Making Sense of Subsidies

Buying your first home is like a charcuterie board packed with need-to-knows – except instead of delicious bresaola and burrata, it’s stamp duty, loan-to-value ratios and an eclectic selection of grants and subsidies.

If that last one is making your mouth water, you’re in luck. Here’s how to make sense of subsidies and get your hands on some sweet, sweet cash. Hopefully, it’ll help get you in your first home faster.

First Home Owner Grant (FHOG)

The top dog. The big one. The First Home Owner Grant is an offering from the federal government designed to give you a lump sum cash injection to your first home purchase – yeehaw. We can feel the velvet couch already. The amount you can apply for is different in every state and territory, and each has their own criteria for who can apply. We’ve rounded up the top level information here, along with where to find out what’s available where you are:

First Home Owner Grant Victoria

Amount: $10,000
Max. property value: $750,000
Requirements: must be a new home
Find out more.

First Home Owner Grant New South Wales

Amount: $10,000
Max. property value: $750,000
Requirements: must be a new home
Find out more.

First Home Owner Grant Queensland

Amount: $15,000
Max. property value: $750,000
Requirements: must be a new home
Find out more.

First Home Owner Grant Western Australia

Amount: $10,000
Max. property value: $750,000 - $1,000,000 depending on location
Requirements: must be a new or off-the-plan home
Find out more.

First Home Owner Grant Tasmania

Amount: $30,000
Max. property value: n/a
Requirements: must be a new or off-the-plan home
Find out more.

First Home Owner Grant South Australia

Amount: $15,000
Max. property value: $575,000
Requirements: must be a new home
Find out more.

First Home Owner Grant Northern Territory

Amount: $10,000
Max. property value: n/a
Requirements: must be a new home
Find out more.

First Home Owner Grant Australian Capital Territory

The First Home Owner Grant has been replaced with the First Home Buyer Concession.

How to apply for the FHOG

Luckily, in some cases your application for the FHOG can be completed on your behalf by your lender or mortgage broker. You can also apply yourself through your state or territory’s government website. You’ll need evidence of your eligibility and identity, and probably a strong cuppa joe to see you through the process.

Stamp duty concessions

In addition to the FHOG, you can access concessions (read: discounts) on the taxes you owe when buying property. When you buy a home, you have to pay stamp duty. But, as a first home buyer, you can often get an exemption or a discount on how much you need to pay. This can save you tens of thousands of dollars, and allow you to put more of your savings into your property purchase. That’s a shortcut we simply love to see.

Check your state or territory’s government website to find out what’s available in your location. In many cases, your lending team will help you apply these concessions, but it helps to be aware so you don’t miss out.

Home Guarantee

The Federal Government’s Home Guarantee includes a suite of subsidies on offer to first home buyers.

Formerly known as the First Home Loan Deposit Scheme, the guarantee helps first home buyers buy property with as little as a 5% deposit. That means you could purchase a $600,000 home with as little as $30,000 upfront.

The idea is to get first home buyers into their first home sooner, by slashing upfront requirements and reducing the time it takes to save up your deposit.

Once you’ve got a 5% deposit, the remaining 15% of the property price is guaranteed by the government, which helps lenders offer loans to first home buyers with less risk. Plus, the scheme saves you paying pricey lenders’ mortgage insurance, which you usually have to pay when buying property with less than a 20% deposit.

You can use the Home Guarantee to purchase any of the following property types – and no, it’s not exclusive to new builds:

  • an existing house, townhouse or apartment

  • a house and land package

  • land and a separate contract to build a home

  • an off‑the-plan apartment or townhouse

How to apply for the Home Guarantee Scheme

You’re probably thinking – what’s the catch? Unfortunately, there is a small one. The First Home Guarantee only has a limited number of places each year, and you need to secure one of the 35,000 spaces each year to be able to get the benefits.

The better news is your broker or lender can help support you with the application.Find out more here.

Regional Home Guarantee (RHG)

New in this year’s Federal Budget, the Regional Home Guarantee offers 10,000 additional places to first home buyers and those who have not owned a home in the last five years. The caveat is that you must buy or build a new home in a regional area.

Family Home Guarantee Scheme (FHGS)

If you’re a single parent, there’s another area of the First Home Guarantee that might flap your flares: the Family Home Guarantee Scheme. It works in a similar way to the First Home Loan Deposit Scheme, but allows eligible single parents to purchase a family home with as little as a 2% deposit.

There are 5,000 places available each year, and you can use it to buy any of the following property types:

  • an existing house, townhouse or apartment

  • a house and land package

  • land and a separate contract to build a home

  • an off‑the-plan apartment or townhouse

Property price caps vary by location – use this postcode search tool to find out about limits in your area.

You do need to apply, just like the FHLDS, and places are limited. You can find out more about the scheme here.

First Home Super Save Scheme (FHSSS)

For a slightly different flavour on the subsidy smorgasbord, the First Home Super Saver Scheme helps you build a bigger deposit by using the tax environment of your super fund.

Wait, the what?

Don’t worry, we’ve got you. In your super fund, income is only taxed at 15%, whereas outside of super, your income is taxed at your marginal rate – which could be up to 45%, depending on how much you earn. For most of us, it’ll sit somewhere on a sliding scale of 19% - 32.5%.

The FHSSS you park your deposit savings in your super fund, and then release them when you’re ready to buy your property.

You can park up to $15,000 per financial year in your super fund, but these can’t be the payments that come from your employer. They must be additional contributions that you’re putting into your fund either before tax, or after tax.

Let’s say you want to save $20,000 towards your home deposit every year. You could move $15,000 of this into your super fund, and release it when you’re ready to buy. Doing so could reduce the amount of tax you’re paying and free up more money towards your deposit. Plus, in your super fund it’s locked away for safe keeping, so you’re not tempted to spend.

Be sure you’re OK with it staying there, though. If you choose not to use it for property, that’s fine – but it has stay in your super fund. You can’t just have it back for a holiday or a car emergency.

Check with your super fund to see if they have a FHSSS calculator, and find out how much you could save.

Things to watch out for:

  • You need to apply to be a part of the scheme

  • Your employer contributions cannot be released under the scheme

  • Your contributions are still subject to contribution caps

  • You can only release your funds once

  • You must occupy the property you purchase (or do so within 12 months if works are required to make it practical to move in).

  • Your funds can only be released to purchase property. If you don’t buy a home, you can’t access the money.

Find out more at the ATO website.

Can you apply for more than one first home buyer subsidy?

You betcha! Fill your boots – you can apply for multiple schemes and subsidies, and in some cases benefit from multiple at once. For example, getting the First Home Owner Grant and pocketing a tasty stamp duty concession on top. Doing so can save you big money on your property purchase, and get you in your first home sooner. Ah, there’s the velvet couch again.

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Pheweee! If you don’t need a spicy marg after that landslide of information, we’re impressed. Now, Upsider. Armed with this juicy, juicy information, go forth and conquer your property purchase with some extra cheddar in your back pocket!

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