Nila Sweeney

It’s not often someone gives you $7,000 for nothing. However, that’s what you’ll get as part of the First Home Owner Grant (FHOG). Originally introduced in 2000, the grant was doubled to $14,000 during 2008 and 2009 to support new homebuyers through the global financial crisis. While the grant has returned to its original figure of $7,000, there are still a range of extra state-specific incentives available for first homebuyers which can significantly assist with the task of getting on the property ladder.

Indeed, it’s arguable that in the current market the lower $7,000 grant is just as, if not more, valuable than the enhanced grant. The boost to the grant was blamed for inflating the price of entry-level properties, with buyers rushing to take advantage of it which in turn pushed prices up due to the demand. In the current, less frantic market, first homebuyers could find themselves in a position to get a better deal than they would have a couple of years ago, while still benefiting from the FHOG.

How does it work?

The FHOG is a national scheme, funded by the states and territories and administered under their own legislation.

While the basic $7,000 grant applies across all states, some states and territories also provide their own additional grants and stamp duty subsidies, including additional benefits for new construction and new homes in regional areas.

There is no tax payable on the grant and the state government administers it with the help of a number of approved banks and lending institutions – although each state has its own variations on the grant regulations.

The grant is not means-tested, but it is restricted by property price in some states – and it almost goes without saying that you can only access the grant once. The following eligibility requirements apply to the grant:

  • You must be an Australian citizen or permanent resident
  • You must not have owned property in this country
  • You must have lived in Australia for at least six months
  • You must be over 18 years of age
  • You must be buying or building your first property as a person, not as a company or trust
  • Neither you or your spouse can have claimed this grant previously
  • An eligible home must be located in Australia and be a new or established house, home unit, flat or other type of self-contained fixed dwelling that lawfully can be used as a place of residence
  • You must live in the property for at least six months, starting within the first 12 months immediately after purchase

Only one grant is payable per eligible transaction (contract) regardless of the number of applicants involved in the transaction. If you have a spouse or partner who has previously received a grant in any state or territory of Australia, you will not be eligible.



The wording around living in the property in the first year also deserves some clarification. Essentially, at least one of the applicants for the grant must live in the property for a continuous period of at least six months, which must begin at any point within 12 months of settlement.

So, a buyer could live in the property for the first six months of those 12 months, they could live there between the three-month and nine-month points, or could start living there in month 11 – as long as he or she stays there for a continuous period of six months. If it is a new home it must be occupied under the same terms, within 12 months of construction.

In terms of payment, the grant usually gets approved at the time of settlement. Typically, the grant will be paid direct to your mortgage lender and most major lenders are authorised to receive the grant on your behalf. If you are building a new home, the grant will be approved once your lender issues the first scheduled loan payment.

First Home Buyer's Grant - Maximum benefit per state

 

State Maximum Benefits Available FHOG Other Concessions More Information
NSW $29,490.00 $7,000 The Home Builder Bonus (HBB) and First Home Plus (FHP) schemes provide exemptions on stamp duty. The HBB provides a full exemption on duty for off-the-plan homes up to $600,000, worth $22,490. FHP provides a full exemption for any property up to $500,000 and a partial exemption up to $600,000 (the maximum saving available under this scheme is $17,990) View more
Queensland $19,750.00 $7,000, plus an additional grant of $4,000 for those building or buying a new home in certain areas of regional Queensland. The commencement date must be before 30 June 2011. Neither grant is available for properties worth more than $750,000. The Queensland government also operates a range of stamp duty exemptions and concessions for home owners, first homebuyerrs and first home builders. First homebuyers receive a discount of up to $8,750 for properties up to $505,000; vacant land up to the value of $250,000 receives a full exemption. view more
Victoria $26,500.00 $7,000 – not available for properties worth more than $750,000. Buyers may also be entitled to receive an additional payment of $13,000 (for new homes only), known as the First Home Bonus. To be eligible to receive the bonus the purchase price of the property must not exceed $600,000. For contracts entered into for the purchase or construction of a new home in a regional municipality in Victoria, an additional $6,500 regional bonus is also available (in addition to the above bonuses). View more
Western Australia $28,665.00 $7,000 – not available for properties worth more than $750,000. Stamp duty concessions apply to first homebuyers. There is a full exemption for properties up to $500,000, and a concessional rate up to $600,000. The Home Buyers Assistance Account also provides first homebuyers with financial support. The scheme provides a grant of up to $2,000 for the incidental expenses of first homebuyers when they purchase an established or partially built home through a licensed real estate agent for a purchase price of $400,000 or less. The grant can be used for mortgage registration fees, solicitor and/or settlement agent fees, valuation fees, inspection fees, loan establishment fees, mortgage insurance premiums and lending institution fees associated with lodging the application. View more
South Australia $15,000.00 $7,000 up to a maximum property value of $575,000. A bonus grant of up to $8,000 is available to buyers who enter into a contract to purchase or build a new home. There are no other concessions. View more
ACT $19,780.00 $7,000 The Home Buyer Concession Scheme allows eligible homebuyers earning under a certain income threshold to pay a token duty of $20 on properties under $360,000 and a concessional rate up to $445,000. View more
Northern Territory $33,730.00 $7,000 – not available for properties worth more than $750,000. The Northern Territory government provides a stamp duty First Home Owner Concession (FHOC) of up to $26,730 to persons purchasing their first home or land on which to build their first home. The FHOC is not means-tested, but the purchase price must not exceed $750,000. View more
Tasmania $11,000.00 $7,000 The Tasmanian government applies a concessional rate of stamp duty for first homebuyers of up to $4,000 for properties up to a value of $350,000. View more

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan