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Guide to the First Home Guarantee Scheme

First home guarantee scheme
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Incentives to help you enter the Australian property market as a first home buyer

Entering the Australian property market can be challenging, with property prices experiencing record highs in the past few years. Not to mention the sharp increases in interest rates we’re experiencing in 2022. But all is not lost, there are incentives like the First Home Guarantee (FHG) to help you get into the real estate market.

It’s not surprising that many Australians feel as though they’ve missed the boat and the great Australian dream of owning their own home is now out of reach. But the good news is there are still ways and means to make owning your own home a reality. Especially for first home buyers.

Yes, it may take some savvy budgeting and commitment to achieve your goals, but it’s not impossible. So if owning your own home is on your to do list, we’ve got some tips to help you.

What is the First Home Guarantee?

The First Home Guarantee Scheme, formerly the First Home Loan Deposit Scheme (FHLDS), is an Australian government initiative aimed at getting eligible first home buyers into the property market sooner.

From 1 July 2022, the scheme was expanded from 10,000 to 35,000 places per year. There are two key benefits to the First Home Guarantee

  1. Buyers can purchase a property with as little as five percent deposit.
  2. There’s no requirement to take out lenders’ mortgage insurance (LMI).

Basically, the scheme guarantees your home loan rather than needing to take out insurance which can be costly if you don’t have a 20 percent deposit. The guarantee is for a maximum amount of 15% of the value of the property.

Domain’s annual First-Home Buyers Report, released in March 2022 shows that on average it takes eight years for the average couple to save the deposit for their first home. Typically, the minimum amount you’d need to save is around 10% to 20%. Being able to reduce that amount to 5 percent is a game-changer.

Criteria and eligibility of the First Home Guarantee

Like most government schemes there are a few eligibility requirements you need to meet. To apply, you need to be:

  • Applying as an individual or couple (married / de facto)
  • An Australian citizen(s) at the time they enter the loan
  • At least 18 years of age
  • Earning up to $125,000 for individuals or $200,000 for couples, as shown on the Notice of Assessment (issued by the Australian Taxation Office)
  • Intending to be owner-occupiers of the purchased property
  • First home buyers who have not previously owned, or had an interest in, a property in Australia

There are four types of residential properties covered under the scheme:

  1. An existing house, townhouse or apartment
  2. A house and land package
  3. Land and a separate contract to build a home
  4. An off-the-plan apartment or townhouse

Specific timeframes and criteria apply to the different property types. Also, the contract of sale and eligible building contracts may have specific dates when they can be signed by the home buyer.

Buying a home can be overwhelming. The last thing you need is to think you’re eligible for the benefits of the scheme only to find out later you’re not. That’s why it’s important to get help and guidance from a trusted professional who understands the intricacies of the scheme and how it will affect your personal situation as a first home buyer.

Other incentives to help first home owners

If you’re in Victoria the FHG isn’t the only government incentive that you may be able to access as a first home buyer. You may be able to compound the financial assistance you get if you’re eligible from a number of other schemes such as:

First Home Owner Grant (FHOG) – if you’re buying or building a new home valued up to $750,000, you may be eligible for a First Home Owner Grant of $10,000.

Stamp Duty Exemptions and Concessions – there are a number of exemptions and concessions available for home buyers including a First-home buyer reduction of up to 50% for a principal place of residence valued up to $600,000.

Established Homes – if you’re buying an established home as your first home you may be entitled to a first-home buyer duty exemption. You need to meet the FHOG eligibility criteria but for the fact that it is not a new home.

The Victorian State Revenue Office has more details on incentives for first home buyers. But also chat to a reputable broker like Mel Finance, who are based in Melbourne and understand what applies in Victoria. They can help you determine what you’re eligible for.

Advice from one of Melbourne’s most trusted brokers

Getting advice from a reputable broker is essential before taking the leap and securing a home loan. Mel Finance can help you navigate the process of choosing the best home loan option for your needs, taking into account your personal circumstances, existing commitments and objectives you want to achieve.

Mel Finance has existing relationships with numerous participating lenders of the First Home Guarantee scheme. Getting independent financial advice about whether a particular home loan or property is right for you is important. Plus they can help you understand the terms of the First Home Guarantee and other government incentives. You need to know whether it will suit your personal circumstances and objectives, before you sign on the dotted line.

Personalised service from an experienced broker

Being a local Melbourne mortgage broker, Mel Finance can help you achieve your dream of getting into the property market and owning your own home.

Set up an appointment and chat about your options and how we can help you take advantage of the First Home Guarantee to help you achieve your goals sooner.

Lumbini Wekunagoda

Lumbini Wekunagoda

Lumbini marries practical insights with solid financial knowledge to craft tailored solutions. Lumbini has a diploma in Mortgage Broking, a Certificate IV, a supplementary Diploma in Mortgage Broking and Finance, and an MBA from the prestigious University of Wales. As an ASIC registered , licensed Mortgage Broker (CRN:444210), Lumbini upholds the highest standards of professionalism and ethics, aligning his practice with the Mortgage and Finance Association of Australia (MFAA).

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