First Home Buyers Rejoice: How the changes in FHG and FHBA schemes can brighten your future - Nfinity Financials

First Home Buyers Rejoice: How the changes in FHG and FHBA schemes can brighten your future

By: Nfinity Financials0 comments

Homeownership is a dream shared by many, but often the journey can be overwhelming, especially when it comes to financing your dream home. Understanding government programs and navigating the complexities of mortgages can be challenging.

In the current environment of rising inflation in Australia, first-home buyers desperately need good news to reignite their dreams. Thankfully, after the changes in both the First Home Buyer Assistant Scheme and the First Home Guarantee Scheme set in July 2023, now is the time to move forward. From lesser upfront costs to higher property limits, the Australian government has highly incentivized First Home Buyers, both citizens, and residents in Australia, to get back into the market and take strong advantage of the lower prices. 

This blog post will go over the significant changes taking effect soon and their impact on various aspects of the First Home Guarantee Scheme (FHG) and the First Home Guarantee Assistance Scheme (FHGAS). Get ready to take the first step towards homeownership with confidence and ease! 

Who can benefit from these schemes?

Before understanding the changes made to the two schemes and their importance to home buyers, it is necessary to learn about the scheme already in place. FHG and FHGAS have acted as change agents, not only for Australian citizens but also for permanent residents, empowering them to make the initial move toward their homeownership goals. These transformative programs have unlocked doors that were formerly assumed to be locked, from relieving the pressure of hefty down payments to abolishing the necessity for lender’s mortgage insurance (LMI). Numerous people, including permanent residents, have found comfort in these initiatives because they know they have the support they need on the way to fulfilling their dreams of homeownership. Previous to the recent changes, the schemes still boasted some amazing initiatives to help Australian citizens purchasing their first homes have a smoother sailing through the rough seas of the Australian Property market. 

Let’s talk about the schemes now.

First Home Guarantee Scheme (FHG)

The FHGS has been a game-changer for many aspiring first-home buyers across Australia. It attempts to make homeownership more attainable by assisting qualified individuals to enter the property market with a lower down payment. The FHG (First Home Guarantee) scheme, a part of the Home Guarantee Scheme, allowed citizens to secure their purchases with deposits as low as 5%, and still avoid paying LMI. In this scheme, the Australian government essentially acted as a guarantor for 35,000 citizens per financial year to allow much lower deposits. 

However, the scheme was only applicable to:

  • Citizens above the age of 18
  • Buyers purchasing their very first property in Australia
  • Buyers with a taxable income up to $125,000 ($200,000 for couples)
  • Properties under $900,000

To apply for the FHGS, home buyers must be:  

  • applying as an individual or 2 joint applicants  
  • an Australian citizen(s) or permanent resident(s) at the time they enter the loan
  • at least 18 years of age
  • earning up to $125,000 for individuals or $200,000 for joint applicants, as shown on the Notice of Assessment (issued by the Australian Taxation Office) 
  • intending to be owner-occupiers of the purchased property 
  • First-home buyers or previous homeowners who haven’t owned a property in Australia in the past ten years.

Deposit required 

Home buyers applying for the FHGS need to have between 5% and 20% of the value of an eligible property saved as a deposit. The minimum deposit required for the FHGS is 5%, but Participating Lenders may require a higher percentage deposit based on individual financial circumstances.
Home buyers should speak with a Participating Lender to find out whether a deposit is made up of genuine savings for the purposes of their lending criteria and the FHGS. 

Home buyers should confirm with their Participating Lender whether any cash grants received under other Australian Government, State, or Territory schemes or programs can be considered part of their genuine savings. 

Property types and price caps

Under the FHG, home buyers can buy a residential property, including: 

  • 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. 

First Home Buyer Assistance Scheme (FHBAS):

To further assist first-time homebuyers in attaining their homeownership ambitions and building on the success of the FHGS, the government launched the First Home Guarantee Assistance Scheme (FHGAS). By extending the FHGS benefits to permanent residents, this program acknowledges their crucial contribution to Australian society.

Property Caps

FHGAS makes it possible for permanent residents to buy their first home with a lower down payment, making it simpler for them to begin a life in Australia. Previously, any first-home buyers looking to purchase their first home in Australia with a property value up to $650,000 could apply for a full exemption on their stamp duty. Furthermore, From 1 July 2023, the transfer duty exemption threshold for new and existing home purchases by eligible first-home buyers will increase from $650,000 to $800,000, and the concessional rate will increase from $800,000 to $1 million.

The FHBAS also allowed first-home buyers purchasing vacant land with a value up to $350,00 to forgo their stamp duty, with concession rates present for those purchasing properties in the $350,000 to $450,000 range. 

However, to be considered a successful applicant, first-home buyers must:

  • Be above the age of 18
  • Never have owned a property in Australia before
  • Move into the house within 12 months of settlement (for home purchase)
  • Have the property as a principal place of residence for at least 6 continuous months

A Closer Look at the Changes

Now, let us take a closer look at exactly what changes have been made to the schemes, and how they could realize your dreams of home ownership much earlier than you expected.

Availability for Permanent Residents

So far, most of the Australian schemes have been tailored to help citizens obtain their dream homes. However, this is no longer the case. Following the news changes for FY24, the FHGS is now open to both citizens and permanent residents of Australia (FHBAS was already open to residents). Thus, even permanent residents can now forget about LMI and still obtain deposits as low as 5%, thus letting them borrow up to 95% of their chosen property’s value. This should allow permanent residents to have an even playing field in an already challenging housing market while also allowing them to settle easily into the Australian dream of home ownership.

Availability for Non-First Home Buyers

Not only can residents also now apply for the FHG, but the scheme will also be eligible for Non-First Home buyers who haven’t owned a property in the last 10 years! That’s right, any of you looking to get back in the property ownership market after a break can also be eligible for a much lower deposit to make it much easier for you to get back in the game quickly and successfully as well. 

Joint Availabilities

Along with all these new openings for Australians to be eligible for the FHG scheme, the new changes also allow eligible home buyers to join together with friends, siblings, and other family members for joint applications, rather than just with their spouses. This change will once again allow a much larger spectrum of Australian residents and citizens to realize their dreams of home ownership much earlier and with a much lesser financial burden on themselves. 

Higher Property Caps

Finally, for FY24, eligible applicants for the FHBAS can now enjoy its multiple benefits for properties as high as $800,000. That’s a $150,000 jump! On top, the cap for concession rates has been moved up as high as $1,000,000. That means that for most first-home buyers, they will be eligible for both FHG and FHBAS for the same property! This will make for a massive boost for Austalians’ savings this year, which is just the news we needed following the current financial struggles for most of the country. 

Nfinity Financials – Your Pathway to Homeownership

We at Nfinity Financials take great satisfaction in our goal of assisting people in achieving homes. Our knowledgeable team is dedicated to offering specialized solutions that are in line with your objectives because we recognize that every person’s financial position is distinct.

Our professional mortgage brokers are here to help you every step of the journey, whether you are a first-time home buyer interested in the FHG or a permanent resident researching FHGAS. We’ll make sure you’re well-informed when making judgments and will assist you in navigating the plans.

Don’t pass up this chance to use the FHGS and FHGAS to open the door to financial freedom. To speak with our knowledgeable staff right away, visit NfinityFinancials.com or call 1300 GET LOAN to connect with our expert team today. Let us be your guide, and together, we’ll make your dream of owning a home a reality!

Let us be your guide, and together, we’ll make your dream of owning a home a reality!

Bibliography:

  1. https://www.revenue.nsw.gov.au/news-media-releases/support-for-first-home-buyers-is-changing#:~:text=The%20NSW%20Government%20has%20expanded,from%20%24800%2C000%20to%20%241%20million.
  2. https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/assistance-scheme#residence
  3. https://www.nhfic.gov.au/sites/default/files/2023-06/NHFIC_First_Home_Guarantee_Factsheet.pdf
  4. https://www.nhfic.gov.au/support-buy-home

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