First home buyers in Australia

Despite what you might have heard on Twitter or from your co-workers, things are starting to look a bit better for first home buyers in Australia. According to Australian Bureau of Statistics data (ABS), lending to first home buyers rose to a 12 year high in January 2021, occupying a market share of 36.5%. 

Extremely low interest rates are likely to have caused this gain, but boosts to various first home buyer grants and concessions around the country in the past few years may have also had something to do with it.  

Australian First Home Owner Grants (FHOG) were first introduced in July 2000 through a national scheme separately legislated, funded and administered by the different states and territories. The purpose? To provide a one-off payment to prospective first home buyers to help them break into the property market.

Is it really that easy? Let’s explore.


How much is the First Home Owner Grant?

At the time of writing, every state and territory in Australia offers some form of a FHOG. Read on to see how much you can get from the grant and any eligibility criteria that may apply.

First home owners grant NSW

In New South Wales, the First Home Owner Grant (New Homes) Scheme was amended on 1 July 2017 to cap the grant at new home purchases worth $600,000 and new home buildings at $750,000. The grant here is worth $10,000, provided you meet the eligibility criteria (see eligibility section below). 

To apply for the New South Wales New Homes Scheme or to learn more, visit the NSW Government’s site

First home owners grant VIC

In Metropolitan Victoria (aka Melbourne), first home buyers buying or building a new home can be eligible for a $10,000 First Home Owner Grant, while those in regional Victoria can qualify for a $20,000 bonus. In both regions, the grants are only available on properties that are valued at $750,000 or less.

Visit the State Revenue Office of Victoria for more information. 

First home owners grant QLD

The Queensland First Home Owners’ Grant provides $15,000 towards a potential first home owner’s deposit if they’re buying or building a new house, unit or townhouse worth less than $750,000. Contracts dated from 1 July 2016 to 30 June 2018 can receive a grant of $20,000. 

Visit the Queensland Government for more information on the First Home Owner’s Grant and how you can apply.

First home owners grant WA

In WA, first home buyers can receive up to $10,000 towards buying or building new homes – it is no longer available for established properties.

The maximum value of the property that can be purchased with the grant depends on the property’s location. For example, homes in the Perth metropolitan area (south of the 26th parallel) must not be valued at more than $750,000, while houses north of the 26th parallel can be valued at up to $1 million.

Visit the Western Australian Government’s Department of Finance site for more information on how to apply. 

First home owners grant SA 

South Australia offers a $15,000 grant to first home buyers building or purchasing new homes with a market value of $575,000 or less. 

The South Australian Department of Revenue and Finance has more details on how you can apply. 

First home owners grant TAS

The Tasmanian Government will provide first home buyers with a $20,000 grant until 30 June 2022, provided they purchased or build a new home, not an established one. Unlike other states, Tasmania does not place a limit on the purchase price of the property. 

The State Revenue Office of Tasmania provides more detailed information. 

First home owners grant ACT

Australian Capital Territory first home buyer grants ended in 2019, and was replaced by valuable savings on stamp duty (see below), which is also called the Home Buyer Concession Scheme. Visit the ACT Revenue Office for more information.

First home owners grant NT

The Northern Territory offers a grant of $10,000 towards buying or building a new home. It used to offer the largest grant of $26,000, but this has since been reduced since May 2019. As in Tasmania, your income and house value does not affect your eligibility for the grant, but you should check out nt.gov.au for more information.  

First Home Owner Grant eligibility 

Although the eligibility criteria for each state and territory will be slightly different, you will typically need to meet the following requirements:

  • You are over 18
  • You or your spouse must never have owned a property in Australia prior to 1 July 2000
  • You have not received a first home owner grant in any State or Territory
  • You need to live in the home (as an owner-occupier) for a continuous period of at least 6 months
  • At least one applicant is a permanent resident or Australian citizen

You also need to be an actual human person and not a company or trust, so make sure you aren’t one of those before applying.  

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First home owners stamp duty concessions

It’s not just property prices that have skyrocketed in recent years. Stamp duty costs – aka the transfer tax you pay when purchasing a property or vacant land – has also increased significantly. For example, a $500,000 owner-occupied dwelling in New South Wales will set you back approximately $17,835 in stamp duty fees based on current regulations. 

To alleviate this cost, the different states and territories also offer stamp duty concessions to prospective new home buyers. At the time of writing, these are the available concessions.

Of course, these reductions and discounts assume you already meet the eligibility criteria, which we’ll discuss below. There are also broader stamp duty concessions available to more than first time buyers, which you can see here. 

Calculate your stamp duty

State Stamp duty concessions
New South Wales

No stamp duty on properties up to $650,000 and vacant land up to $350,000. Discounted stamp duty for properties between $650,000-$800,000 and vacant land between $350,000 and $450,000. 

(The caps on these concessions are higher until August 2021). 

Victoria No stamp duty on properties under $600,000 and discounted stamp duty on properties between $600,000-$750,000.
Queensland No stamp duty on properties under $550,000 and vacant land under $400,000. Discounted stamp duty on properties under $550,000.
Western Australia No stamp duty on properties up to $430,000 and land up to $300,000. Discounted stamp duty on properties between $430,000-$530,000 and vacant land between $300,000 and $400,000.
South Australia No stamp duty concessions.
Tasmania 50% discount on stamp duty on established homes up to $400,000
ACT Under the new Home Buyer Concession Scheme, full stamp duty concessions are available for applicants who earn below a certain amount for properties up to $585,000 – see the link above for more detailed information.
Northern Territory No stamp duty on new or established properties up to $500,000 and discounted stamp duty on properties between $500,000-$650,000. According to the Northern Territory State Government website, this discount no longer applies to properties bought after May 6 2019.

What is the First Home Loan Deposit Scheme?

The First Home Loan Deposit Scheme (FHLDS) is an initiative that was announced by the Morrison Government just prior to the 2019 election. Under the scheme, first home buyers who earn a maximum household income of $200,000 will only require a deposit of 5% in order to waive Lenders Mortgage Insurance (LMI) on their purchase, something that could save them as much as $10,000. 

Using first home owners grant as deposit

If you are eligible for the grant, then this injection of cash can potentially make a difference to your ability to buy a home a home.

Domain’s House Price report for the December 2020 quarter found that the median house price across Australia is $852,940, not exactly pocket change, and a 5.8% increase from a year prior. This rises and falls depending on where you live. Darwin, for example, has a median house price of roughly $533,845, whereas Sydney’s average house will set you back roughly $1.2 million.

While cutting down on eating out, coffee, electricity, breathing and other luxury items like food and clean water is seen as the best course of action by some of Australia’s more out-of-touch personalities, it isn’t always that easy for some. Saving 20% for a house deposit can take the average young couple about six and a half years in Sydney. While other capital cities might not take this long, prices can change quickly, and after five years that deposit you thought you needed might no longer be enough. 

This is where either the First Home Owner Grant or the First Home Loan Deposit Scheme can come in handy. If your 20% deposit on a $600,000 house is $120,000, then a $10,000 or $15,000 contribution you can get in certain states can seriously offset some of this cost. Likewise, reducing the deposit you need from $120,000 to $30,000 can also make it much easier to make that first step. 

It isn’t clear yet if you can use both schemes to buy your first home, but using even one of them can be the difference between securing the property or losing it to that annoying couple you hate. 

Does anyone actually use the First Home Owners Grant? 

It would seem that yes, lots of aspiring first home buyers do use the First Home Owners Grant. 

Using State Revenue Office data and comparing it to the ABS’ Lending Indicators data for First Home Buyers, we can see just how many people actually used the grants across Victoria and New South Wales over the 2019/20 financial year as a percentage of total buyers. 

First Home Buyer Grants & Commitments New South Wales Victoria 
Number of First Home Buyer Commitments (2019/20) 28,152 37,244
Number of First Home Owner Grants (2019/20)  6,724 16,470
% of grants to home loan commitments 24% 44%

Source: ABS Lending Indicators data, Victoria State Revenue Office, Revenue NSW. Investment loans excluded. 

So based on this data the First Home Owners Grant is still pretty widely used, with about one-third using it between these two states. Victorian first home buyers appear to have a higher grant usage rate of over 40%, which may have something to do with the state government’s comparatively generous offering of up to $20,000 for properties in regional Victoria. 


What is a first home buyer loan?

While some lenders offer home loans specifically marketed towards first home buyers, there isn’t really such thing as a ‘first home buyer loan’ – first home buyers simply take out regular owner-occupier home loans. But there are some specific things a first home buyer might want to seek out when searching for a good value home loan, such as:

Compare First Home Buyer Loans

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
ZERO APPLICATION FEESFEE FREE OFFSET
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
  • The shorter your loan, the less interest you pay in the long run.
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
  • The shorter your loan, the less interest you pay in the long run.
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS
NSW/VIC/SA METRO & INNER REGIONAL AREAS

Variable Home Loan (Principal and Interest)

  • $5000 Cashback. T&Cs Apply.
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
AN EASY ONLINE APPLICATION
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (LVR < 60%)

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
100% FULL OFFSET ACCOUNT
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
100% FULL OFFSET ACCOUNT

Ocean Owner Occupied (Amounts < $1m, LVR < 60%)

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
UNLIMITED EXTRA REPAYMENTS
UNLIMITED EXTRA REPAYMENTS

Basic Home Loan (Principal and Interest) (LVR < 60%)

    Variable
    More details
    $0 APPLICATION FEE
    $0 APPLICATION FEE

    Budget Home Loan (Principal and Interest) (LVR < 80%)

      Variable
      More details
      LIMITED TIME OFFER
      • Fast turnaround times, can meet 30-day settlement
      • No ongoing or monthly fees, add offset for 0.10%
      • Extra repayments + redraw services
      LIMITED TIME OFFER

      Smart Booster Home Loan Discounted Variable - 1yr

      • Fast turnaround times, can meet 30-day settlement
      • No ongoing or monthly fees, add offset for 0.10%
      • Extra repayments + redraw services
      Variable
      More details
      NO UPFRONT OR ONGOING FEES
      • Fast turnaround times, can meet 30-day settlement
      • No ongoing or monthly fees, add offset for 0.10%
      • Extra repayments + redraw services
      NO UPFRONT OR ONGOING FEES

      Owner Occupier Accelerates - Evaporate (LVR 60%-70%) (Principal and Interest)

      • Fast turnaround times, can meet 30-day settlement
      • No ongoing or monthly fees, add offset for 0.10%
      • Extra repayments + redraw services
      Variable
      More details
      100% FULL OFFSET ACCOUNT
      100% FULL OFFSET ACCOUNT

      Offset Package Home Loan (Principal and Interest) (LVR < 60%)

        Variable
        More details
        NO UPFRONT OR ONGOING FEES
        NO UPFRONT OR ONGOING FEES

        Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 80%)

          Variable
          More details
          100% FULL OFFSET ACCOUNT
          100% FULL OFFSET ACCOUNT

          Offset Package Home Loan (Principal and Interest) (LVR 60%-70%)

            Variable
            More details

            Smart Home Loan (Principal and Interest) (LVR < 80%)

              Variable
              More details
              NO UPFRONT OR ONGOING FEES
              NO UPFRONT OR ONGOING FEES

              Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 90%)

                Variable
                More details
                100% FULL OFFSET ACCOUNT
                100% FULL OFFSET ACCOUNT

                Offset Package Home Loan (Principal and Interest) (LVR 70%-80%)

                  Variable
                  More details
                  NO APPLICATION FEES
                  NO APPLICATION FEES

                  Yard Home Loan (Principal and Interest) (LVR < 80%)

                    Variable
                    More details
                    NO UPFRONT OR ONGOING FEES
                    NO UPFRONT OR ONGOING FEES

                    Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 95%)

                      Variable
                      More details
                      GET A DISCOUNTED GREEN RATE*
                      • Low rate home loan with added benefits, add offset for 0.10%
                      • Save thousands & make an environmentally conscious choice on your loan for homes less than 12 months old
                      • Get a 7.0 star NatHERS rating or higher for up to 1.59% discount on your variable rate home loan T&Cs apply
                      GET A DISCOUNTED GREEN RATE*

                      Green Home Loan (Principal and Interest)

                      • Low rate home loan with added benefits, add offset for 0.10%
                      • Save thousands & make an environmentally conscious choice on your loan for homes less than 12 months old
                      • Get a 7.0 star NatHERS rating or higher for up to 1.59% discount on your variable rate home loan T&Cs apply

                      Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 25, 2022. View disclaimer.

                      First home buyer loan features

                      Interest rates

                      By far the biggest cost factor of a home loan is the interest rate. You only have to spend a few minutes on one of our calculators to see that having a home loan with an interest rate that’s a single percentage point higher than another home loan’s (e.g. 5% instead of 4%) can cost you tens of thousands of dollars extra in interest over the life of the loan.

                      Of course, not everyone can qualify for the lowest interest rate on the market. Your interest rate is often determined by a range of factors, including your LVR (loan-to-value ratio), credit rating, income, expenses, suburb etc.

                      So to give yourself the best chance of qualifying for a low interest rate, you should aim to have at least a 20% deposit (putting your LVR at 80%), have a good track record of paying bills on time and managing your spending, and avoid buying in suburbs that are at risk of price falls (e.g. buying an apartment in an area where lots of other apartment buildings are under construction).

                      Fees

                      While its the biggest expense, the interest rate isn’t the only thing that’ll cost you. Most home loans include upfront and ongoing fees, as well as incidental fees, such as the extra costs of lender’s mortgage insurance (LMI) or refinancing. A helpful guide to the relative cost of a home loan is its comparison rate, which takes the upfront and ongoing fees into account on top of the interest rate. So if a home loan’s comparison rate is significantly higher than its advertised interest rate, you might expect high fees.

                      Features

                      Flexible features such as an offset account or redraw facility can help first home buyers save thousands in interest over the life of the loan and pay it off loan years earlier. Such features may come with added fees or a higher interest rate on the loan, but given the savings they can help you generate, they can be worth the extra cost.

                      Guarantor

                      If you’re really struggling to cough up the dough for a deposit, then you can always speak to someone (usually your parents) about whether they’d consider going guarantor for your home loan.

                      A guarantor acts as a guardian angel for both you and your lender. They sign an agreement stating that they will make any repayments that you yourself fail to meet, protecting both parties from a default. Having this safety net can help you secure a home loan with a small deposit, exempt you from having to pay LMI or even qualify you for a low interest rate.

                      Obviously going guarantor isn’t something to be taken likely as it’s a huge responsibility, but if you have someone that’s willing, you should seek out a home loan that will accept them as a guarantor. While most lenders allow guarantors, they often have restrictions around who can act as one. For instance, most do not allow non-family members to go guarantor, but some do.


                      Savings.com.au’s two cents

                      Don’t feel too helpless if you’re struggling to buy your dream first home. A first home buyer grant is one of several ways you can get help. Other options include the First Home Super Saver Scheme, using a guarantor, financial assistance programs and the new first-home buyer deposit scheme if it comes to fruition. 

                      But keep in mind that government grants and concessions are subject to the ever-changing nature of state budgets and legislation, so don’t hang your hat on them. You should aim to save enough to be able to buy property without a grant, so that it merely serves as an added bonus.    

                      While the information in this article is accurate at the time of writing, it is subject to change. Check your state government’s website to see what the grant requirements are and what changes are in the works.

                      Frequently Asked Questions

                      Eligibility for the First Home Owner Grant (FHOG) depends on the state/territory you live in. But to give you a general idea, eligibility criteria typically includes:

                      • Being an Australian citizen
                      • Being at least 18 years old
                      • You must intend on living in the property (owner occupier)
                      • You can apply as a couple but you must be de facto or married
                      • You must be a first home buyer

                      If you’re thinking about applying for the FHOG, visit your state/territory’s page for more details/eligibility requirements.

                      There are a number of grants and incentives geared towards helping first home buyers purchase their first homes. To give you a quick overview of the government assistance that may be available to you, grants and incentives could include:

                      • New Home Guarantee Scheme: Allows first home buyers to buy or build a brand new home with as little as a 5% deposit without needing to pay LMI
                      • First Home Loan Deposit Scheme: Allows you to buy your first home (doesn’t have to be brand new) with a deposit as little as 5% without paying LMI
                      • First Home Super Saver Scheme: Allows first home buyers to use their super fund to help them accelerate their deposit savings by around 30% through lower taxes and a deemed rate of return.
                      • First Home Owner Grant: One-off payment to help eligible first home buyers purchase their first home

                      While not specifically for first home buyers, you could potentially look into the Family Home Guarantee Scheme, which allows single-parent families to purchase a home with as little as a 2% deposit.

                      As a first home buyer, you may be able to purchase a home with a deposit as low as 5%. Some lenders will offer home loans with a 95% loan-to-value ratio (LVR), meaning you only need to have a 5% deposit. Typically, these loans are less common and can come with a higher interest rate. Some lenders also offer 85 to 90% LVR home loans, meaning you need a 15 to 10% deposit to purchase respectively.

                      However, purchasing with a deposit of less than 20% typically means you need to pay lenders mortgage insurance (LMI). But as a first home buyer, there are government grants and incentives that can allow you to purchase a home with as little as a 5% deposit without needing to pay LMI.

                      Buying first home articles