What is First Home Buyer Support in Australia?

Understanding First Home Buyer Support

Buying your first home is an exciting milestone, but it can also feel overwhelming. The Australian government and lending institutions offer various support options specifically designed to help first home buyers enter the property market. Understanding these opportunities can make the difference between continuing to rent and becoming a homeowner sooner than you might think.

First home buyer support comes in many forms, including grants, stamp duty concessions, low deposit options, and government-backed guarantee schemes. Each option has specific first home buyer eligibility criteria that you'll need to meet, and knowing which support you qualify for is an important first step in your home buying journey.

Government Schemes and Guarantees

The First Home Loan Deposit Scheme is one of the most valuable support mechanisms available. This initiative helps eligible first home buyers purchase a property with a deposit as low as 5% deposit, without the need to pay Lenders Mortgage Insurance (LMI). This can save you thousands of dollars in upfront costs.

Another option is the Regional First Home Buyer Guarantee, which specifically supports buyers purchasing homes in regional areas. This scheme also allows qualified applicants to enter the market with a 5% deposit while avoiding LMI costs.

These guarantee schemes work by having the government guarantee a portion of your home loan, which gives lenders the confidence to approve loans with smaller deposits. This support can be particularly valuable when you're working with a tight first home buyer budget.

First Home Owner Grants and Stamp Duty Concessions

First home owner grants (FHOG) are available in most Australian states and territories, though the amounts and eligibility requirements vary by location. These grants typically range from $10,000 to $25,000 and can be used towards your deposit or other purchase costs.

First home buyer stamp duty concessions can result in substantial savings. Depending on your state or territory and the property value, you may be eligible for a partial or complete exemption from stamp duty. In some cases, this could save you tens of thousands of dollars.

To access these benefits, you'll need to meet specific criteria, which typically include:

• Being an Australian citizen or permanent resident
• Being at least 18 years old
• Never having owned property in Australia before
• Moving into the property as your primary residence
• Purchasing a property below certain price thresholds

Low Deposit Options and Gift Deposits

Beyond government schemes, many lenders offer low deposit options for first home buyers. While a 20% deposit is often considered ideal, you can purchase property with a 10% deposit or even less. Keep in mind that deposits below 20% usually require you to pay LMI, unless you're using a government guarantee scheme.

A gift deposit from family members can also help you reach your deposit goal. Most lenders accept gifted funds, though they'll require documentation proving the money is a genuine gift rather than a loan that needs to be repaid.

Home Loan Options for First Home Buyers

When you're ready to apply for a home loan, you'll encounter various home loan options designed to suit different financial situations. Understanding the difference between a fixed interest rate and a variable interest rate is essential.

A fixed interest rate remains the same for a set period, typically between one to five years. This provides certainty and protection against rate increases, making budgeting more predictable. A variable interest rate, on the other hand, can fluctuate based on market conditions and lender decisions. While it carries more uncertainty, variable rates often come with features like an offset account or redraw facility.

An offset account links to your home loan and uses your savings to reduce the interest you pay. A redraw facility allows you to access extra repayments you've made on your loan. These features can provide flexibility and potentially save you money over the life of your loan.

The First Home Super Saver Scheme

The First Home Super Saver Scheme allows you to save money for your first home inside your superannuation fund. You can make voluntary contributions up to certain limits and later withdraw these contributions, along with earnings, to put towards your first home loan.

This scheme offers tax advantages that can help your deposit grow faster than it would in a regular savings account. It's worth considering as part of your overall savings strategy when preparing your first home buyer checklist.

Preparing Your First Home Loan Application

Before you apply for a home loan, it's important to organise your finances and documentation. Your first home loan application will require evidence of your income, savings, employment history, and expenses. Lenders will assess your financial position to determine how much they're willing to lend you.

Getting pre-approval is a valuable step in the home buying process. This gives you a clear understanding of your borrowing capacity before you start searching for properties, and it shows real estate agents and vendors that you're a serious buyer.

Your first home buyer checklist should include:

1. Checking your credit score and correcting any errors
2. Saving your deposit and keeping records
3. Gathering financial documents like payslips and tax returns
4. Researching which government schemes you're eligible for
5. Understanding the ongoing costs of homeownership
6. Consulting with a mortgage broker who can guide you through your options

Interest Rate Discounts and Comparing Loans

Many lenders offer interest rate discounts for first home buyers or for specific loan features. When comparing loans, don't focus solely on the interest rate. Consider the loan features, fees, flexibility, and whether the loan structure suits your financial situation.

A mortgage broker can help you compare home loan options across multiple lenders and identify which products offer the support you need. They understand the lending criteria of different institutions and can match you with lenders who are more likely to approve your first home loan application.

Taking the Next Step

Buying your first home requires careful planning and the right support. At Empire Road Investments, we specialise in helping first home buyers understand their options and find suitable home loan products. Whether you're exploring government guarantee schemes, comparing interest rates, or working out how much you can borrow, professional guidance can make the process more manageable.

Our team understands the unique challenges faced by first home buyers and can help you access the support you're entitled to. We work with a wide range of lenders to find solutions that match your financial situation and property goals.

If you're ready to start your journey towards homeownership, call one of our team or book an appointment at a time that works for you. We're here to support you every step of the way.

To learn more about Empire Road Investments and how we assist first home buyers Australia-wide, visit our website or reach out today.