How First Home Buyers in Australia can get into the housing market

With the rising housing market, getting into an entry-level home has become increasingly difficult in recent years.  The Australian Government has introduced a number of incentives to try and make this easier, including:

  • Help to Buy scheme (not available yet) – the Government will contribute/own 30%-40% of your house.  You’ll only need a 2% deposit and a loan for 58% – 68%.
  • First home owner’s grants – a lump sum payment which varies from state-to-state.
  • Stamp duty concessions: full stamp duty waiver for purchases under $500,000 for first home buyers.
  • First Home Super Saver Scheme: ability to make additional Superannuation contributions and then later drawdown to use as your deposit.
  • First Home Guarantee: 5% deposit home loans with no Lender’s Mortgage insurance – guaranteed by the Government.
  • Family Home Guarantee: 2% deposit for single parents looking to purchase – guaranteed by the Government.

How to qualify for the Government Schemes

The eligibility criteria vary between schemes.  But if you are:

  • Buying your first home to live in,
  • Are an Australian Citizen, and,
  • Aren’t earning over $120k

Then you will qualify for most schemes.  This will allow you to purchase with a 5% deposit only and pay $0 stamp duty under $500k.

How much you’ll need to purchase a property in Australia

First, you’ll need your deposit.  Check the First Home Guarantee eligibility as a first step – if you’re eligible, you’ll just need a 5% deposit.

You’ll also need enough to cover all Government charges.  Whilst Stamp Duty is $0 for under $500,000, there is still a Transfer Fee & Mortgage Registration fee.  You should check the exact Government charges using a Stamp Duty Calculator.

Other costs & their estimates are:

  • Bank application fees: $200 – $600 in most cases.
  • Building & Pest fees: estimated $500.
  • Solicitor costs: estimated $1,500
  • Moving costs, furniture etc.: unascertainable.

How much you’ll need to earn to borrow from the banks

This figure varies greatly.  You’d be best to speak to a Mortgage Broker to calculate exact affordability figures for your situation.  Here’s a few examples of income needed to purchase for $500k i.e. borrow $475k:

  • Single, no dependents, no other loans: $78,000 gross p.a. income required.
  • Married couple with 1 child, no other loans (single income household): $110,000 gross p.a. income required.
  • Married couple with 1 child, no other loans (joint income household): $50,000 + $50,000 gross income p.a.

Other factors that will help you get approved

Income/affordability is the most important thing to an approval.  There are a few other factors that can play a part in approval:

  • Credit history.  Any missed payment showing on your credit file can affect your application.
  • Bank statement conduct: missing payments, gambling, late fees etc. showing in the last 90 days can hurt your chances of approval.
  • The type of property you’re purchasing: it’s always checking the property with your Broker upfront.
  • Savings history: being able to show that you saved the 5% deposit yourself will greatly assist you in getting approved.

The above is to be used as a guide only & to point you in the right direction.

Please always have your situation assessed fully by a Mortgage Broker upfront.  They will be able to check your eligibility with all Government schemes and assist you in applying for them as part of your home loan process.

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