2022 Federal Budget: Get Into Your First Home Faster

1.         The First Home Buyers Deposit Scheme

First created in 2019, the First Home Buyers Scheme (FHBDS) allows eligible first home buyers to build or buy a new home with a 5% _deposit and no lenders’ mortgage insurance (LMI).

In the 2021-22 financial year, there were 10,000 places available, all of which were taken up promptly. The current budget expands the scheme to make a further 35,000 places available in the 2022-23 financial year.

To be eligible, you must buy an existing or new residential property. These include:

• An existing house, townhouse or apartment
• House and land packages
• New builds on existing land
• Off-the-plan homes

2.         The Family Home Guarantee

The Family Home Guarantee Scheme is more limited in scope, but offers even more flexibility. For single parents who meet the eligibility criteria, the scheme offers an opportunity to buy a house with a tiny 2% deposit. Since the government guarantees the remaining 18%, there is no requirement for lenders mortgage insurance. 

There are 5,000 places per year over the next three years to 2025.

To be eligible, buyers must be:

• Australian citizens of adult age

• Earning $125,000 or less

• With dependants in their care

3.         The Regional Housing Scheme

A new Regional Housing Scheme (RHS) is designed to encourage construction of new homes in regional areas and ease housing pressure.

The Regional Housing Scheme is similar to the First Home Deposit Scheme, in that it allows buyers to purchase with as little as 5% deposit and no LMI. It is available both to first home buyers and to anyone who hasn’t owned a home in the past five years.

However, it is only available for new homes. 

These include:

• House and land packages

• New builds on existing land

• Off-the-plan homes

• Newly built homes (generally, homes built in the past year and which have not been occupied since completion).

Additional criteria and price caps 

For all three of these schemes, some additional criteria apply. The property must be owner-occupied after settlement; the scheme is not available for investment properties.

The price of the property is capped and varies depending on location. For buyers looking at established homes, the caps may pose a problem in several states. Melbourne properties are capped at $700,000, which is substantially below its median house price of $780,000. Sydney buyers are even worse off, with a cap of $800,000 and a median house price of $1.02 million.

However, new house and land packages can be found for well under the cap, and may also be eligible for first home grants, which can be used in conjunction with the schemes.

More money in your pocket

To help you cut costs and save for that deposit faster, the Budget also includes tax cuts and a reduction in fuel excise.

The low-and-middle-income tax offset will be boosted this year by $420, with a possible tax return of up to $1,500 per individual as compared to previous years.

And since global instability has led to sharply increased fuel rises, petrol and diesel excise will be cut in half for six months. This drops it from 44.2 cents/litre to 22.1 cents/litre, taking the pressure off at the pump.