First Home Buyer Grants Victoria: What Support May Be Available?

Saving a deposit is only one part of buying your first home. In Victoria, transfer duty, legal fees, inspections and lender costs can add up quickly. Understanding the assistance that may be available to eligible first home buyers may help you plan for these upfront costs.

It is helpful to distinguish between a cash grant, a transfer duty concession and a government guarantee scheme. While each may reduce the amount you need upfront, they operate differently, have separate eligibility requirements and may not be available to every buyer. Understanding the differences can help you prepare a more informed budget before you begin your property search.

The main first home buyer assistance available in Victoria

One of the most recognised forms of assistance is the Victorian First Home Owner Grant (FHOG). Subject to eligibility requirements, eligible purchasers may receive a $10,000 grant when buying or building a new home valued at $750,000 or less.

Generally, a new home is one that has not previously been sold or occupied, or a substantially renovated home that satisfies the program requirements. Established homes generally do not qualify for the grant.

Eligibility requirements generally include age, citizenship or permanent residency status, intended occupancy and other criteria determined by the relevant government authority. Applicants are generally required to occupy the property as their principal place of residence within the required timeframe and continue to meet the applicable residency requirements.

While the grant may assist eligible buyers, it should form only one part of your purchasing decision. Building a home may involve progress payments, construction delays and additional site or upgrade costs. It is important to consider the overall affordability of the purchase rather than focusing solely on grant eligibility.

Transfer duty relief may provide savings

Transfer duty (commonly referred to as stamp duty) is often one of the largest upfront costs when purchasing property in Victoria.

Subject to eligibility requirements, eligible first home buyers purchasing a property valued up to $600,000 may qualify for a full transfer duty exemption. A concession may apply to eligible purchases between $600,001 and $750,000.

Unlike the First Home Owner Grant, transfer duty concessions may apply to both new and established homes, making them relevant for many first home buyers across metropolitan and regional Victoria.

Eligibility requirements include residency conditions, ownership history and other criteria. Buyers should refer to the current Victorian Government requirements, as eligibility depends on individual circumstances.

Property value thresholds may influence the level of concession available. Rather than focusing solely on the purchase price, it is worthwhile considering the overall cost of ownership.

A government guarantee is different from a grant

The term "first home buyer grant" is sometimes used to describe all forms of government assistance. However, the Australian Government's Home Guarantee Scheme is not a cash payment.

Subject to eligibility, participating lenders and available places, eligible buyers may be able to purchase a property with a deposit from as little as 5% without paying lender's mortgage insurance.

A lower deposit may help some buyers enter the property market sooner. However, borrowing a higher percentage of the property's value generally results in a larger loan balance, which may increase repayments and total interest over the life of the loan. Whether this approach is appropriate depends on your individual financial circumstances and objectives.

Separate guarantee pathways may also be available for eligible single parents or legal guardians. Eligibility requirements, property price caps and scheme availability may change over time.

What qualifies as a first home?

Eligibility is not always determined solely by whether you have previously purchased a home.

Previous ownership interests, including investment properties, inherited property or jointly owned property, may affect eligibility depending on the specific government program.

Similarly, most first home buyer assistance is intended for owner-occupied properties. If occupancy requirements are not met, government assistance may no longer apply or may need to be repaid, depending on the relevant program rules.

Where there is more than one purchaser, the eligibility of all applicants is generally considered.

Budget for the costs that still apply

Government assistance may reduce some upfront costs, but buyers should also budget for expenses that may include:

Deposit Conveyancing or legal fees Building and pest inspections Lender fees Valuation fees Moving costs Home insurance

For new builds, additional expenses such as site costs, landscaping, driveways, fencing, window furnishings and upgrades may also apply.

Maintaining a financial buffer after settlement may also assist with ongoing ownership costs such as council rates, utilities, strata fees (where applicable), maintenance and loan repayments.

Borrowing capacity involves more than your deposit

Loan approval is determined by a range of factors, including income, employment, living expenses, existing debts, dependants, credit history and lender assessment criteria.

As a result, two buyers with similar incomes may have different borrowing capacities.

Before making an offer on a property, it may be helpful to understand both the maximum amount a lender may be prepared to lend and the repayment level that is comfortable for your own circumstances.

A mortgage broker can explain how government assistance programs may interact with lender policies and discuss lending options that may suit your circumstances. This information is general in nature and does not take your personal financial situation or objectives into account.

Bringing it all together

When planning your purchase, consider whether you are buying a new or established home, your expected purchase price and whether you intend to occupy the property as your principal place of residence.

From there, you may wish to assess whether the First Home Owner Grant, transfer duty concessions or a government guarantee scheme may be available based on your circumstances.

It is also important to compare loan repayments under different deposit scenarios, allow for all purchasing costs and retain an appropriate savings buffer.

Government assistance programs, eligibility criteria, property value thresholds and available places may change over time. Before relying on any government assistance, confirm the current eligibility requirements with the relevant government authority or seek appropriate professional advice.

Disclaimer

This article provides general information only and does not take into account your personal objectives, financial situation or needs. Lending is subject to lender assessment and approval criteria. Government grants, concessions and guarantee schemes are subject to eligibility requirements, availability and may change without notice.

Inspiration Lending Pty Ltd Credit Representative 569537 is authorised under Australian Credit Licence 389328 | ABN 20687381737.