Australia's First Home Owner Grants and concessions: how do they work?

Sub Editor · 13 May 2021
What is the First Home Owner Grant, and what grants and concessions are currently on offer to first home buyers in your state or territory?

What is the First Home Owner Grant?

The First Home Owner Grant (FHOG) in Australia is a one-off government payment designed to encourage and assist would-be first home buyers across the country to purchase a property. The size of the grant and the eligibility criteria attached to it differ in each state and territory, but in most places it applies to first-time property owners who are either purchasing an existing home that has never been lived in, or building an entirely new home.

In addition to the FHOG, several Australian states and territories offer eligible first-time home owners concessions (reduced rates) or exemptions on stamp duty – otherwise known as transfer duty – which could help these homebuyers further reduce their costs.

Can I use the First Home Owners Grant as a deposit?

Whether or not you can use the First Home Owners Grant as a deposit largely depends on your lender and the rules around how they consider a borrower’s eligibility. While some lenders may allow you to use grants as part of a deposit, other lenders may require proof of ‘genuine savings’ in their home loan application process. This typically means that you need to have saved about 5% of the purchase price as a minimum (rather than, for example, receiving it as a gift from your parents or from government grants), according to financial adviser Stuart Wemyss.

Keep in mind, however, that your deposit is just one part of the equation in working out if it’s a suitable time for you to buy. Having a bigger deposit means that you’ll have more equity in your home, which could reduce your likelihood of experiencing negative equity and mortgage stress. Seeking professional financial advice may be helpful to support you in considering if it may be a good time for you to buy, based on your personal circumstances and needs.

What other first home buyer assistance is available in Australia?

Wider first home buyer assistance that may be available to you in Australia includes the First Home Loan Deposit Scheme (FHLDS) and Family Home Guarantee.

First Home Loan Deposit Scheme

Under the First Home Loan Deposit Scheme (FHLDS), which was launched on 1 January, 2020, the Australian Government partially guarantees some low-deposit home loans each year. These are set aside for eligible low- and middle-income earners who have saved up a deposit of at least 5% of a property’s value, which could help these borrowers avoid the cost of lender’s mortgage insurance (LMI). The scheme can potentially be used in conjunction with other state and territory grants, as well as any incentive or deal your home loan provider may offer to first home buyers. The scheme covers eligible first home buyers looking for a new or existing home.

Family Home Guarantee

In the 2021 Federal Budget, the government announced a new type of scheme, called the Family Home Guarantee. This separate scheme offers to guarantee the loans of single parents (with dependants) who want to build or buy a home with a deposit of 2% (subject to the individual’s ability to service a home loan), the National Housing Finance and Investment Corporation (NHFIC) states. The single parent does not have to be a first home buyer, but does need to meet other eligibility criteria.

Grants, concessions and other incentives by state or territory

While some of these incentives and schemes may be used at the same time on a single property, be sure to check carefully if that’s the case in your situation, as there may be exclusions. Here’s an overview of some of the first home owner grants, concessions and other incentives you may be eligible for at the time of writing.

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First Home Owner Grant ACT

Our nation’s capital currently does not offer any first home owner grants to first home buyers, but it does offer a means-tested full stamp duty concession to all first home buyers on all properties.

Compare home loans

The comparison table below displays some of the variable rate home loans on our database with links to lenders’ websites that are available for first home buyers in ACT. Products shown are principal and interest home loans available for a loan amount of $500k with an LVR of 80% of the property value. Please note this table has been sorted by current rate (lowest to highest), followed by provider name (A-Z).

Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products.