Compare government home loans

Australia’s state and federal governments recognise that it can be difficult to buy a home when you’re on a low income, especially if you’re a first-time buyer. Several government schemes and support programs are available to help make it easier to enter the property market.

For example, with a little government support, you may be able to buy residential property with a low deposit, and without having to also budget for lenders mortgage insurance (LMI) in your upfront costs. Further down the track, you may be able to refinance your home loan to an option that more closely matches your financial situation, without the government’s support. 

You will still have to fulfil eligibility criteria and go through an application process, but if you’re a responsible borrower who can manage money well, a government-supported loan could help to solve some of your problems. The types of Australian government home loan support schemes you may be eligible for will depend on your financial situation as well as where you live. Before you apply for any, make sure you do your own due diligence and check the eligibility criteria, such as any property price caps.

Each of Australia’s state and territory governments offers its own support program for eligible first home buyers. The rules and eligibility requirements for these First Home Owner Grants (FHOGs) vary – you may receive different levels of financial support depending on the type of property you’re buying (e.g. house or unit, established home or off the plan) and its location (e.g. in a capital city, suburb, or regional area).  

To discover more information about the FHOG available to you, you’ll want to visit the Revenue Office website of your state or territory.

Australia’s federal government offers the Home Guarantee Scheme (HGS), formerly known as the First Home Loan Deposit Scheme (FHLDS), administered by the National Housing Finance and Investment Corporation (NHFIC) which allows first home buyers to buy a new home with a deposit as little as 5% of the purchase price and pay no LMI.

Additionally, the Regional First Home Buyer Guarantee (RFHBG) is available specifically to encourage home ownership outside of the capital cities. There’s also the Family Home Guarantee (FHG) to consider, which can help single parents purchase a stable home for their family with a deposit as small as just 2%.

While these schemes can be very useful in the right situations, there are several important factors to keep in mind:

• Limited places per financial year – depending on the popularity, you could miss out if you can’t move quickly
• Maximum caps on applicant incomes and purchase prices – Some borrowers and properties may not be eligible
• First home buyers only – the exception is the Family Home Guarantee
• Restrictions on property type and location
• Limited participating lenders – you may not be able to get a loan with the lender you want.

This program lets you use the voluntary after-tax contributions you make towards your superannuation to help you buy your first home.

Eligible individuals can withdraw up to $50,000 in voluntary contributions, so couples pooling their funds may be able to access up to $100,000 to help cover the cost of their deposit.

The scheme is exclusively available to eligible applicants who are buying their first home where they plan to live, not for investment properties or other purchases. You can use this scheme if you are a first home buyer and all of the following apply:

• You have not previously owned a property in Australia
• You are an Australian citizen over 18 years of age
• You have not have previously had funds released from your superannuation under this scheme
• You will occupy the premises you buy, or intend to as soon as practicable
• You will occupy the property for at least six months within the first 12 months you own it

If you apply for the FHSS scheme, you can withdraw your savings when you are ready to enter the housing market. You don’t need to have found your home yet, but you will need to sign a contract to buy a home within 24 months of your release request. This timeframe includes a 12-month extension being granted by the ATO.

Keep in mind that taking money out of your super fund prior to retirement could affect your ability to save for the future and to live well in your old age. To help protect your balance, first home buyers may only withdraw up to 40% of their total superannuation under the scheme.

Keystart is a Western Australian scheme designed to help people who are struggling to save a deposit. Some users need a deposit of 2% of a property’s value if they are buying in a metro area, or a 10% deposit if they’re buying in a regional area. To be eligible, you’ll have to meet a set of criteria, including being at least 18 years old and intending to use the property as your main home.

Shared equity home loans are also available through Keystart, and work on a shared ownership principal. Loans are made available so that residents can buy a stake in their homes, with the Housing Authority remaining in partial ownership. This arrangement provides some of the security of home ownership and could put you in a better position to buy a home independently in the future.

HomeStart Finance is a South Australian scheme that allows some applicants to purchase properties with as little as a 2% deposit. There’s no insurance to pay and initial repayments are worked out based not on the interest rate but on what you can afford.

You’ll need to be over 18 and have a clear credit history to demonstrate your financial responsibility. These loans are open to Australian citizens, permanent residents and skilled migrants but can only be used to buy a property you’re going to live in.

Queenslanders are also eligible for a scheme that requires no loan insurance. It’s available with a deposit as low as 2% and there are no monthly fees attached. Payments are based on your income, starting at 30% of what you have coming in and never rising above 35%.

You’ll need to have a good credit record and a good savings history, have the capacity to keep earning for the full term of the loan, and have enough money in your savings to be able to pay for home insurance, stamp duty and legal fees. The loan is only available if you’re a citizen or permanent resident, own no other property and intend to live in the property you’re buying.

Different government support programs may be available to you depending on your financial situation, personal goals, and where in Australia you plan on buying your property.

Check the eligibility requirements with the relevant government department before you apply, as you may not be eligible for every scheme or program. Make sure you have all the relevant documentation to help ensure your application’s approval. Also, a limited number of lenders may participate with some programs, which could affect your decision.

In some cases, a mortgage broker may be able to walk you through which government offers you may be eligible for, as well as helping you to complete your application. A broker’s experience may be able to help you avoid little errors that could slow down your application’s progress, speeding up your approval.