Even as the housing market cools, the upfront cost of purchasing a property still remains the biggest barrier to homeownership for many. 

However, with the new financial year comes new and expanded home buyer assistance schemes for eligible buyers.

From July 1, tens of thousands of new places became available in the federal government’s guarantee schemes. Picture: Getty

Here’s what you need to know.

Federal government schemes

Over the 2022/23 financial year, tens of thousands of places will be available in schemes aimed at reducing the deposit hurdle.

That means eligible buyers can put up a smaller deposit without having to pay Lenders Mortgage Insurance (LMI). Usually, lenders will require borrowers to take out LMI if their deposit is less than 20% of the purchase price.

Here’s an overview of the available schemes:

Home Guarantee Scheme

The Home Guarantee Scheme comprises of several programs targeting first-home buyers and single parents.

  • First Home Guarantee 

From 1 July 2022, 35,000 places are available in the First Home Guarantee each financial year. It allows eligible first-home buyers to purchase of a home with a deposit of at least 5%, without paying LMI.

There are several eligibility requirements for the scheme, including limits on income and property price caps as outlined in the tables below.

  • Family Home Guarantee

From 1 July 2022 to 30 June 2025, 5,000 places are available each financial year to eligible single parents with at least one dependent child. The minimum deposit size for this program is at least 2%.

Buyers may have owned a home previously, but cannot currently own a home.

Other eligibility criteria applies, including income limits and property price caps as outlined in the tables below.

  • Regional First Home Buyer Support Scheme (Upcoming)

Scheduled to start from 1 January 2023, the new Regional First Home Buyer Support Scheme will help 10,000 first home buyers in regional Australia each year.

This scheme allows eligible buyers to purchase a home with a deposit of at least 5% without paying LMI.

To be eligible, buyers must have been living in the regional area where they intend to purchase for at least 12 months. They also need to fall within the income and property price caps as outlined in the tables below.

Help to Buy (to be legislated)

The Labor government’s flagship housing policy, announced during the election campaign, is a national shared equity scheme called ‘Help to Buy’.

Under the scheme, the government would co-purchase up to 40% of a new property (or 30% of an existing home) with an eligible buyer. Over time, the buyer could buy out the government, or pay out their share once the property is sold.

10,000 places will be available each financial year. The scheme is yet to be legislated, with a start date to be confirmed.

Eligibility and requirements overview

Price caps 

To be eligible for each scheme, buyers must also ensure the property purchased remains under the price caps outlined in the tables below.

These caps are reviewed annually by the National Housing Finance and Investment Corporation (NHFIC) with the most recent thresholds set in July 2022.

Price caps for the Home Guarantee Scheme: 

Regional centres are defined as having a population over 250,000 (Newcastle & Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast and Sunshine Coast), recognising that dwellings in regional centres can be significantly more expensive than other regional areas.

You can search the property price threshold for a suburb or postcode on the NHFIC website.

Price caps for the Help to Buy Scheme: 

The scheme is yet to be legislated. You can read more on the proposed scheme on the government’s website.

State government schemes

Each state and territory also has their own schemes designed to help first home buyers. In many cases, buyers can access both state and federal assistance schemes.

Here’s a run down of the key state schemes available.

The First Home Owner Grant (FHOG)

Most states and territories offer a FHOG to assist with buying or building a new home.

NSW, Victoria, Western Australia and Northern Territory all offer a $10,000 grant, Queensland and South Australia offer $15,000 and Tasmania currently has a $30,000 grant.

Eligibility for these grants generally requires the property to be below a certain price cap – except in Northern Territory and Tasmania – however buyers are not subject to an income test.

Stamp duty exemptions and concessions

NSW, Victoria, Queensland, Western Australia and Tasmania all offer stamp duty exemptions and concessions for first home buyers purchasing properties or land valued under a designated price point. They are typically available for the purchase of new and existing properties, except in Tasmania where the concession is only available for an existing property.

ACT’s Home Buyer Concession Scheme

The ACT has replaced the FHOG and stamp duty concessions with its Home Buyer Concession Scheme, which is available for any buyer who has not owned a property during the previous two years. It is available for all types of properties but only to those whose income is below a certain level.

NSW’s optional property tax

From 16 January 2023, first home buyers in NSW will have the option to pay an annual property tax instead of stamp duty.

To be eligible, buyers cannot have previously received any first home buyer grants or duty concessions and the cost of the property must be less than or equal to $1.5 million. If buyers opt for the property tax over stamp duty, they are then committed to paying an annual tax on their property for as long as they own it.

Find out more about the schemes from your Smartline Mortgage Adviser.

It can be a bit of a minefield keeping track of all the available government schemes for first home buyers, particularly as they do change over time.

However, your mortgage broker will be able to help you determine which schemes you may be eligible for and how they will affect when you make your first purchase and what you can spend.

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.