First Home Buyers 5% Deposit

The First Home Buyers Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS), an Australian Federal Government initiative to support eligible home buyers to buy a home faster with a lower deposit and without being exposed to higher fees, charges and interest rates.  It is administered by the Australian Government where a guarantee enables an eligible first home buyer to purchase a home with as little as 5% deposit while waiving expensive Lenders Mortgage Insurance (LMI). Eligibility criteria applies.

 

Deposit required

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Home buyers applying for the scheme need between 5% and 20% of the value of an eligible property saved as a deposit. The minimum deposit required is 5%. On top of the 5% deposit First Home Buyers should also have enough funds to cover any government stamp duties or fees as well as other costs such as conveyancer or solicitor fees, lender fees, moving and set up costs that may be applicable.

 

Benefits

The FHBG is an Australian Federal Government scheme however, in addition to the FHBG many state governments have their own incentives for First Home Buyers such as stamp duty waivers or concessions or government grants for new homes or construction.  Usually, when a home buyer has less than a 20% deposit, they need to pay what's called Lenders Mortgage Insurance (LMI) and they are subjected to higher interest rates.  So, there are a number of savings opportunities for first home buyers. 

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Some advantages for First Home Buyers

• Lower savings deposit required from the beginning - as low as 5%

• Fair and reasonable interest rates in line with that of a customer that has a 20% deposit - this may also result in higher borrowing capacity.

• No Lenders Mortgage Insurance (LMI) payable - Thousands of dollars saved instantly

• Potential for $0.00 stamp duty or a significantly reduced stamp duty! Please check with your State Government 

• Potential for a government grant for a new house and land package or a land and construction purchase. Please check with your State Government 

• No Government Equity in your home.  This may save you tens of thousands of dollars if your home appreciates in value over time.

 

Eligible Residential Properties, may include: 

• an established house, townhouse, unit or apartment 

• a house and land package - This option may also provide for a once off government grant if eligible.

• land and a separate contract to build a home (conditions apply)

• an off-the-plan apartment or townhouse. - This option may also provide for a once off government grant if eligible.

 

Each location has a property price cap and may also be subject to a participating lender's home loan lending policy. 

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Eligibilty

 

To apply for the FHBG, first home buyers must be:  

• individual or two joint applicants 

• an Australian citizen(s) or permanent resident(s)

• 18 years of age

• earning up to a maximum $125,000 for individuals or $200,000 for joint applicants, as shown on the Notice of Assessment or NOA (issued by the ATO) 

• intending to be owner-occupiers (live in the property) of the purchased property 

• First home buyers or previous homeowners who haven't owned a property in Australia in the past ten years.

Contact us today to learn more and to assess eligibility.  This is a guide only and there are other conditions than can be explored with a preapproval.

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PLEASE NOTE - It's very important to consider a pre-approval to confirm your eligibility and likelihood of being approved.

• The is no guarantee of eligibility or approval for this scheme so please discuss your plans with your broker.

• All applications are subject to a full lender assessment of a participating lender.

• Eligible home buyers are responsible for meeting all costs and repayments for home loans associated with the Home Guarantee Scheme including but not limited to stamp duty, application fee and legal costs.

• Property types and price caps apply

• Specific timeframes and criteria apply to different property types and locations. The contract of sale and (if applicable) eligible building contract may need to be executed by specific dates.