Buying your first home is an exciting milestone, but it can also be a daunting process. Thankfully, there are various government grants available to help first home buyers navigate the financial challenges. One such Australian government initiative is the First Home Owner Grant (FHOG).
In this article, the property law experts at Haitch Convey will explain everything you need to know about the First Home Owner Grant, including eligibility criteria, how to apply, and other grants available to first-time home buyers in Melbourne.
What is FHOG?
The First Home Owner Grant is an initiative designed to support eligible home buyers by offering financial assistance when purchasing or building a new home. This grant exists to make homeownership more accessible for first-time buyers, particularly those struggling to save for a deposit or cover associated costs. The FHOG is available across all Australian states and territories, although each state has different criteria and application processes.
In Victoria, the FHOG provides first home buyers with up to $10,000 if they are purchasing or building a brand-new residential property. This initiative is aimed at encouraging new construction and boosting the housing market, while also reducing the financial barriers for eligible home buyers. This home owner grant is available only for new builds or homes that have never been lived in or sold, ensuring that it stimulates the construction of new residential properties.
The FHOG is a one-off grant, meaning you can only access it once. Additionally, it is not available for purchasing established homes in most cases, except in special circumstances (which will be explained further).
Who is Eligible for the First Home Buyers Grant in Australia?
To apply for the First Home Owner Grant in Australia, you must meet certain eligibility criteria. Below, we’ve outlined the main requirements for first-time home buyers in Victoria, as set out by the State Revenue Office (SRO). These guidelines are essential for ensuring that your application is successful and that you receive the support you need as an eligible home buyer.
General Eligibility Criteria
- Australian Citizens or Permanent Residents: At least one applicant must be an Australian citizen or a permanent resident to apply for the home owner grant. New Zealand citizens with a permanent residency visa are also eligible.
- First-Time Home Buyers: The First Home Owner Grant is available only to first home buyers who have not previously owned or co-owned a residential property in Australia.
- Age Requirement: Applicants must be at least 18 years old at the time of application.
- Property Type: The property must be a new home that has never been occupied or sold. This ensures that the grant is used to promote the purchase of new builds and not for established homes (with some exceptions).
- Principal Place of Residence: The property purchased must be your principal place of residence. You need to occupy the home within 12 months of settlement and live in it for at least six months.
- Property Value: The purchase price of the property must be below certain thresholds for eligibility. In Victoria, the home value must not exceed $750,000 for the home to qualify for the First Home Owner Grant.
For more information on eligibility, refer to the State Revenue Office.
Income and Financial Requirements
While the First Home Owner Grant does not impose specific income caps, other government grants like the Victorian Homebuyer Fund have income restrictions. It’s important to check your eligibility for additional assistance if required.
For the purposes of meeting the lending criteria set by Participating Lenders, a deposit must consist of genuine savings when applying for the First Home Guarantee.
Other Criteria
- Joint Applicants: If you are applying with someone else, both applicants must meet the eligibility criteria. For example, both applicants must be first-time buyers and both must intend to live in the property.
- Supporting Documentation: When applying for the FHOG, you must provide documentation, such as proof of identity, proof of permanent residency, and other supporting evidence like a marriage certificate or divorce certificate.
Any discrepancies in the name on the documents presented require additional verification, and specific documents, such as change of name certificates or statutory declarations, must be provided if the name on any submitted documents differs from the applicant’s name.
For full details on the criteria, visit the State Revenue Office.
Established homes vs. New Builds
The First Home Owner Grant is primarily available for purchasing new builds or homes that have not been previously lived in or sold. For established homes, the grant is generally not applicable. However, if the property is a newly constructed home that meets the grant’s criteria, it can still be eligible.
If you are considering purchasing an established home, you should review the specific eligibility requirements and consult the State Revenue Office for further clarification, as there are certain exceptions.
How to Apply for First Home Owners Grant
Applying for the First Home Owner Grant is a fairly straightforward process, but it requires a few essential steps. Here’s an overview of what you need to do to apply:
Steps to Apply
- Complete a Statutory Declaration: You will need to declare that you meet all the eligibility criteria for the FHOG. This statutory declaration is a legally binding document confirming that you have never owned property in Australia.
- Submit the Application: You can submit your application online via the State Revenue Office website or through an approved agent.
- Provide Required Documentation: Each person involved in the property transaction must provide proof of identity, such as a passport or driver’s licence, and additional documents like proof of permanent residency, or a marriage certificate if applicable.
- Obtain Approval: Once your application is submitted, the State Revenue Office will review your application. If everything is in order, they will approve your application for the First Home Owner Grant.
- Receive the Grant: After approval, the grant will be paid directly to you or to the seller, depending on your arrangement.
For more information on applying, visit the State Revenue Office.
How long does FHOG approval take?
The approval process for the First Home Owner Grant typically takes around 2 to 4 weeks. However, the exact time may vary depending on factors such as the complexity of your application or the need for additional documentation. Be sure to start the application process early to avoid delays.
Who does the FHOG get paid to?
The First Home Owner Grant is generally paid to the applicant(s) directly or, in some cases, to the seller or builder as part of the settlement process.
Am I eligible? Real Life Scenario
Meet Emma and James, a couple from Melbourne looking to buy their first home. They are both Australian citizens, and they’ve found a newly built home valued at $700,000. They plan to move in and live there for at least six months after settlement.
Scenario 1: Emma and James are eligible for the FHOG
In this case, Emma and James would qualify for the First Home Owner Grant because they meet all the eligibility criteria:
- They are both Australian citizens.
- They have never owned property before.
- The home is a new build and valued below $750,000.
- They intend to live in the home as their principal place of residence.
Scenario 2: Emma and James are not eligible for the FHOG
If Emma and James found an established home instead, they would not be eligible for the First Home Owner Grant because the grant is only available for new homes. Even though they meet the other criteria, established homes do not qualify for the FHOG.
What grants are available for first home buyers in Victoria? (Other than FHOG)
In addition to the First Home Owner Grant, there are several other grants available for first home buyers in Victoria. These include the Victorian Homebuyer Fund, which helps eligible buyers purchase a home with just a 5% deposit. The First Home Guarantee and Regional First Home Buyer Guarantee are also part of the Home Guarantee Scheme, providing more opportunities for eligible buyers.
FHOG Checklist: What to Consider Before You Apply
To summarise, before applying for the First Home Owner Grant, you should consider these key factors:
1. Financial Preparedness
Ensure you have enough savings for a deposit and be aware of additional costs like stamp duty and mortgage insurance. Even with the FHOG, proper financial planning is crucial. (Use our Stamp duty Calculator).
2. Eligibility of the Property
The property must be a new build and your principal place of residence.
3. Document Requirements
The application requires proof of Australian citizenship or permanent residency, along with other documents like a marriage certificate. Ensure you have everything ready to avoid delays.
4. Other Government Grants
Explore additional programs like the First Home Guarantee and Victorian Homebuyer Fund for more financial support, especially with lenders mortgage insurance.
5. Timing
The FHOG is paid after settlement, so plan accordingly. The approval process can take weeks, so apply early to avoid delays.
By considering these points, you’ll ensure a smoother process when applying for the First Home Owner Grant.
Looking to Buy in Melbourne?
Understanding the eligibility criteria for the First Home Owner Grant and other government grants can make your journey to homeownership much easier.
If you need assistance with your property purchase, the experts at Haitch Convey are here to support all eligible home buyers through the process. Contact us today to get started on your path to owning your first home!
