First Home Buyers Grant Melbourne

First Home Buyers Grant Melbourne

Are you dreaming of buying your first home in Melbourne but feeling overwhelmed by the process and costs involved? You're not alone. Entering the property market can be a daunting prospect, especially in a competitive city like Melbourne. However, the good news is that there are several government incentives available to help eligible first home buyers achieve their homeownership goals. In this guide, we'll break down the key grants, concessions, and benefits you may be able to access as a first home buyer in Victoria's capital.

First Home Owner Grant (FHOG)

The First Home Owner Grant (FHOG) is a one-off payment of $10,000 provided by the Victorian government to eligible first home buyers. To qualify for the grant, you must be purchasing or building a new home valued at $750,000 or less.

To be eligible for the FHOG, you must:

  • Be at least 18 years old
  • Be an Australian citizen or permanent resident
  • Not have previously owned a property in Australia (this applies to both you and your spouse/partner)
  • Occupy the home as your principal place of residence for a minimum of 12 months
  • Be buying a new home that has not been previously sold or occupied, and is less than 5 years old

If you are a current member of the Australian Defence Force, you may be exempt from the residency requirement, provided you are enrolled to vote in Victoria.

First Home Buyer Duty Exemptions and Concessions

In addition to the $10,000 FHOG, first home buyers in Victoria may also be eligible for significant stamp duty savings. If you are purchasing a property valued at $600,000 or less, you will not be required to pay any stamp duty. For homes valued between $600,001 and $750,000, a concessional stamp duty rate applies.

To access the first home buyer duty exemption or concession, you must meet the same eligibility criteria as the FHOG. However, the property does not need to be brand new, unlike the requirements for the grant.

Furthermore, there is an additional stamp duty discount available for first home buyers purchasing within the City of Melbourne local government area. This applies to homes valued up to $1 million and is available for contracts entered into between 2021-2022.

Victorian Homebuyer Fund

The Victorian Homebuyer Fund is a shared equity scheme designed to help eligible first home buyers enter the market with a smaller deposit. Under this initiative, the state government contributes up to 25% of the purchase price of the property, in exchange for an equivalent share in the home's equity. This allows participants to buy a home with a deposit as low as 5%, without the need to pay lenders mortgage insurance (LMI). For eligible Aboriginal or Torres Strait Islander homebuyers, the government's contribution can be up to 35%, and the minimum required deposit is reduced to 3.5%.

To qualify for the Victorian Homebuyer Fund, you must:

  • Earn $125,000 or less per annum as a single applicant, or have a combined income of less than $200,000 as a couple
  • Have a minimum deposit of 5% of the property's value (or 3.5% for eligible Aboriginal or Torres Strait Islander homebuyers)

While participants are not required to pay interest on the government's share of the property, it's important to note that the government will be entitled to their proportionate share of the profits (25% or 35%) when the home is eventually sold. However, homeowners have the option to buy out the government's portion over time.

Finding Your Perfect First Home

Melbourne offers a diverse range of suburbs and property types to suit different lifestyles and budgets. As of June 2023, the median house price in the city was $820,000, while the median unit price sat at $600,000.

For those seeking more affordable options, exploring the city fringe or regional areas can often yield better value for money. Attending open homes and auctions is a great way to get a feel for the market in different locations and understand what your budget can afford. Online real estate portals such as Domain and are also valuable resources for researching current listings and recent sales data.

Once you've found a property that ticks your boxes, it's essential to organise a professional building and pest inspection before proceeding with an offer or bidding at auction. These reports can uncover any significant issues with the home and help you make an informed decision about whether to move forward with the purchase.

Securing Finance and Budgeting for Upfront Costs

One of the biggest hurdles for first home buyers is often saving a large enough deposit. Most lenders require a minimum deposit of 5-10% of the property's value, but aiming for 20% or more can help you avoid the added cost of LMI.

Consulting with a mortgage broker can be a helpful step in understanding your borrowing capacity and securing pre-approval for a home loan. This will give you a clear idea of your budget and allow you to make an offer or bid at auction with greater confidence.

When budgeting for your first home purchase, it's important to factor in the various upfront costs involved, such as:

  • Loan application fees (up to $1,000, but sometimes waived by lenders)
  • Estimated independent property valuation ($300-$500)
  • Estimated conveyancing and legal fees ($1,000-$2,000)
  • Estimated building and pest inspections ($500-$1,000)
  • Moving estimated costs ($300-$3,000)

The Bottom Line

Buying your first home in Melbourne is a significant achievement that requires careful planning and budgeting. By taking advantage of available government incentives, such as the First Home Owner Grant and stamp duty concessions, eligible buyers can receive a valuable financial boost to help them enter the property market.

Thoroughly researching the market, getting your finances in order, and surrounding yourself with a team of trusted professionals are key steps in setting yourself up for success. Remember, your first home is just the beginning of your property journey, and it doesn't necessarily need to be your forever home.

If you're ready to take the next step in buying your first home in Melbourne, Pearson Chambers Conveyancing can provide expert guidance and support throughout the process. Contact their friendly team today on 03 9969 2405 or email to discuss your needs and arrange a free Section 32 contract review.