This article was last updated on July 18th, 2023
With recent changes expanding the eligibility criteria, there’s no better time to explore your options and join the homeowner club! If you are curious to learn how this scheme could help make your first homeownership dreams come true, read through as our superstar, Josh Finckler, and South Australia’s best young professional broker 2023 (MFAA), Mathew Denton, share their insights!
Keen to learn more about tips and schemes that could help? Scroll to the very end for our bonus tips and tricks!
What is the First Home Guarantee Scheme?
The First Home Guarantee Scheme is an exciting opportunity available to Australians (not only residents! but more on this below) looking to get in the market and, as its name implies, buy their first home.
The initiative is particularly helpful for anyone struggling to save a big enough deposit and will see favourable changes in eligibility criteria from July 2023.
Some of the benefits the scheme offers include:
Lower deposit requirements
Allowing first-home buyers to kickstart their journey with as little as 5% deposit plus an additional 6% in savings to cover potential government fees
Lenders Mortgage Insurance waivers
That can save you anywhere between $5,000 and $30,000 on Lenders’ Mortgage Insurance (LMI) premium costs (which actually protect the lender! not you!)
35,000 places available!
Plenty of opportunities to get into homeownership with 35,000 spots available to get your foot in the door!
Where lenders would traditionally expect you to have at least a 20% deposit plus 6% savings to cover government fees, as well as enough budget for LMI costs to get a home loan, the First Home Guarantee Scheme reduces this threshold significantly, helping you get into the market and into your new home way sooner!
What are the eligibility criteria?
This new financial year also brought significant changes when it comes to eligibility criteria. A more flexible approach has opened more doors for Australians to access the benefits of the scheme. From July 2023, this scheme has opened doors to applicants that satisfy the following conditions:
Be an Australian citizen OR permanent resident
Traditionally, homeownership schemes have been available exclusively to Australian citizens. The First Home Guarantee Scheme brings great news for permanent residents dreaming about homeownership by making them eligible.
Be under the income cap
Are you an individual earning less than $125,000 per year or have a joint income that falls below $200,000 per year (if you are applying with a friend, family member or partner)? If so, we have great news for you, you could be eligible for this scheme!
Be in the market for an owner-occupied property
If an investment property is what you are after, this scheme is not for you. However, if your brand new home is what is on your mind keep reading! An owner-occupied property is basically one in which you intend to live in.
As long as you are not intending to rent out the property, you can still access the first home guarantee scheme.
Stay within the property price cap!
If you have met the previous criteria you will still want to ensure your property is below specific price caps. These changes between states are currently standing at $600,000 in South Australia and can extend up to $900,000 in New South Wales.
Working with your dedicated Rise High broker can help you gain clarity on what the right cap will be depending on the location you intend to buy in. Learning more about house price negotiation may also help expand your options, enabling you to secure properties that could have been sitting slightly above that cap!
Some other things you will want to keep in mind is that the first home guarantee scheme is only available through select lenders (which we can provide you access to through our panel of over 70 lenders!).
It is applicable to brand new homes and builds, as well as existing established properties.
From July 2023, there have been a few additional changes that can bring your homeownership dreams to life sooner. These include:
Eligible for buyers who are not necessarily genuine First Home Buyers
If it has been 10 years or more since you owned a home, you might still be eligible for this scheme. Where most first-home buyer schemes specify that applicants must be genuine first-home buyers, this scheme enables individuals who have had a home in the past, to enter the market again.
A broader understanding of “joint applications”
Ever wondered if you could buy your new home with a friend or sibling? Under this scheme, you can! When considering joint applications, eligibility criteria will no longer limit those applications to couples.
From July 2023, the scheme will also include friends, siblings and relatives as potential members of a joint application.
Stamp Duty exemption
In addition to these, the government has also announced an exemption on stamp duty charges, which applies to first-home buyers looking to buy a brand new home or build.
Its eligibility criteria are very similar to those discussed throughout this article, but can always be further discussed with your trusted mortgage broker.
Are there any other alternatives?
Absolutely! The first home guarantee scheme is only one of a few options first-home buyers have when looking for the right home loan to make their dreams come true!
Some other options you can consider include the:
- First Home Owner’s Grant (also known as FHOG)
- Family Home Guarantee/Regional Home Guarantee
- First Home Super Saver Scheme
You can learn more about these and others by having a read through our article on first-home buyer grants and schemes!
At Rise High, we understand that getting your foot in the door can sometimes feel like a never-ending race!
If you are thinking about purchasing and are struggling to save a big enough deposit, it is important for you to speak to your Rise High broker to discuss and evaluate your options, as there may be lenders outside of these schemes that offer low-deposit and high loan-to-value ratio lending, which could enable you to buy your first home.
Setting realistic expectations and even putting a savings plan in place can also be great ways to ensure your financial dreams can happen in the near future!
Things like working out how to improve your credit score, or maximise your borrowing capacity can also come in handy. Our team will be here to guide you with expert advice and keep you informed every step of the way! And since our mortgage broking services are fee-free, you have nothing to lose.
Get in touch! We can’t wait to empower and support you!