11 Dec, 2019
The First Home Buyers Grant is a government scheme introduced in 2000 as an effort to offset the Good and Services Tax (GST) paid upon the purchase of a house.
The grant is currently a lump-sum payment to first home buyers who buy or build a new home. Notorious for changing its terms every couple of years, previously the grant was available for established homes too. For these reasons, it’s important to keep up with the latest terms to check if they apply to your purchase.
The national scheme is administered separately by the states and territories, meaning different sums are available in different locations.
Unlike most other parts of the home-buying process, the grant isn’t means tested i.e. based on income, but rather a set sum per state.
Typically, the first home buyers grant is paid at settlement after a deposit has been made. For this reason, it is unlikely this lump sum could be put down in your deposit and you will need to foot the bill of the deposit yourself.
Yes – permanent residents of Australia are eligible to receive a first home buyers grant, but it must be the first property you have purchased in Australia.
The national scheme is administered separately by the states and territories, consequently, the terms and conditions will vary across different locations.
Generally, to receive the grant:
Generally, you won’t be eligible for the grant if you or your spouse:
According to the scheme, the first home buyers grant is known for having applications incorrectly lodged on their first attempt. In fact, only one in five get it right the first time.
Here is the basic run-down on how to lodge the first home buyers grant application.
Step one: Check your eligibility
To save yourself time and reliance on the grant, check that you are first eligible for the grant. Details for each State or Territory are listed above. Generally, you will need to be over 18, an Australian citizen or permanent resident and, be purchasing or building a new home. Of course, it must also be your first time buying.
Step two: Gather supporting evidence
If you are lodging with an approved agent, you – and if applicable – your spouse or partner must provide a copy of a valid form of identification. You must also provide evidence of citizenship or permanent residency.
If you are lodging on your own, you – and if applicable – your spouse or partner must provide a valid copy of a document from each of the four categories. This works out to be four documents per person. It should be noted that a single document cannot be repeated (a common mistake). The four categories are:
Additional supporting evidence is required if any of the following applies to you:
Step three: Complete the application
If you are lodging with an approved agent, they will take care of this step for you.
If you are lodging the application yourself, there are usually guides available to help you navigate applications as they are frequently lodged incorrectly.
When you find the application, print it out and answer with a blue or black pen. Remember to sign.
Step four: Lodge the application
If you are lodging your application through an approved agent, they will send the application on behalf of you.
If you are lodging the application yourself, find the appropriate address through your state or territory website. These can be found in the table above.
The first home buyers grant is rigid in its use. Once you are deemed eligible, it can basically only be used to contribute to your outstanding loan. This also makes it pretty hard to use for a deposit.
In fact, the grant is not actually paid to the buyers, rather when you get to the settlement period, the money is transferred to your lender and directly taken from your mortgage.
If you’re buying a house and land package, sometimes the grant is approved once you start the construction process.
The grant is typically paid at the time of settlement to your home lender so it can be directly deducted from your home loan. When building, the grant will be approved once your first mortgage repayment is due.
No, the grant is a one-off payment to first home buyers.
No, you will not have to pay tax on your first home buyers grant.
A FHBG calculator can be used to determine the sum of your first home buyers grant based on your location and property.
After eligibility is established, the grant is automatically deducted from your home loan. This ensures it directly pays a portion of your home loan.
Words by Michelle Elias
Are you looking to buy your first home soon? Get in touch with eChoice. Our brokers can help you understand the First Home Owners Grant in your state or territory and ensure your application goes smoothly. Plus, we have access to 100’s of mortgage products, so, we can help you find a competitive deal on your mortgage.
An eChoice home loan expert will be in touch with you shortly.