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Mortgage Basics

Home Loan Subsidies: What is out there Currently and are you Eligible?

The property trends of 2021 are looking up for this year, buoyed by everything from waning fears of the pandemic to strong financial incentives for buyers across the board. As there are many subsidies out there, it can become confusing whilst looking for property to use the right subsidy for the right transaction.

 We’ll explore the different initiatives currently available and whether you are eligible for it or not.


First Home Loan Deposit Scheme (FHLDS)

The first-home loan deposit scheme was designed to help Australians secure their first property. It’s a home loan subsidy administered through the National Housing Finance and Investment Corporation (NHFIC), and it was conceived to make the entry point for either building or purchasing sooner attainable.

It has recently been expanded with increased property price thresholds. However, buyers are limited to new-build homes.

Under the normal lending rules, a first-time home buyer would need at least 20% for a down payment plus stamp duty, or else they would have to factor in the additional costs of Lenders Mortgage Insurance (LMI). Now eligible first home buyers can purchase a modest home with a deposit as little as 5% (subject to lender criteria). The NHFIC guarantees to a participating lender up to 15% of the value of the property purchased that is financed by an eligible first home buyer’s home loan. 

The 2020–2021 Federal Budget announced that it would allocate an additional 10,000 places for new builds under the FHLDS for eligible buyers. Currently, there is a wait list of more than 5,000 for established builds.

To be eligible for these home loans, you’ll need to meet all of the following criteria:

  • Single applicants must not have had a taxable income of more than $125,000 and couples must not have had more than $200,000 in taxable income combined.
  • Applicants must not have owned a property in Australia, a lease of land, or other title interest.
  • Applicants must be at least 18 years old and a current Australian citizen at the time of the application.
  • Applicants must have at least 5% saved up to qualify.
  • Applicants must move into the property within 6 months of the date of settlement and live in the property for as long as the loan is guaranteed by the NHFIC.


State Capital City / Regional Centres (New Builds) Capital City / Regional Centres (Established Builds) Rest of State (New Builds) Rest of State (Established Builds)
NSW $950,000 $700,000 $600,000 $450,000
VIC $850,000 $650,000 $550,000 $375,000
QLD $650,000 $475,000 $500,000 $400,000
WA $550,000 $400,000 $400,000 $300,000
SA $550,000 $400,000 $400,000 $250,000
TAS $550,000 $400,000 $400,000 $300,00
ACT $600,000 $500,000 N/A N/A
NT $550,000 $375,000 N/A N/A

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First Home Super Saver Scheme (FHSS)

The FHSS allows Australians to save money for their first home with the help of their super fund. The concessional tax treatment of superannuation will allow buyers to save faster and get into homes sooner.

Under this scheme, you can apply to have a maximum of $15,000 of your voluntary contributions released for any one financial year, up to a total of $30,00 across all years.

To be eligible for these home loans, you must either:

  • Intend to live in the property for at least 6 months of the first year you own the property.
  • Never owned a property in Australia.
  • Not previously requested the commissioner to issue an FHSS.
  • Be over 18 years of age.

The Homebuilder’s Grant

The Homebuilder’s Grant provides owner-occupiers (including first-home buyers), with the money they need to either build a new home or renovate an existing one. This encourages new buyers to invigorate the property market, but it also stimulates the construction sector. At the end of 2020, the Government announced an extension to these home loan subsidies until 31 March 2021.

The extension includes several changes to the grant, including a new deadline of 14 April 2021. This deadline applies to all contracts that were signed on or after 4 June 2020. So if you signed a contract to build a new home at the end of 2020, you can still apply for the homebuilder’s grant this year.

There will be a $15,000 grant option for building contracts between the 1st of January and the deadline of the program (as opposed to the $25,000 standard option before). This allows more people to take on smaller renovation projects, helping to improve Sydney property across the board.

The construction start time has also been extended from 3 to 6 months, giving owners more time to organise the labour and prepare the property. This again applies to all contracts settled on or after 4 June 2020.

Finally, the government has made concessions for different neighbourhoods. New builders have seen the limits jump to $950,000 in New South Wales and $850,000 in Victoria (for contracts signed between 1 January and 31 March 2021).

To qualify for this home loan subsidy, you’ll need to meet the following criteria:

  • The contract must be between $150,000 – $750,000 (excluding New South Wales and Victoria).
  • The value of the land and the home must not exceed $1.5 million.
  • The construction must take place within 6 months of the contract being signed.

Guarantor Loans

A guarantor loan is where a third party offers financial security as support to the borrower. These third-party individuals are usually limited to either immediate family members or spouses. However, some lenders may consider close friends. A guarantor will promise to pay back the loan if you can’t. However, unlike a co-signer, the guarantor has the option of being released from their responsibility before the loan is paid back in full.

Guarantors have to offer some type of equity in order to be eligible, such as a portion of their own home, to secure part or all of the mortgage. However, it’s the homeowner who is primarily responsible for payments, including interest and fees. It’s only when the homeowner defaults that the guarantor might be called to cover the additional funds.

A guarantor home loan allows borrowers to borrow up to 100% of the property or even more. For first home buyers, you can borrow up to 105% of the property with a guarantor loan.

To be eligible, the guarantor must:

  • Have a good personal credit score.
  • Own equity in a property that can be used as security.
  • Have stable, verifiable, and substantial income.
  • Be an Australian citizen or permanent resident.
  • Be between the ages of 18 – 64.

Guarantors come with a wide range of potential risks, so it’s best to speak to a property expert who will give you the right advice before you make such a major commitment.

Bank Initiatives

In addition to government incentives, banks like ANZ are offering home support loans to first-time buyers. This includes a conveyancing fee rebate of up to $1,000, which can be a blessing for home buyers who are looking to save. 

To be eligible, you must be a first-time home buyer with a home loan of over $250,000 and apply between 1 October 2020 and 31 July 2021.

Talk to Shore Financial to Explore Your Home Loan Options

The home loan subsidies available are undoubtedly tempting to anyone who’s getting ready to make a move — particularly if it’s your first property. However, the reality is that there’s a lot of fine print to wade through before you settle on your best option. 

Shore Financial has a team of property experts to help you navigate your way through this crowded space and make decisions that fit both your current needs and future plans. 

If you have any questions about the government initiatives and whether you qualify, call us today to start getting customised mortgage advice.


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