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Grants & incentives for first home buyers

For first-time buyers, purchasing a property in the Australian Capital Territory (ACT) can be a daunting task, especially with the current housing shortage and skyrocketing prices. To help ease this burden, the government has implemented various initiatives to make it easier for first-time buyers to enter the property market.

Overview of the First Home Owners’ Grant

How Does the Grant Work?

The first home owners’ grant in the ACT provides a one-off payment of $7,000 (as of the time of writing) to eligible applicants. This payment can be used towards the purchase price of a newly constructed property or one that has undergone significant renovation or remodelling.

Newly constructed properties can include those built by developers, off-plan purchases, or those constructed by the owner themselves with the help of a builder. However, existing properties must undergo substantial renovation to be eligible for the grant, as minor renovations typically do not qualify for first-time home buyer grants.

To be eligible for the grant, the property must not exceed $750,000 in value. To begin the application process, applicants must ensure they meet the eligibility criteria (check here for a full list), and then complete the first home buyers’ grant application form. After submission, the government will assess the application and make a determination of its success.

How much is the First Home Owners’ Grant in ACT?

The First Home Owners’ Grant in the Australian Capital Territory (ACT) is currently $7,000.

Eligibility Criteria for the First Home Owners Grant?

To be eligible for the first home owners grant in ACT, applicants must meet the following criteria:

  1. The applicant(s) must not have owned a home before in Australia.
  2. The applicant(s) must be at least 18 years old.
  3. The applicant(s) must be Australian citizens or have an appropriate visa. Those with temporary visas are not eligible for the grant.
  4. The property being purchased must be a new-build or heavily renovated and must cost less than $750,000.
  5. The applicant(s) must move into the property within 12 months of purchase and live there for at least one year.

Check full list of eligibility criteria over here

Application Process

To apply for the first home owners’ grant (FHOG) in the Australian Capital Territory (ACT), you have two options: you can either submit your application through an approved agent or directly to the ACT Revenue Office.

It’s important to note that you must submit your application within one year of the completion date of the eligible transaction. This includes either the settlement date or the date the Certificate of Occupancy and Use is issued.

For owner-builders, the application can only be submitted within this one-year period if the home has been fully completed.

People Also Asked

Is the First Home Owners’ Grant still available in the ACT?

Currently, the First Home Owners’ Grant is still available in the ACT, as well as in other states across Australia. However, due to annual budgetary pressures, the grant amount may vary in the future or be discontinued on a temporary or permanent basis. It is recommended to apply for the grant once you have identified the property you intend to purchase. New-build properties can be advantageous since they do not have issues like property chains or owners changing their mind about selling at the last minute.

When does the First Home Owners’ Grant end in the ACT?

As of now, there are no plans to end the government grant for first home buyers, but it cannot be guaranteed that an end date won’t be specified in the future.

Does the First Home Owners’ Grant count towards a deposit?

Yes, the First Home Owners’ Grant can count towards a deposit, but it’s important to check with your home loan provider since some providers won’t accept the grant as part (or all) of a deposit due to the timing of its payment. Additionally, $7,000 may not be sufficient for a deposit on a new-build property, so savings may be needed to make up the shortfall.

Can you use the First Home Owners’ Grant to buy land?

No, the First Home Owners’ Grant cannot be used towards the purchase of land. However, if you are buying land to build a property on, it’s possible to get stamp duty relief. At present, if you buy land to build a home that costs less than $281,200, you will not have to pay stamp duty, provided the combined income of all applicants is less than $160,000 per year. Stamp duty on more expensive land purchases then increases gradually, depending on price.

Can you get the First Home Owners’ Grant if you’re married?

Yes, you can get the First Home Owners’ Grant if you meet the other eligibility criteria, regardless of marital status.

Can permanent residents get First Home Owners’ Grant?

Yes, permanent residents can get the First Home Owners’ Grant, provided they meet all the other eligibility criteria.

Can you get the First Home Owners’ Grant twice?

No, the First Home Owners’ Grant is a one-off payment, and you cannot apply for a second grant. In some circumstances, if you have previously been a homeowner, you may still be eligible for the grant, provided you haven’t claimed it before.

Do First Home Buyers pay stamp duty in the ACT?

First Home Buyers may be eligible for stamp duty concessions in the ACT, depending on the value of the property they wish to purchase. For new-build properties under $470,000, no stamp duty is payable, and between $470,000 and $607,000, stamp duty is paid on a sliding scale. No concessions are offered above $607,000. Applicants must have a combined income of less than $160,000 annually to be eligible for stamp duty concessions. Stamp duty relief is only available on new-build properties, and existing properties, even significantly renovated ones, are not eligible.

Can you get a First Home Owners’ Grant on existing homes?

For the First Home Owners’ Grant, existing property rules state that the property needs to have been “significantly renovated.” This usually involves a change of use, such as converting a commercial building into a residential one, bringing a derelict building into use, or converting a much larger residential building into apartments. It’s important to note that the First Home Owners’ Grant scheme aims to stimulate the new-build market, so commonplace renovations, such as building an extension, will not be eligible.

When does the First Home Owners’ Grant get paid to successful applicants?

Successful applicants of the First Home Owners’ Grant receive the payment at different times depending on their situation. If they purchase a new-build property constructed by a developer, the grant is paid once the purchase is complete. On the other hand, for home owners who are building their own home, they can obtain the grant once construction work has begun, usually when the foundations have been laid. It’s essential to note the timing of the payment, especially if planning to use the grant as part of the deposit.

The First Home Loan Deposit Scheme (FHLDS) is a program that enables eligible first home buyers to purchase a property with a minimum deposit of five per cent without having to take out lenders mortgage insurance (LMI). This scheme, which started on 1 January 2020, is backed by the Commonwealth Government, which guarantees the difference between the amount the first home buyer has saved and the 20% deposit threshold that lenders typically require.

For example, if a person has $45,000 saved and wants to buy a $500,000 home, the government would guarantee the first $55,000 of their loan, bringing their security up to $100,000, or 20% of the total property value, excluding government fees. Essentially, the FHLDS functions like a family guarantee, but with the government serving as the guarantor over the loan.

Although the scheme does not provide a cash payment, it can be used in conjunction with other government grants, concessions, and waivers for which a person qualifies. State or Territory-based First Home Owner Grants and stamp duty concessions still apply. From 1 July 2022, the scheme will be expanded to include 35,000 places per year for the purchase of both new and existing homes. This expansion will be ongoing.

Meaning of “New Home”

The term “new home” encompasses various types of properties that are eligible under the New Home Guarantee (NHG) program, including:

  • Newly constructed dwellings, such as freestanding houses, townhouses, or apartments
  • Off-the-plan dwellings, including freestanding houses, townhouses, or apartments
  • House and land packages
  • Land with a separate contract to build a new home

To qualify for the NHG, the borrower purchasing the newly built dwelling must be an eligible first home buyer. However, owner builder constructions are not eligible for the New Home Guarantee.

To learn more about the NHG, individuals can visit the website of the National Housing Finance and Investment Corporation (NHFIC).

Am I eligible for the First Home Loan Deposit Scheme?

If you are wondering whether you are eligible for the First Home Loan Deposit Scheme, you must meet several requirements. You must be an Australian citizen over 18 years old, buying with your spouse or partner, and have never owned a residential property before in Australia, either as an owner-occupier or investor. The eligibility criteria for the temporary New Home Guarantee is the same as the criteria for the FHLDS.

Apart from these criteria, you must also fulfill specific requirements related to your salary, home loan, and the property itself. These requirements are as follows:

  1. Property requirements: For the First Home Guarantee, both newly-built and established properties are eligible, whereas for the New Home Guarantee, eligible first home buyers must build a new dwelling or purchase a newly built dwelling instead of an established property. The property value threshold varies depending on your location and whether you are in a metropolitan or regional area.

  2. Buying as a single or couple: You can qualify for the scheme as an individual buyer or as a couple. However, you are not eligible if you are buying with someone you have a different relationship with, such as a parent or grandparent, sibling, or friend.

  3. Salary threshold: If you are purchasing a home on your own, you must have earned $125,000 or less in the last financial year. If you are buying as a couple, your combined taxable income must be less than $200,000 in the last financial year.

  4. Deposit requirement: To be eligible, you must have saved at least a 5% deposit, which must be demonstrated savings.

  5. Principal and interest loan: Your loan must be a principal and interest home loan for the entire guarantee period, except if you are taking out a loan over vacant land and to construct a new home. In such cases, interest-only loans are eligible while your home is under construction.

Owner/occupiers only

The scheme is exclusively available for those who plan to live in the property they are purchasing, which means you must be an owner-occupier to be eligible.

How to apply for the First Home Loan Deposit Scheme?

New scheme places are released at the start of each financial year.

To apply for the First Home Loan Deposit Scheme, you can visit the National Housing Finance and Investment Corporation’s website to find a comprehensive list of participating lenders. 

The new scheme places become available at the start of each financial year, and you can apply for the scheme through a participating lender, either directly or with the assistance of a mortgage broker.

It’s important to note that you must meet the eligibility criteria, and you’ll be required to provide documentation to prove your eligibility to secure a spot in the scheme.

To be eligible for the First Home Loan Deposit Scheme, you must meet the following criteria:

  • You must be a first home buyer, and you must not have owned or had any interest in any residential property, whether for investment purposes or owner-occupied.

  • If you’re applying individually, you must have earned less than $125,000 in the last financial year, and if you’re applying as a couple, you must have earned less than $200,000 in the last financial year. This information can be verified on your ATO Notice of Assessment.

  • Couples must be married or in a de facto relationship to be eligible. Other parties, such as friends, siblings, or a parent/child, are not eligible.

  • Applicants must be at least 18 years old and have a valid Medicare card or Defence ID.

  • All applicants must be Australian citizens with a valid Australian passport or proof of citizenship. Permanent residents are not eligible.

  • You must have a deposit of between 5% and 20% of the property’s value.

  • The price of the property you’re purchasing must fall within the property price threshold for the suburb and postcode. 

In addition to meeting the eligibility criteria, you should bring all the necessary documents to your first home loan meeting. This includes proof of your current income and expenses, details of your employment status, and information about any debts or credit cards you may have. It’s important to have all of these documents ready to ensure a smooth and efficient application process.

Things to consider before applying for First Home Loan Deposit Scheme

Before applying for the First Home Loan Deposit Scheme, there are several things you should consider. It’s important to ask yourself the following questions:

  • Are you currently employed? If you’re not employed, you won’t be eligible for the scheme.

  • Do you meet the lender’s credit requirements? Your home loan application will be assessed like any other, meaning you’ll need to meet the lender’s income and expenses requirements and have a good credit history.

  • Can you afford to make repayments throughout the entire loan period? A smaller deposit typically means a larger home loan. You won’t be able to switch to interest-only payments while covered by the scheme, so you’ll need to keep up with the same repayments even if your circumstances change.

  • Do you have genuine savings? If you can’t prove that you’ve saved at least five percent of the home’s value, you may not qualify for the scheme at all, even though some lenders may still allow you to borrow.

  • Can you afford the upfront costs, such as stamp duty? Some state and territory governments offer discounts for eligible first home buyers, but you may still need to pay these costs.

  • Are there better alternatives? For example, would it be better to save for a larger deposit and reduce the size of your home loan? It’s important to consider all your options before applying for the scheme.

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