First Home Buying Schemes: New South Wales

Photo by: Henrique Félix on Unsplash.

As a first home buyer (FHB), getting into the property market can be difficult for a range of reasons. With property prices rising, the economy still recovering from major crises like COVID-19, your homeownership dreams may feel out of reach.

However, the NSW and federal governments have introduced a range of schemes for first home buyers in NSW that could help you enter the property market faster and get the keys to your dream home. In this article, we’ll take you through some of these schemes. We will discuss who is eligible for them and how you can find out more so you can make the most of this government support:

  • First Home Buyer Assistance Scheme
  • First Home Owner Grant (New Homes)
  • First Home Loan Deposit Scheme (now the New Home Guarantee)
  • First Home Super Saver Scheme
  • Family Home Guarantee
  • What are your next steps?

First Home Buyer Assistance Scheme

Depending on your eligibility, the First Home Buyer Assistance Scheme provides:

  • Concessional rates on stamp duty (or transfer duty) or
  • A total exemption from transfer duty

This grant applies to first home buyers in NSW purchasing an existing home, new home or vacant land on which they intend to build their first home.

The stamp duty exception you’re eligible for depends on what property you buy. See the table from the NSW Government page on the First Home Buyer Assistance Scheme to determine your eligibility:

Photo Credit: NSW Government – Revenue

First Home Owner Grant (New Homes)

The First Home Owner Grant (New Homes) gives first home buyers in NSW $10 000 towards buying or building a new home, a substantially renovated home, or a home off-the-plan. This could be a house, townhouse, apartment, unit, or other property types.

In order to be eligible, the cost of the property must be no more than $600 000 if you’re buying a newly built property. If you’re buying vacant land to build your property on, the combined cost of the land, building contract, First Home Owner Grant, and other relevant costs must not exceed $750 000.

For substantially renovated properties, the cost must not exceed $600 000. You must also meet some other qualifying conditions, such as proving you are buying a home that:

  • Was mostly removed and/or replaced during renovations
  • The seller, builder, or tenant has not lived in before, during, or after renovations
  • Has not been sold since it was renovated

First home buyers in NSW can apply for this grant through an agent or directly through their relevant government website (as this is a state government initiative.) For more information about this grant and how to apply, check out the NSW Government fact sheet.

First Home Loan Deposit Scheme (or New Home Guarantee)

The First Home Loan Deposit Scheme, or New Home Guarantee as of May 2021, is a scheme that will be offered to 10 000 first home buyers over the next financial year. It allows a first home buyer to buy or build a home with as little as a 5% deposit. As such, they can buy or build their dream home sooner.

Previously, buyers unable to pay a 20% deposit on their home loan would have to pay Lender’s Mortgage Insurance (LMI). LMI is a hefty one-off cost that only protects the bank, not the borrower, if they were to default on their loan. Now, when an eligible first home buyer makes a 5% deposit, the government will supply the remaining 15% to ensure the buyer can access their dream home without extra charges like LMI.

You can apply for this scheme as a single or couple. You will have your income assessed accordingly to determine if you’re eligible. On top of that, you must also prove that you:

  • Are at least 18 years old
  • An Australian citizen
  • Haven’t owned property in Australia before
  • Can meet the 5% deposit requirement
  • Meet the income requirements
  • Move into the property within six months of settlement and continue to live in the property for as long as you’re covered by the scheme/guarantee

Currently, there are 27 lenders participating in this scheme. For more information about how this scheme works and where you can apply, visit the National Housing Finance and Investment Corporation page or message one of our brokers for personalised advice to suit your financial needs.

First Home Super Saver Scheme

This scheme allows Australians to make extra contributions to their super funds. This could help you save for a deposit faster. Therefore, getting your dream home sooner than you might by saving normally.

Through this scheme, buyers can make concessional (before tax) and non-concessional (after-tax) contributions to their super funds. You can then apply to release these voluntary contributions and other related earnings to pay for your home loan deposit. Buyers can release up to $15 000 per year from their super funds for this purpose.

To be eligible for this scheme, you must:

  • Live in the property or plan to live in it as soon as you’re able
  • Move into the property within the first 12 months of securing it
  • Live in the property for at least six months upon moving in

You can discover more about this scheme and apply for it through the Australian Taxation Office (ATO) website.

Family Home Guarantee

If you’re a single parent looking to buy a home, you may be eligible for this scheme. With the Family Home Guarantee, you could be one of 10 000 single parents who buy a home with as little as a 2% deposit.

Over the next four years, the Australian Government is offering this scheme to 10 000 single parents. This scheme is open to all single parents with dependents at home, including first home buyers. To be eligible you must be:

  • At least 18 years old
  • An Australian citizen
  • Have an annual taxable income of no more than $125 000

For more information about the family home guarantee offer, check out this fact sheet from the National Housing Finance and Investment Corporation.

What are your next steps?

Although all these schemes could provide you with exciting new avenues to get into the property market sooner, they can be tricky to understand and time-consuming to apply for. By speaking with an experienced mortgage broker who specialises in services for first home buyers, you can be confident that your home buying journey will be smooth sailing.

As an ethical mortgage broker, we put our customers, the community and the planet before profits. Our free services allow you to compare home loans from over 30 banks, and save you time by preparing your application and chasing up banks for you. And if you manage to secure a home loan with us, we’ll help a family doing it tough in Australia or the Asia Pacific get a home, too.

So, send us a quick message, give us a phone call or schedule a consultation or even apply online for personalised advice regarding your financial situation. And while you’re here, you can check out our mortgage services for customers in Sydney and Newcastle.

Disclaimer: The information provided is general in nature and does not constitute financial advice. Please speak to us for recommendations on your individual circumstances and requirements.