Can I use the First Home Owner Grants (FHOG) & other rebates as my first home deposit?
The short answer is YES you can use the FHOG and rebates to form all or part of your deposit. At FHBA, our FHBA Coaches are asked the above question almost every day. Therefore, we have decided to dedicate this blog on whether you can use government grants + other incentives to fund the deposit for your first home and what some of the requirements in order to do so.
Disclaimer: Please note our website, including this article, is in no shape or form designed to replace the need to obtain professional advice from experts such as Mortgage Brokers. We always recommend you speak to a licensed professional. Please visit our website’s Terms & Conditions for more information. To speak to a licensed Mortgage Broker please click here.
The state governments offer a range of stamp duty exemptions, grants and other benefits that can help you buy your first home. Recently, we have seen more assistance measures announced by the state governments, aimed at reducing the cost of housing for first home buyers. The recent stamp duty changes mean first home buyers in some areas can potentially purchase their first home using their state’s FHOG on its own.
What are some of the requirements?
At FHBA Mortgages we understand everyone’s circumstance is different and that one size does not fit all. Our panel of lenders (40 + of them) provide different products, rates, and solutions to first home buyers. This makes us well positioned to find a great solution for most aspiring first home buyers looking for their first home loan.
Generally speaking, if you are looking to use the FHOG as the entire amount of your deposit, the following requirements need to be met:
- You need to be renting at the moment and you need to show a satisfactory rental payment history over the last 6 months, to show you can afford loan repayments once you get your first home
- The property you are purchasing must be a ‘brand new’ apartment/townhouse/house that has never been lived in (as the Grants only apply to new houses)
- Good credit history
- Sufficient income to support the home loan repayments (complete the enquiry form below to find out!)
- The Grant must not exceed 5% of the total property purchase price
Example: If you are looking to purchase a brand-new townhouse for $330,000 in the suburbs of Brisbane, the minimum deposit (5%) required is $16,500. As the Queensland government Grant currently stands at $20,000, the Grant would be sufficient to cover the deposit + property purchase costs such as conveyancing and other fees. The Lenders Mortgage Insurance (LMI) can be capitalised onto the loan for first home buyers with some lenders.
If you are looking to use the FHOG for a partial amount of your deposit, the following requirements need to be met:
- You need to show 5% in genuine savings for a period of 3 months or more
- The property you are purchasing must be a ‘brand new’ apartment/townhouse/house that has never been lived in (as the Grants only apply to new houses)
- Good credit history
- Sufficient income to support the home loan repayments (complete the enquiry form below to find out!)
Example: If you are looking to build a brand-new home for $450,000 in the Geelong region of Victoria, to avoid LMI, you need to have saved $90,000 (+ costs) to purchase this property (unless you are using your parents as Guarantor’s). However, if you have saved $75,000 but are looking into the market now, you can use the $20,000 Grant in regional Victoria to make up the remainder of the deposit and to avoid LMI. The additional $5,000 can assist with covering property purchase costs.
Are there any costs involved?
If you are purchasing a new home with the minimum deposit of 5%, LMI will be applicable, regardless of whether you are using your own savings or the FHOG for your first home deposit. Recently, many lenders have opened up their policies by allowing rental payments to be considered as genuine savings for first home buyers only. FHBA Mortgages has access to lenders who will allow you to capitalise LMI onto the loan, allowing you to repay it over the life of the loan – typically 30 or 40 years.
When borrowing more than 90% of the property value, most lenders have slightly higher interest rates (+ 0.1 to 0.5%) as a result of the additional risk they are taking by lending more money.
Can other incentives/rebates be used?
In some cases, you may be allowed to use rebates and developer/builder incentives to pay for the deposit on your first home. It is wise not to factor these amounts as part of your deposit funds, rather these funds can be utilised for purposes such as buying furniture or other household items. The FHBA 50 rebate can potentially be used to form part of your deposit. Click here to find out more!
You may also use the FHOG as part of your 5% deposit for the FHBG Scheme.
Is this an option you would like to explore?
It is never too soon to get in touch with an FHBA Coach. All FHBA Coaches are qualified credit advisers and experts in the first home buyer space. Your FHBA Coach’s lending services are obligation and cost free for all first home buyers. They can help you with the following:
1. FHBA Mortgages – Determine if you are eligible for a zero/no deposit home loan, whereby you can use the FHOG to partially/completely form part of your first home deposit.
2. FHBA New Homes – Our new home experts can offer you a range of new home options, whether that be completed, under construction or off-the-plan properties. FHBA New Homes has access to over 6,000 different apartments, townhouses, and houses which suit all budget types! This service is complimentary for first home buyers, in fact, you may also be eligible for the FHBA 50 Rebate.
To get started, simply complete the form below or click here to organise your complimentary consultation with an FHBA Coach
Written By,
First Home Buyers Australia
