Home Loans for Aboriginal and Torres Strait Islander Peoples

The Australian Government has a range of measures designed to assist Indigenous Australians in buying a home. Find out how much of a deposit you may need and how these Torres Strait Islander and Aboriginal home loan measures work.

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KEY POINTS

Indigenous Business Australia (IBA) can assist Aboriginal and Torres Strait Islander people when buying a home.

IBA loans are usually low deposit, low priced home loans for those who face barriers accessing mainstream finance.

There are various Indigenous home loan programs in place around the country.

First Nations Australians considering buying a home could be eligible for a government home loans assistance program. This could potentially make it easier to buy a residential home, or land to build a home, when it is difficult to get a home loan from a mainstream bank or financial institution.

What are Indigenous Australian home loans?

There are a number of assistance home loan programs for Aboriginal and Torres Strait Islander people that could make it easier to:

Buy an established residential property

Build a new home

Improve an existing home.

These programs typically only apply to properties you will live in, not investment properties.

Depending on the home you’d like to buy and where you want to live, assistance could come in the form of:

A home loan that offers a more flexible approach to approval and payments

A smaller deposit

Discounted starting interest rates

Co-ownership with a housing authority

Help with loan establishment costs, such as home insurances and loan fees and charges.

These programs are typically partly or fully funded by different levels of government. Some programs can also help you to purchase social housing dwellings from the government, or to build a house on leased land that’s under a communal title.

Some of the programs currently available across Australia include:

Nationwide: Indigenous Home Ownership Program, which includes the Remote Indigenous Housing Loans, both administered by Indigenous Business Australia (IBA).

New South Wales: Aboriginal Home Buyer Saver Scheme administered by the NSW government’s Aboriginal Housing Office (AHO).

Northern Territory: Home Ownership Sublease in Townships, run by the NT Government.

Queensland: Remote Home Ownership Program and Home Ownership Leases, run by the Queensland Government.

South Australia: At the time of writing, there is no specific state-run Indigenous Australians loan help scheme, however, there are a range of other options such as HomeStart Finance, run by the SA Government and the IBA.

Victoria: The Victorian Homebuyer Fund, a shared equity scheme run by the Victorian Government.

Western Australia: Aboriginal Home Ownership Scheme, run by Keystart (an initiative of the WA government).

In this article, however, we will focus on the two national programs administered by IBA—the Indigenous Home Ownership Program and Remote Indigenous Housing Loans. Please see the above websites for more information on the other state and territory specific schemes on offer.

Some mainstream banks/financial institutions may offer special deals and incentives to attract Indigenous Australian customers—it could pay to ask lenders if they have such a scheme. If you are researching the home loan market and interested in finding the best deal for your needs, you could consider comparing home loans with Canstar, which has 6,000+ loan products on its database.

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What is the Indigenous Home Ownership Program?

The Indigenous Home Ownership Program is funded by the Federal Government and administered by Indigenous Business Australia (IBA), which has assisted Aboriginal and Torres Strait Islander people with home ownership since 1975. The loans offered under the program are designed to make it financially easier for Indigenous Australians to enter the housing market and maintain home ownership.

At the time of writing, loans on offer under the scheme include those for:

Buying a home

Buying and renovating a home

Buying land and building a home

Financing selected home loan fees (such as stamp duty in some cases)

Improving a home

Building a home in a regional area

Buying land (with the condition to build a home within a set timeframe)

Refinancing an existing home loan

Property settlement (after a relationship break-up)

Previous home owners buying a new residential home.

It’s important to note that there can be a waiting list for these loans, as IBA’s website advises its home loans are in high demand. IBA states that it will contact you within 30 days of submitting an Expression of Interest form, but then it might take an additional two months before an invitation to apply is sent through.

What are Remote Indigenous Housing Loans?

Remote Indigenous Housing Loans are part of IBA’s program and assists Aboriginal and Torres Strait Islander people who currently live, or have previously lived, in a remote location.

Outside of what’s already offered through the Indigenous Home Ownership Program, Remote Indigenous Housing Loans offer:

A standard introductory interest rate loan with a longer introductory period

A grant of up to $13,000 to meet establishment costs, such as legal or financial advice, pest and building reports, property valuation and initial home insurance costs

A potential $20,000 grant for minor house renovations, repairs and maintenance (which is subject to eligibility)

Low deposit requirements (from $1,500, depending on income).

To establish if a property or location is ‘remote’ or ‘very remote’, IBA says it follows the Accessibility/Remoteness Index of Australia (ARIA), which is also used by the Australian Bureau of Statistics (ABS).

How are IBA loans different from mainstream lenders’ loans?

Typically, home lenders look at a range of information when assessing loan applications, such as:

How much deposit will be put down on the property by the buyer, typically with extra fees (i.e. lenders mortgage insurance (LMI)) if the deposit amount is less than 20% of the cost of the home

What the income and expenses are of each borrower

The credit history of the borrower (or borrowers), which is a record of any loans, such as credit cards or personal loans, that the person has used, as well as their repayment history. You can check your credit score for free with Canstar or via the Canstar App.

However, according to the National Indigenous Australians Agency (NIAA), IBA home loans usually require a lower deposit than other types of home loans, and are also typically offered at a lower interest rate, to help Indigenous Australians who face barriers getting a loan from mainstream lenders. IBA loans also have lower lending requirements—such as minimum income thresholds—than typical loans with other lenders. For example, some low income earners could buy a house with as little as $1,500 for the deposit, while people earning more could need up to 5% of the home’s purchase price as a deposit.

IBA also says it doesn’t charge lender’s mortgage insurance (LMI), establishment fees or annual fees, which other banks could charge. The way interest is charged on the loans is also structured differently from most loans typically offered by mainstream lenders.

Although, in some circumstances, IBA states that the loan offered to the borrower may only cover a portion of the cost of buying a home. In that case, borrowers may have to apply for a loan from another lender to cover the remainder of the cost.

What is the aim of the Indigenous Home Ownership Program?

Established in 1975, IBA’s home ownership program is one of the longest standing programs supporting Aboriginal and Torres Strait Islander people.

“Home ownership is a goal shared by many Australians, and it plays a crucial role in building intergenerational wealth, prosperity, and health,” IBA Deputy CEO Sean Armistead told Canstar.

“To date, our program has supported more than 22,000 Aboriginal and Torres Strait Islander families into home ownership, often making them the first in their family to do so.”

“It’s about more than home ownership as IBA supports our customers in their financial wellbeing journey through our free information sessions and workshops that guide them in our process as well as how to understand credit, budgeting, and owning a home.”

Mr Armistead highlighted that IBA’s recent Pathways through Housing research shows how the program opens opportunities for those who have historically been marginalised.

“In 2025, we’re recognising our 50th anniversary of the home ownership program and how that’s impacted over the generations.”

“The research shows that the benefits of owning a home are considerable including security, intergenerational wealth, and freedom to make choices about how to live.”

Applying for an IBA home loan under the Indigenous Home Ownership Program

To apply for an IBA Home Loan, you must first register and submit an Expression of Interest Form, which can be done through IBA’s online portal. If you require assistance with your application, IBA recommends contacting them directly by calling 1800 107 107 or submitting an online inquiry.

Once you’ve submitted the form, IBA says a Home Loan Officer will contact you within 30 days and, if eligible, add you to the register. Once on the register, an invitation to apply for an IBA home loan will be sent, but IBA warns due to high demand and their focus on high customer service, “this process does take time”.

IBA states that to be eligible to apply for a loan, you must meet the following minimum requirements:

At least one applicant be of Aboriginal or Torres Strait Islander descent and provide evidence of such in a form acceptable to IBA

Be an Australian citizen or permanent resident

At least 18 years of age

Intend to reside in the home being purchased as your principal place of residence

Not own an investment property

Able to contribute the relevant deposit/equity required

Not be bankrupt or going through the process of bankruptcy

Have the capacity to meet home loan repayments.

But before you register, IBA recommends attending one of their free home ownership workshops to prepare and learn more about IBA home loans. IBA holds both in-person and virtual workshops about home ownership, creating a budget, understanding credit, as well as what to do once you’re a homeowner. Visit IBA’s website for more details.

For the Remote Indigenous Housing Loan, additional to the above requirements, you will also need to currently live, or have previously lived, in a Remote Location. IBA says it follows the ARIA to establish whether a property or location is considered ‘remote’ or ‘very remote’. You can contact IBA directly if you’re unsure whether your location is eligible.

Indigenous home loans: How much deposit do I need to buy a house?

The amount of deposit you need to buy a home with an IBA loan may depend on how much you earn. You are also able to use other grants and incentives, such as the First Home Owners Grant, to help fund your deposit.

However, IBA states that it “also requires that you contribute as much of your savings as possible towards the purchase and costs.”

Keep in mind that these deposit amounts and gross income brackets are subject to change at any time. Check IBA’s website for more information.

At the time of writing, effective as at 22 June 2024, IBA’s website lists the minimum amount of deposit required for first home buyers, based on gross income (before tax and deductions) per year as:

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Annual gross income	Minimum deposit amount
Up to $83,487	$1,500
$83,488 – $137,508	$3,000
$137,509 – $162,063	3% of purchase price
$162,064 – $245,550	5% of purchase price

If you’re not a first home buyer, IBA states that “previous homeowners must contribute any remaining proceeds from a recent sale of their previous home”.

Other types of IBA loan products have different minimum deposit requirements. At the time of writing, the IBA lists the minimum deposit amounts, effective from 24 April 2023, as:

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Loan Product	Minimum deposit amount
Purchase of residential land	5% of purchase price or $10,000 (whichever is lesser)
Home improvement or property settlement	No cash deposit required, but you must hold at least 5% equity in the home.
Refinance	No cash deposit required, but you must hold at least 10% equity in the home.

Another important factor to remember is that you will generally have to pay the other costs associated with setting up the loan, including:

Government charges such as
– stamp duty,
– transfer fees, and
– mortgage registration

Property costs such as
– valuation fees,
– building inspection,
– pest inspection,
– building insurance, and
– property reports (e.g. strata, body corporate reports, engineering or structural reports)

Settlement costs such as
– conveyancing fees, and
– any adjustment costs to property taxes and council rates

After settlement costs such as
– moving costs,
– costs to connect utilities (e.g. electricity and internet), and
– cleaning costs

Financial help is available through IBA and other government schemes to eligible applicants to help cover some of the fees mentioned above. IBA recommends going to the Revenue Office website for your state or territory to learn more about government charges, rebates, exemptions and grants that may be available to you.

How much can I borrow?

How much you can borrow under the Indigenous Home Ownership Program depends on many factors, including your individual circumstances, where you want to buy and what type of loan you require.

IBA states your income and ability to pay back the loan will also be taken into consideration, and its low deposits are based on the individual’s circumstances. IBA works with each situation to determine the applicant’s loan opportunity.

Your eligibility for the First Home Owner Grant scheme may be another factor that will be taken into account.

Since IBA wants to ensure its loan applicants are ready for home ownership, IBA hosts free info sessions and workshops about home ownership that IBA encourages all potential applicants to attend.

IBA advises that in order to support more customers, applicants on higher incomes may be required to obtain part of their funds from another lender. But these customers may still receive an extended starting interest rate on their IBA loan (at the time of writing, 3.54%) that will be capped for a minimum period of 3 years.

For Aboriginal and Torres Strait Islander people looking to purchase a home, and where an IBA Home Loan on its own is insufficient to enable you to purchase a home in your local market, the IBA Shared Equity product may be an option. It’s a finance option provided in combination with an IBA Home Loan.

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How do IBA home loans work – how much interest is charged?

Usually, when a borrower takes out a home loan with a financial institution, they can choose a fixed interest rate, which is kept the same for a certain number of years, or a variable rate, which can change according to the policies set by the lender and usually due to economic factors (i.e. the raising or lowering of the cash rate).

However, home loans through IBA work a little differently to typical home loans. The conditions of an IBA loan is usually tailored to suit an individual’s financial capacity to fund the loan, such as the amount of deposit needed (shown above), and the interest rate that is charged.

For IBA home buyers:

The interest rate charged is typically set by IBA according to the applicant’s income level and individual circumstance

At the beginning of the loan, a reduced interest rate applies for a certain period of time (which will depend on your income when you’re approved for the loan)—called the ‘starting rate period’

After the starting rate period, the rate goes up gradually each year (in March), until it reaches the ‘IBA Home Loan Rate’.

IBA reviews the IBA Home Loan Rate every month to make sure it is similar to the average standard variable rate available in the lending industry. The current IBA home loan variable rate is 6.49% (effective as at 22 June 2024 and is subject to change at any time).

As for the starting interest rates for home buyers and refinance customers, you can expect the following:

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Total gross income ($)	Starting interest rate	Incremental rate	Starting rate period
Up to $83,487	2.54%	0.25%	24 months
$83,488 – $137,508	3.54%	0.25%	12 months
$137,509 – $162,063	4.54%	0.25%	12 months
$162,064 – $245,550	6.49%	N/A	N/A

Source: IBA. Total gross income values, rates and minimum introductory periods are effective as at 22 June 2024 and are subject to change at any time.

How your interest rate may change during the term of your loan will be outlined in your loan agreement, IBA advises.

Can I access any other government assistance and grants?

Yes, it’s possible to also qualify for various grants and home ownership schemes, such as the First Home Guarantee and the First Home Owners Grant in addition to an IBA Indigenous home loan.

Where can I find information about the Indigenous Home Ownership Program?

IBA is the organisation to contact to find out more about the Indigenous Home Ownership Program, as well as any other assistance that could be available for First Nations Australians looking to make a move into the property market.

You could visit IBA’s website at iba.gov.au/home-ownership/about-iba-home-loans/, call 1800 107 107, or use its online email form.

The website also has information about business loans and support for Aboriginal and Torres Strait Islander peoples.

Cover image source: Prostock-studio/Shutterstock.com

This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.

Karen Yang

Senior Content Production Specialist

Karen is the Senior Content Production Specialist at Canstar, working to help the company produce informative yet easy-to-digest financial content for Australian consumers. Karen has a background in allied health, having completed a Bachelor of Podiatry from the Queensland University of Technology. Karen recently embarked on a second career to rekindle her childhood passion for writing, while still maintaining her earnest intentions from her health professional background — to help the general public. In 2023, she completed a Graduate Certificate in Writing, Editing and Publishing at the University of Queensland. Karen strives to bring a fresh perspective and accurately represent the average consumer. You can connect with Karen via Linkedin.