Making the most of the First Home Super Saver scheme, the First Home Guarantee, and other help for Victorian first home buyers.
There’s extra help on offer for Victorian first home buyers.
First home buyer grants
Victoria has two state government schemes to help new home buyers. The First Home Owners Grant can contribute up to $10,000 to eligible residents who are building or purchasing a brand new home up to the value of $750,000. The second is the Victoria Homebuyer Fund - a shared equity scheme where the Victorian Government pays for and owns a stake in your home.
Upfront cost help
The First Home Guarantee is a national program designed to lower the amount of deposit you need, by providing a guarantee for some of your home loan, thereby avoiding expensive Lenders Mortgage Insurance. Eligible first home buyers can also apply for a Victorian stamp duty exemption on homes up to $600,000 (or a concession on homes up to $750,000).
Tax help with saving
First Home Super Saver (FHSS or FHSSS) is a scheme that helps Victorians save more for their first home deposit in their super accounts, where it’s generally taxed at 15% tax rate - well below most people’s income tax rates.
Caroline wants to buy her first home in Geelong. It will cost $600,000 and she is excited about this as the property is in good condition. Here’s how Caroline handles her house purchase.
Tip – If Victorians wish to pay a smaller deposit than 20% and avoid paying Lenders Mortgage Insurance, the Victorian Homebuyer fund is not the only way. The federal First Home Guarantee provides an alternative and you can apply and be eligible for both.
How does the First Home Super Saver scheme work?
The FHSS scheme lets you access some of your super to help cover your mortgage deposit - but you can only withdraw super that you paid yourself e.g. through salary sacrifice or a voluntary after-tax contribution for which you claim a tax deduction.
Effectively this means you’re getting a tax concession to help you save your mortgage deposit! You can also use after-tax contributions on which you haven’t claimed a tax deduction.
If you’re ready to buy and have been topping up your super over the past few years, you might have enough now.
If you’re still saving up, then you could do so through your super, so when you’re ready, you can take out up to $15,000 worth of contributions per year up to $50,000 in total plus the earnings in super.
Saving through FHSS, plus any use of the Victorian first home schemes, can bring first home ownership within reach.
How do I save using the FHSS?
To save money via your super - and the FHSS - all you need to do is contribute to your super, on top of what your employer pays.
Many workers opt for a salary sacrifice, which sees their employer direct an extra amount directly to the employee's super (instead of to their paycheck).
You could also make a voluntary contribution and then claim a deduction at tax time.
Both methods can see those contributions taxed at only 15% rather than the higher tax rate you’d probably pay on your normal wage - up to a certain limit.
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 (aka FHBG) is a Federal Government initiative to help eligible Australians purchase their first home. Approved buyers can have just a 5% deposit instead of the usual 20% that many lenders require to avoid paying Lenders Mortgage Insurance.
How does the First Home Guarantee work?
Australia’s First Home Guarantee (FHBG) was introduced to help first home purchasers avoid expensive Lenders Mortgage Insurance, which can increase costs by $10,000 or even more. If you don’t qualify for the Victorian Homebuyer Fund, the FHBG may be an alternative way to avoid lenders' insurance.
What are the eligibility criteria?
Generally, to be eligible for the First Home Guarantee (previously First Home Loan Deposit Scheme or FHLDS) in Victoria, you must be:
Only residential properties are eligible, but these can include:
In Melbourne and Geelong in 2023, the property value can only be up to $800,000, and in the rest of Victoria, up to $650,000.
For more eligibility information, visit the FHBG site.