What You Need to Know to Own Your First Home in Australia

By Catsup and Mustard
house for sale

The Australian government has extended three housing schemes into 2021. These aim to help low-income and middle-income first-home buyers having difficulty with saving enough deposits. You can now acquire an existing or new home or buy land for sale and build a house on it, with a low deposit.

First Home Loan Deposit Scheme

The National Housing Finance and Investment Corporation (NHFIC) provides the First Home Loan Deposit Scheme (FHLDS); hence, eligible first-time homebuyers only need as low as a five percent deposit to get a loan. Without the FHLDS, buyers who pay a deposit that is lower than 20 percent are required by lenders to pay mortgage insurance.

The FHLDS grants 10,000 loans every year through different lenders. You can combine the FHLDS with various government programs that you qualify for, such as concessions for stamp duty, first homeowner grants in states and territories, a HomeBuilder grant, or a First Home Super Saver Scheme.

Eligible for purchase under the FHLDS are residential properties such as houses, apartments, or townhouses that are already built, apartments or townhouses being sold off the plan, packages consisting of land a house, or residential land plus a contract for building a house on it.

Eligible are Australian citizens aged 18 and older, single persons, and couples. Friends or family members are not allowed to buy together. There is an income ceiling of $125,000 taxable annual income for single applicants and $200,000 taxable annual income for couples. Applicants must occupy the purchased property as their main residence. They must not have previously owned any property in the country.

Eligible properties have different price caps in different areas. These increased since July 1 to $800,000 in the New South Wales (NSW) regional centres and Sydney; $600,000 in the rest of NSW; $700,000 in Melbourne and Geelong; $500,000 in the rest of Victoria; $600,000 in Brisbane, the Gold Coast, and the Sunshine Coast; $450,000 in the rest of Queensland; $500,000 in Perth; $400,000 in the rest of Western Australia; $500,000 in Adelaide; $350,000 in the rest of South Australia; $500,000 in Hobart; and $400,000 in the rest of Tasmania. It remains at $500,000 in the ACT.

new house

New Home Guarantee

The New Home Guarantee adds 10,000 new loans from July 1, 2021, to June 30, 2022. It does not allow the purchase of residential properties similar to the FHLDS except for existing homes. An existing house can be considered a newly constructed residence if the vendor has substantially renovated or rebuilt it. A buyer is not allowed to buy an existing home and renovate it.

The eligibility of applicants and other requirements are similar to the FHLDS. In addition, within 90 days after receiving preapproval to purchase a new home, you must secure a sale contract. If the property is off-the-plan, the sale contract date must be October 7, 2020, or afterward. Construction must begin within 12 months of the sale contract date and must finish in 24 months.

Newly constructed residences must have been fully built on January 1, 2020, or afterward. Within 90 days after receiving preapproval to build a new home, you must secure a building contract, initiate building in 12 months and finish in 24 months.

Home price caps differ for regional areas, large regional centers, and capital cities. They range from a high $950,000 for the capital city and regional centers of NSW to a low $400,000 for several regional areas.

Family Home Guarantee

From July 1, 2021, to June 30, 2025, 10,000 Family Home Guarantees will be available. This is specifically for single parents who have one dependent child or more who must be in his or her care. The applicant can be the natural parent or the adoptive parent of the child and must be legally responsible for the child’s welfare, daily care, and development. Also eligible is a single parent living with a child, aged 16 to 22, who is receiving a disability pension. The single parent must be an Australian citizen aged 18 or older. There is an income cap of $125,000 taxable annual income, excluding any child support received.

The NHFIC guarantees 18 percent of the loan, hence, an eligible single parent only needs to put up a two percent deposit. The applicant must reside in the purchased property, and loan documents, as well as the title, will bear only the single parent’s name. An applicant need not be a first-time homebuyer but must not own property in the country currently. Eligible properties, as well as home price caps, are similar to the FHLDS.

What are you waiting for? Apply now for the opportunity to buy or build your house.

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