First Home Buyer’s Loan Deposit Schemes

With news of the First Home Loan Deposit Scheme being launched earlier this year, four first home buyer’s deposit schemes are available to assist first home buyers in total this year. 

We have listed general information to help first home buyers understand these 4 first home buyer’s loan deposit schemes and how they can qualify. The information listed below is general. To verify if you are eligible, please ensure you consult your conveyancer, broker, and the ATO. 

1. First Home Super Saver Scheme – are you still saving up your deposit?

If you are saving up for your deposit, the First Home Super Saver Scheme (FHSS) allows you to save money for your first home inside your super fund. From the 1st of July 2017, voluntary additional contributions before and after-tax you make to your super fund can be released for your first home purchase (subject to eligibility requirements). Important – Please ensure you read the eligibility requirements and speaking with the ATO before deciding to ensure this is right for you. 

 What’s the benefit of the FHSS? 

  • Firstly, by contributing to your superannuation before tax (directly from your pay through your employer) will mean that you will be entitled to a concessional (discounted) tax treatment for that specific amount. Superannuation funds are only taxed a concessional rate of 15%. When withdrawing the amount, the standard 15% tax rate for funds apply instead of your personal tax rate. 

For example, if your before-tax income is $90,000, you are generally taxed at 37%. Should you make the additional contribution to your superannuation fund, you will be taxed at 15% instead of 37%. Thereby, saving 22% of the amount added. If you’ve voluntarily contributed $10,000, that equates to $2,200 in taxes.

  • Secondly, the amount of return on the amount contributed is higher. Superannuation funds on average in Australia generated a 9.2% return in 2017/2018. If you place the additional $10,000 onto your savings account, the average return savings rate is 0.98% (according to Mozo). 

That means, if in 2017/2018, you invested $10,000 in your superannuation, your return on average would have been $920 yearly. Whilst if the $10,000 was in your personal savings account, it would have generated $98 per year. You would have lost $822 within that year if the funds were just in your savings account! 

General conditions:

  • Must be 18 years of age or older 
  • Never owned property in Australia 
  • Not previously requested the Commissioner to issue an FHSS release authority concerning the scheme

2. First Home Owner Grant – are you buying a new home or building one?

The second government scheme is the First Home Owner Grant which was introduced to offset the GST on home ownership. The grant is a one-off payment for eligible first home buyers and differs from state-to-state. Generally, you need to be buying or building your first home, with the property’s worth no more than $750,000 (in NSW). 

General conditions:

  • Maximum purchase price amounts apply 
  • A new home that no one has lived in before 
  • Citizenship or PR conditions apply 
  • At least 18 years old 
  • Residence requirements – living there at least six continuous months or moving into the new home within 12 months after buying the property 

3. Stamp Duty Concessions Scheme – do you want a reduction on your stamp duty?

 If you are looking for a discount on your stamp duty, there is the Stamp duty concessions (NSW) where you can get a reduction in how much you pay for stamp duty of up to $750k property price. 

With every property purchase, there are applicable upfront costs on settlement (costs besides the property price). Primarily the associated costs include stamp duty (called transfer duty), legal fees (generally $2,000) & bank-related fees. 

Different states have various schemes to help you reduce the amount payable for full or partial exemption on stamp duty. If the property value is up to $650,000 in NSW, a full waiver generally applies. For properties between $650,000 – $800,000 there are partial reductions. 

To illustrate, if you purchase a property worth $650,000 in NSW, generally you’d have to pay $24,682, but that is waived for you. Hooray! Want to play around with the figures – click here

General conditions:

  • NSW property prices: $650,000 – $800,000
  • Citizenship conditions apply 
  • At least 18 years old 
  • Residence requirements – living there at least six continuous months or moving into the new home within 12 months after buying the property 
  • Applicants never owned or co-owned residential property in Australia 

For more information based on your state:

New South WalesVictoriaQueenslandWestern AustraliaSouth AustraliaNorthern TerritoryAustralian Capital Territory & Tasmania.  

4. First Home Loan Deposit Scheme

The newly announced First Home Loan Deposit Scheme allows eligible first home buyers to purchase a home with as little as 5% deposit (lender’s criteria apply). The government is releasing 10,000 scheme places every year through participating lenders in the scheme to waive their ‘lenders mortgage insurance’ (LMI).

Generally, banks charge an LMI charge for applicants with less than 20% of a deposit which is a one-off cost. This protects the bank or credit provider if borrowers are unable to repay their loans. LMI does not benefit the borrower, it just protects the bank or credit provider.

 For example, if you’re purchasing a property worth $700,000 with a $90,000 deposit, LMI of $25,000 would apply. This cost is now avoided through the scheme if eligibility is met. For more information, here’s an informative guide.

Do you want to check if you qualify? Click here

General conditions:

  • Property price depends on location – up to $700,000 for NSW
  • Citizenship conditions apply 
  • At least 18 years old 
  • Residence requirements – living there at least six continuous months or moving into the new home within 12 months after buying the property 
  • Applicants never owned or co-owned residential property in Australia 
  • Income test applies – maximum of $125,000 taxable income for singles or $200,000 for joint applicants

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