The First Home Owner Grant (FHOG), a very common but popular scheme by the Australian government to help first-home buyers. The scheme essentially guarantees that every first-home buyer can purchase their first home without worrying about a deposit.
The government introduced it in July 2000 to offset the effect of GST on first homeownership. So, how much is the grant? What changes happened to this scheme? Are you still eligible for this grant? What are the key considerations when applying for this grant?
How Much Is The First Home Owner Grant In Australia
The first home owner grant is generally a one-time payment for first-home buyers to help them cover the costs associated with buying their first home. But its amount can vary depending on the state or territory you live in.
For example, in Western Australia, the grant is $10k for new home purchases up to $750k outside Peel or Perth. However, if you purchase your home in Peel or Perth, the price must be up to $700k.
Meanwhile, in South Australia, the grant is $15k on new home purchases. In other states, like Victoria, it is $10k, while in Tasmania and Queensland, it is $30k on home purchases up to $750k.
It means the amount of the grant and property cap can change depending on the market conditions. Therefore, you should be cautious when purchasing your first home and applying for this grant.
Eligibility Criteria For The First-Home Owner Grant
To get all the benefits of FHOG, you must fulfil the following eligibility criteria, being an individual.
- You should be buying your first home.
- Your age must be 18, and you should be a permanent resident or an Australian citizen.
- You and your spouse must not have received the Australian First Home Owner Grant in any state or territory of Australia before.
- You or your partner shouldn’t have owned any property in Australia before.
- Also, you must live in your home as the principal place of residence.
- You must start living in your home within 12 months of settlement and continuously live there for 6 continuous months.
Eligibility For Properties
Even if you are eligible, the property you’re buying needs to meet certain rules, too.
- The home must be newly built, off-the-plan, or substantially renovated.
- It can be a house, townhouse, unit, apartment, or even a kit home.
- It must not have been previously lived in or sold.
- The property must be used as your principal place of residence.
- Additionally, the property must adhere to price caps that can vary by state.
Other Costs To Consider
Although the First Home Owner Grant (FHOG) is a valuable government aid, it does not cover all expenses. You’ll still need to budget for:
- Stamp duty, against which some states offer exemptions or concessions for first-home buyers.
- Legal and conveyancing fees for contract reviews and settlement.
- LMI (Lender Mortgage Insurance) is what you need if your deposit is under 20%.
- Inspection cost while ensuring building and pest checks.
- Moving and setup costs include expenses for shifting your furniture, setting up utilities, and managing council rates.
In recent times, it has become even more important to plan for these extra costs due to the high cost of living. Then how can FHOG benefit you?
Benefits Of FHOG For You
FHOG can be a great help for you, especially when houses are recording heights. Recent research says that the average median house price in Australia at present is $825k. The shortage of houses is exacerbating the housing crisis. Currently, the government is falling behind its target of home construction by 262,000 homes. That means that without this help, you may need to spend years saving for a 20% deposit.
But with FHOG, you can save up to $30k, depending on your state. This can help cover:
- Part of your deposit
- Construction costs
- Lender fees and upfront costs
- Legal and conveyancing charges.
Also, in some cases, it may even reduce your loan amount while saving you interest over time.
How To Apply For The First Home Owner Grant
Applying for FHOG is straightforward, but you need to be prepared. So, follow these steps to apply for it:
Confirm Your eligibility
Double-check that both you and the property meet the criteria. This is important because each state has its own rules, therefore, you should visit your state’s revenue office website to verify the information.
Choose Your Application Method
After confirming your eligibility, you have two methods by which you can apply for FHOG.
1. Through your lender or mortgage broker
- This is the most common route to apply.
- In this process, your lender will submit the application on your behalf when you go for a home loan.
- It’s faster and often more convenient, especially if you’re already working with a broker.
2. Directly through your state or territory’s revenue office
- This method is ideal if you’re not using a lender or want to manage the process yourself.
- You’ll need to complete the application form and upload all required documents online or by post.
- Some states may also offer online portals for easier tracking.
3. Gather Required Documents
This step is all about preparation. Having the right paperwork ready will speed up your application. You’ll typically need:
- Proof of identity (passport, driver’s license, birth certificate, Medicare card)
- Proof of residency status (citizenship certificate or visa)
- Bank account details (for direct payment if applicable)
- Contract of sale for purchases or building contract for new builds
- Statutory declarations (if required by your state)
- Evidence of occupancy plans, like a utility connection or a change of address
Make sure all documents are clear, current, and certified if needed. Missing or incorrect paperwork can cause a delay in your approval for FHOG.
4. Submit Your Application
Lodge your application now. If you’re applying through a lender or a mortgage broker, they’ll submit it along with your home loan documents.
However, if you’re applying directly, visit your state’s revenue office website and complete the online form. Then, upload or mail your documents as instructed. Also, recheck all fields before submitting. It’s because each state has its own processing system, so follow their instructions carefully.
5. Wait For Approval and Payment
Once submitted, your application will go for assessment. Wait for some time since the government will check all your details. If anything is missing or unclear, they’ll contact you.
If your application confirms all the requirements, the grant will be paid at settlement for purchases or at the first construction payment for builds. Usually, the processing may take 2-4 weeks, but it can vary in different states. For example, in Queensland and Victoria, the process takes 2-4 weeks, whereas in Western and South Australia, it may take longer, especially during peak periods.
You’ll receive a confirmation once the grant is approved and scheduled for payment.
Combining FHOG With Other Government Schemes
The First-home owner grant is just one government grant, but you can combine it with other schemes too, such as
First Home Buyer Guarantee (FHBG)
Under this scheme, you can buy your first home with just a 5% deposit, and the government guarantees the remaining 15%. By this, it helps you avoid LMI while saving your money on upfront costs.
The government has also lifted the FHBG cap so all eligible first-time buyers can apply for the scheme. Meanwhile, the Regional First Home Buyer Guarantee (RFHBG) is the name under which this scheme operates in different regions.
First Home Super Saver Scheme (FHSSS)
This scheme allows you to use your superannuation fund to buy your first home. You can make voluntary contributions to your super fund and later withdraw up to $50k to use for your first home.
Additionally, the lower tax rate on these contributions allows you to enhance your savings more effectively. It’s therefore a wise strategy to increase your deposit while lowering your taxable income.
Help to Buy (Shared Equity Scheme)
This is a shared equity programme where the government contributes up to 40% of the purchase price for new homes and 30% for existing homes. You only need a 2% deposit, and you won’t need to pay LMI.
The scheme is like you’ll co-own the property with the government, but you can buy back their shares over time. So, it’s ideal if you’re facing issues in meeting traditional lending requirements or want to reduce your mortgage size.
Conclusion
Hence, the First-Home Owner Grant is an effective aid while owning your first home. With rising property prices and shifting market conditions, every bit of support matters. But to make the most of the scheme, you’ll need to meet certain criteria. For example, you must be over 18 years old and make sure this is your first property purchase.
Additionally, for more extensive support, you can combine this scheme with other programmes, such as the FHBG, FHSSS, and the Help to Buy Scheme. These can lighten your financial load and smooth your journey to homeownership.
For more tailored advice, reach out to Nfinity Financials at 1300 GET LOAN, or 0456 456 267.
Frequently Asked Questions
Here are some brief answers to the most common questions first-home buyers ask about the First Home Owner Grant.
Q1. What is the first-home owner grant in Australia?
The First Home Owner Grant (FHOG) is a one-off grant by the Federal Government to assist first home buyers with building or buying a new home.
Q2. Can a first home buyer’s grant be used as a deposit?
Yes, in most cases, the FHOG can be used for your deposit. However, some lenders may still require you to show genuine savings, so it’s best to check with your broker or lender.
Q3. Is the FHOG available for established homes?
No. The FHOG is only available for newly built, off-the-plan or substantially renovated homes that haven’t been previously lived in.
Q4. Can you apply for FHOG and other schemes at the same time?
Yes. You can combine FHOG with other schemes like the First Home Guarantee, FHSSS, or Help to Buy, as long as you meet the eligibility criteria for each.
