Home loan deposit schemes have rebranded and expanded — so let’s make sure you’re across the basics for 2023

Government schemes are a key way that savvy first home buyers can stay ahead of the game and put property ownership within reach. Great Southern Bank’s survey of 1,500 Aussies shows:

• Budding first home buyers are relying on government schemes more than ever before, with 72 per cent hoping to use the support compared to just 55 per cent who purchased in the past five years.

• More than half of the first home buyers (55 per cent) said they made use of government schemes and financial support, while another 31 per cent have not ruled out taking the step.

With extensive changes underway, it is absolutely crucial those considering federal and state government support do their homework and understand what financial support might be available.

Buying your first home isn’t just a significant financial investment; it can also be an incredibly complex and time-consuming process to navigate. What stops many from taking advantage of the various government schemes on offer is that they simply haven’t figured out which scheme is best suited to their unique needs.

By making smart strategic decisions and exploring all schemes and support available, it might just be possible to map out a buying journey that could shorten the time to save a deposit by up to a decade.

So, let’s step through the basics: 

Home Guarantee Scheme

Helping eligible home buyers purchase a home sooner, the Home Guarantee Scheme is an Australian government initiative administered by the National Housing Finance and Investment Corporation (NHFIC).

The scheme includes the First Home Guarantee (FHBG) and Family Home Guarantee (FHG), which we’ll outline below.

The First Home Guarantee (FHBG)

• What is it? Recently rebranded from the First Home Loan Deposit Scheme, the First Home Guarantee is a popularly used initiative under the Home Guarantee Scheme, with places historically being in high demand. The First Home Guarantee allows eligible first home buyers to purchase their first home sooner, with as little as a 5 per cent deposit and without the added cost of lenders mortgage insurance (LMI).
• Who can use it? Both new and existing properties can be purchased by first-time buyers through the scheme, but there’s a limit to how many people can access it.
• Don’t forget: Annual places in the guarantee increased from 10,000 to 35,000 as of 1 July 2022.

The Regional First Home Buyer Guarantee (RFHBG)

• What is it? The most recent addition to the initiative repertoire, the Regional First Home Buyer Guarantee aims to support eligible first-home buyers already living in the country. The RFHBG can be used to purchase a home with as little as a 5 per cent deposit.
• Who can use it? Eligible regional first home buyers are able to purchase in the regional area where they have lived during the past 12 months, or in an adjacent regional area. This is available for 10,000 regional first home buyers each financial year.
• Don’t forget: Eligible regional first home buyers can use the RFHBG in conjunction with other government programs like the First Home Super Saver Scheme or state and territory first home owner grants and stamp duty concessions.

The Family Home Guarantee (FHG)

• What is it? The FHG is another initiative under the umbrella of the Home Guarantee Scheme, enabling a single parent with dependents to purchase a property with a deposit as little as 2 per cent. The government will guarantee up to 18 per cent of the remaining value of the loan. Allocations have increased to 5,000 places per year until 2025.
• Who can use it? The FHG is available to eligible single parents with at least one dependent child, but there are limited places. You must be single or divorced to use the FHG — you won’t be eligible if you’re in a de facto relationship or separated. 
• Don’t forget: There are property price caps for the FHG, which vary state by state and depend on whether you’re buying in the city or country. No matter where you live, you won’t be able to buy a property for more than $900,000. 

Future initiatives – Help to Buy program

• What is it? A new shared equity scheme where home buyers can purchase a property with as little as 2 per cent deposit, this proposed program is a commitment by the recently elected Labor federal government. Once legislation passes, the proposal is for the government to contribute an equity stake of up to 40 per cent of the purchase price for a new home and 30 per cent for existing properties in a co-ownership model. This means the government owns a share of your property until you sell it or refinance it later on.
• Who can use it? Low- to middle-income earners — individuals earning up to $90,000 and couples earning up to $120,000. The Grattan Institute has reported the program will best suit older Australians who risk renting into retirement, as well as younger Australians who only have enough savings for a 2 per cent deposit.
• Don’t forget: If your income increases above the set threshold, you’ll have to buy out the government’s stake in part or whole within two years or sell the property. Great Southern Bank has previously supported state-level shared equity schemes, such as the Buy Assist program, which offers financial support for eligible buyers on new properties by providing up to 25 per cent of the purchase price through investor partners, including the Victorian government and charitable equity programs.
• Also, don’t forget: This program is not in place yet and is awaiting new legislation. There could also be more federal government schemes to come post-election. A Regional First Home Buyer Support Scheme to help buyers looking to purchase in regional Australia is also on the cards.

What about the states and territories?

Depending on where you live, there are various state or territory-run schemes that could help you take the next step to home ownership. First home owner grants are offered by all states and are probably the most well-known, one-off state government support available to first-time purchasers of newly built, never-before-lived-in homes.

While every state has its own set of rules, grants can reach up to $20,000, and most have strict property value thresholds of $750,000. While this can limit their use in expensive locations, like inner Melbourne or Sydney, they’ll go a long way if you’re looking to buy in an outer suburb or regional area.

There are also various concessions available for stamp duty, which remains one of the most universally dreaded upfront costs for first home buyers.

What about other non-government support?

Australians can seek to engage in privatised shared equity and deposit arrangements alongside additional state and federal government support.

But it’s important to remember that these platforms are very new in the home ownership space and not as highly regulated as existing government schemes. They will typically seek a return of their money plus a percentage of your home’s increase in value over the years. We encourage buyers to undertake extensive research, talk to their broker or lender and consider alternative options first. 

Where to next?

So, now you’ve got a government initiatives cheat sheet. Your best next step is to talk to a bank, broker, or financial expert.

Remember that each initiative has specific criteria required to access it and its own terms and conditions. What you’re eligible for will be affected by your age, your income, your residency status, timing, what you plan to buy, property value and whether you plan to live in it.

You can also visit the National Housing Finance and Investment Corporation (NHFIC) website for further information on the guarantees that sit under the Home Guarantee Scheme.

Mathew Patterson is the head of broker and insurance partnerships at Great Southern Bank.