Buying your first home in New South Wales s is an exciting milestone, but navigating the various government assistance schemes can be complex. This guide breaks down the key initiatives available to first-time buyers, including the First Home Owner Grant, the First Home Buyer Assistance Scheme (FHBAS), and the Federal Home Guarantee Scheme.
By understanding how these schemes work and what they can offer, you can save money, reduce your deposit, and get into the property market sooner.
First Home Buyer Scheme: Overview
In New South Wales, “First Home Buyer Scheme” is a general term that may refer to several government initiatives designed to assist first-time purchasers of residential property. The principal schemes include:
- First Home Owner Grant (New Homes) Scheme: A one-off grant for eligible first home buyers purchasing or building a new home.
- First Home Buyer Assistance Scheme: Provides exemptions or concessions on transfer (stamp) duty for eligible first home buyers.
- Federal Home Guarantee Scheme (including the First Home Guarantee): Allows eligible buyers to purchase a home with a deposit as low as 5% without paying Lenders Mortgage Insurance (LMI).
Each scheme has distinct eligibility criteria and benefits.
Deposit Guarantee: Meaning in Context
Government “Deposit Guarantee” (First Home Guarantee)
- The First Home Guarantee (formerly First Home Loan Deposit Scheme) is a federal initiative administered by Housing Australia.
- It is not a cash payment to the buyer, nor is it a guarantee of the buyer’s deposit to the vendor.
- Instead, the government acts as a guarantor to the lender for up to 15% of the property value, allowing the buyer to secure a home loan with as little as a 5% deposit (or 2% for eligible single parents under the Family Home Guarantee).
The guarantee protects the lender (not the buyer) in the event of default, covering the shortfall between the buyer’s deposit and the standard 20% deposit required to avoid LMI.
Eligibility and Application Process
First Home Guarantee (Federal Scheme)
Eligibility
- Australian citizen or permanent resident
- At least 18 years old
- Individual income ≤ $125,000 or combined ≤ $200,000 (previous financial year)
- Must not have owned property in Australia in the last 10 years
- Owner-occupier (not for investment)
- Minimum 5% deposit (genuine savings)
- Property value must be within the relevant price cap for the area (e.g., $900,000 in Sydney, $750,000 elsewhere in NSW)
Application
- Must apply through a participating lender (not directly to Housing Australia)
- Lender assesses eligibility and reserves a place in the scheme
- 90 days to find and contract a property after pre-approval
NSW State Schemes
- First Home Owner Grant: $10,000 for new homes (subject to value caps and other criteria)
- First Home Buyer Assistance Scheme: Stamp duty exemptions/concessions for eligible buyers
Relevant Legal Principles and Statutes
- First Home Owner Grant (New Homes) Act 2000 (NSW)
- Duties Act 1997 (NSW) (for stamp duty concessions)
- National Housing Finance and Investment Corporation Act 2018 (Cth) (now Housing Australia)
- Scheme Guidelines: Published by Housing Australia and Revenue NSW
Application of Principles
- The First Home Guarantee is a government guarantee to the lender, not a deposit paid to the vendor or a cash benefit to the buyer.
- The buyer must still provide a minimum deposit (5% or 2% as applicable) from their own funds.
- The guarantee enables the buyer to avoid LMI, reducing upfront costs and facilitating earlier entry into the property market.
- The buyer remains responsible for all repayments and costs associated with the home loan.
Caveats and Limitations
- The guarantee is not transferable and is subject to ongoing owner-occupier requirements.
- If the buyer ceases to meet eligibility (e.g., moves out), the guarantee may be withdrawn and LMI may become payable.
- Places in the scheme are limited and allocated annually.
The guarantee does not cover the buyer’s deposit to the vendor at exchange—this must be arranged separately (e.g., via deposit bond or cash).
First Home Buyer Assistance Scheme (FHBAS) – New South Wales
Eligibility Criteria
To qualify for the FHBAS, the following requirements must be met:
- Property Type and Value:
- The purchase must be for a new or existing home, or vacant land in NSW.
- For homes: Full exemption for properties valued up to $800,000; concessional rate for homes valued over $800,000 and less than $1,000,000.
- For vacant land: Full exemption for land valued up to $350,000; concessional rate for land valued over $350,000 and less than $450,000.
- Purchaser Requirements:
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- The purchaser must be an individual (not a company or trust) and at least 18 years old.
- At least one purchaser must be an Australian citizen or permanent resident.
- Neither the purchaser nor their spouse/de facto partner can have previously owned residential property in Australia.
- Neither the purchaser nor their spouse/de facto partner can have previously received an exemption or concession under this scheme.
- Residency Requirement:
- For contracts exchanged on or after 1 July 2023, at least one eligible purchaser must move into the home within 12 months of settlement and occupy it as their principal place of residence for at least 12 continuous months.
Benefits
- Full Exemption: No transfer duty is payable for eligible purchases of new or existing homes valued up to $800,000, or vacant land up to $350,000.
- Concessional Rate: Reduced transfer duty for homes valued over $800,000 and less than $1,000,000, or vacant land valued over $350,000 and less than $450,000.
- Significant Upfront Savings: The scheme can reduce or eliminate one of the largest upfront costs associated with purchasing property.
Application Process
- Complete the First Home Buyers Assistance Scheme application form and the Purchaser/Transferee Declaration form.
- Lodge these forms, along with proof of identity, with your solicitor, conveyancer, or directly with Revenue NSW.
- The application is generally processed as part of the conveyancing process, and the exemption or concession is applied at settlement.
Important Considerations
- The definition of “residential property” includes any land or building used, or suitable for use, as a place of residence.
- If you or your spouse/de facto partner have previously owned any property that included a dwelling, you are ineligible.
- The scheme is separate from the First Home Owner Grant (which is a cash grant for new homes only) and from federal schemes such as the First Home Guarantee.
Relevant Statutes and Guidelines
- Duties Act 1997 (NSW), Part 8, Division 1
- Revenue NSW guidelines and application forms
Caveats and Limitations
- The FHBAS is only available for the purchase of the whole property (not a partial interest).
- Strict compliance with residency and other requirements is necessary; failure to comply may result in the exemption/concession being revoked and duty becoming payable.
- The value thresholds are strictly enforced and are subject to periodic review by the NSW Government.
First Home Buyers Assistance scheme (Revenue NSW)
