you are considering a home loan with the Commonwealth Bank, you can find the information you need in the buying your first home section of the bank’s website.
You can see the steps you should take before applying for the loan and use the calculators to work out how much you can borrow, what your monthly repayments would be and the upfront costs you’d likely pay.
You can also book a time with a Commonwealth first home loan specialist by calling 13 2221.
CommBank publishes a property report that may help you understand the real estate market. The bank has also created a CommBank Property App that you can use to search for property. The link to download this app is available on the same webpage.
If you are eligible for the First Home Loan Deposit Scheme, CommBank will help you process your application. The scheme helps first home buyers to purchase a home with a low deposit. You can read details about this scheme here and speak with a CommBank home lending specialist to understand your options.
How to apply for a pre-approval home loan from Bendigo Bank?
Applying for pre-approval on your home loan gives you confidence in your ability to secure finance while looking at potential new homes. You can get a free and personalised pre-approval home loan from Bendigo Bank in just a few minutes, without any credit checks or paperwork.
Bendigo Bank offers pre-approval for home loans that allow you to understand the home loan size you may be able to get before looking for a new home.
With the pre-approval, Bendigo Bank provides an estimate of your borrowing power. This figure incorporates stamp duty, lenders mortgage insurance (LMI) and any first home buyer incentives you may be eligible for. You may also qualify for the First Home Loan Deposit Scheme initiative, depending on your circumstances.
To apply for a pre-approval on your home loan from Bendigo Bank, all you need to do is fill in a smart form. You could also contact the bank directly on 1300 236 344.
What is a low-deposit home loan?
A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.
For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.
As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.
How much is the first home buyer's grant?
The first home buyer grant amount will vary depending on what state you’re in and the value of the property that you are purchasing. In general, they start around $10,000 but it is advisable to check your eligibility for the grant as well as how much you are entitled to with your state or territory’s revenue office.
How much deposit do I need for a home loan from NAB?
The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.
Generally, lenders look favourably on applicants who save up a 20 per cent deposit for their property This also means applicants do not have to pay Lenders Mortgage Insurance (LMI). However, you may still be able to obtain a mortgage with a 10 - 15 per cent deposit.
Keep in mind that NAB is one of the participating lenders for the First Home Loan Deposit Scheme, which allows eligible borrowers to buy a property with as low as a 5 per cent deposit without paying the LMI. The Federal Government guarantees up to 15 per cent of the deposit to help first-timers to become homeowners.