NSW first home buyer? You could get into the property market sooner with the First Home Super Saver scheme and First Home Guarantee.
Three ways to get help saving your deposit.
First home buyer grants
The New South Wales First Home Owner (New Homes) Grant offers $10,000 to resident first home buyers home, or buy land with a contract to build a house. New properties must have a purchase price of no more than $600,000, and the combined cost of new builds must be valued at no more than $750,000. Applicants must meet various criteria.
Upfront cost help
The national First Home Guarantee can help lower the deposit you need and avoid high Lenders Mortgage Insurance. The NSW First Home Buyer Assistance scheme offers concessions to first home buyers on their stamp duty, and Shared Equity Home Buyer Helper can help first home buyers who work in key industries buy their home with a 2% deposit.
Tax help with saving
The Federal Government’s First Home Super Saver (FHSS or FHSSS) scheme helps you save more for your deposit by using your super fund, where your super is generally taxed at 15% (before-tax contributions and investment earnings) well below most income tax rates.
Suzi is keen to get off the rental mill and into her own home. She’s found a great, newly completed one-bedroom apartment for $540,000, and she discovers that she can get assistance because it’s her first home.
Tip – Sydney house prices and deposits are high so Suzi was wise to start saving early and gain tax concessions by depositing money into her super, which she could later withdraw through FHSS to help fund the deposit.
How does the First Home Super Saver Scheme work?
The different grants and schemes on offer in NSW can help make it easier to purchase your first home, but often the deposit is the challenge.
That’s why the Federal Government created the FHSS scheme. If your super has been topped up by you through salary sacrificing or voluntary contributions, then you may be able to use up to $50,000 of that (and the earnings) to put towards your first home deposit.
If it’ll be a few years before you’re ready to buy, then making additional contributions to your super now means you’ll have more to draw upon when it’s finally time to buy - plus, you may be able to get some tax advantages making saving even easier.
When you’re ready to buy your first home, your FHSS savings will give you an advantage while the other federal and NSW first home programs should help to bring the funding target within reach.
How do I save using the FHSS?
Saving via your super for the FHSS can happen in two ways.
Firstly, through contributions such as salary sacrificing (where you get your employer to direct some of your normal pay straight to your super) or making a contribution yourself then claiming a tax deduction.
Either way, you may only pay 15% tax on that amount rather than your higher, standard tax rate.
You can also make and use any after-tax contributions you make to your super.
Note, there are limits on how much you can contribute to your super each year.
What is the First Home Guarantee?
The First Home Guarantee (called FHBG to avoid confusion with other programs) is an Australian Government program to help eligible first-time home buyers buy a home with a deposit of just 5%. The program also means there is no Lenders Mortgage Insurance to pay.
How does the First Home Guarantee work?
When you apply for your first home loan, lenders will often ask for up to 20% of the purchase price as a deposit. If you can’t meet that, then you may need to pay expensive Mortgage Lenders Insurance.
However, the Commonwealth Government’s First Home Guarantee (FHBG) aims to help eligible applicants get around that by offering to guarantee some of the mortgage.
What are the eligibility criteria?
Generally, to meet the 2023 eligibility criteria for the First Home Guarantee (formerly called First Home Loan Deposit Scheme or FHLDS) in New South Wales, you must:
Only homes to live in qualify, but these can be:
In Sydney, Newcastle, Lake Macquarie and the Illawarra, the property must be valued up to $900,000 and in the rest of NSW the cap is $750,000.
Check out the First Home Guarantee website for full eligibility details.