Buying your first home in Australia can be a challenging and rewarding process. The Australian government has expanded the First Home Guarantee scheme to allow more participants an opportunity to purchase a home.
If you are looking to purchase your first home, this blog can help you on your journey. In this article we will discuss what the first home guarantee is, recent changes in eligibility, what properties are eligible, and the property price thresholds.
What is the First Home Guarantee?
The First Home Guarantee (FHBG) is set in place by the Australian Government to help eligible first home buyers enter the property market for the first time. The FHBG allows home buyers to purchase a house with a 5% deposit without having to pay Lenders Mortgage Insurance.
Without the guarantee, home buyers would be required to pay a 20% deposit or face paying thousands to tens of thousands for Lenders Mortgage Insurance. The FHBG is available for 35,000 loans per financial year and can be used in conjunction with other government programs like stamp duty concessions.
The recent changes in First Home Guarantee eligibility
New changes for the First Home Guarantee are set to begin in July 2023. So, what are the recent changes to the First Home Guarantee eligibility?
Previous FHBG Eligibility
- Australian citizens only
- Only married or de-facto relationships are eligible for joint applications
- Applicants must be first time home buyers
Changes from July 2023
- Australian permanent residents can now apply
- Friends and family members are also eligible for joint applications
- Applications are open to people who haven’t owned a home in the last 10 years
The new changes to the First Home Guarantee allow more Australians to enter the property market including permanent residents. The change to joint applications now allows family and friends to purchase a home together. The government has introduced people who haven’t owned a home in the last 10 years the opportunity to use the scheme as they may struggle to re-enter the property market.
What properties are eligible?
A property is only eligible for the FHBG if it is a residential property. Residential properties that meet eligibility include but are not limited to the following:
- Existing houses, apartments, or townhouses
- House and land packages
- Off the plan apartments or townhouses
- Land and a separate contract to build a home
Property price thresholds
To meet eligibility for your desired property, the value of the property must not exceed the property price thresholds for the given locations below:
|State/ Territory||Capital city & regional centres||Rest of the State|
|Jervis Bay Territory & Norfolk Island||$550,000|
|Christmas Island & Cocos Island||$400,000|
First home purchase
Taking the step to purchase your first home is a very exciting time! You’re moving from renting (paying someone else’s house off) to paying off your own home. To get first home purchase ready there are few things that you can do to be seen in a more favourable light by the banks. Here’s a quick list of things to do;
- Pay off and close out all your buy now, pay later (BNPL) accounts.
- Close off any online gambling accounts.
- Reduce the limits and repay any credit cards.
- Repay any personal loans incurring high interest rates.
- Set a budget and stick to it.
- Speak to a mortgage broker about the first home owners grant (FHOG) to see how to qualify.
- Speak to a mortgage broker about pre-approval.
- Save, save and save! Save as much as you can regularly to demonstrate to the bank that you’re a good potential customer.
Getting yourself first home purchase ready is an important part of the journey to first home ownership. Speak to a mortgage broker for more information on what you can do to get first home ready.
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