THE FIRST HOME BUYERS GUARANTEE SCHEME (FHBG) in Queensland 2024
The First Home Buyers Guarantee Scheme (FHBG), is a government program that helps first-time homebuyers get into the property market by requiring only a 5% deposit on their mortgage. Housing Australia, working on behalf of the Australian Government, runs this program and offers various benefits to people looking to buy their first home. From July 1, 2022, the scheme's name has changed from the First Home Loan Deposit Scheme (FHLDS) to the First Home Guarantee (FHBG).
WHAT IS THE BENEFIT OF THE FHBG FOR FIRST HOME BUYERS IN QUEENSLAND?
To start, this initiative speeds up the process of entering the property market by making it easier for potential buyers. They only need to put down a smaller initial deposit, which helps them move into homeownership more quickly. Additionally, eligible buyers benefit from avoiding the financial strain of Lenders Mortgage Insurance (LMI). Moreover, they gain access to lower interest rates that are usually offered to those who can afford a larger initial deposit. This combination of reduced deposit requirements and financial perks makes the path to homeownership more accessible for qualifying individuals.
WHO IS ELIGIBLE FOR THE FHBG QUEENSLAND 2024?
When seeking approval for the FHBG in Queensland, a thorough evaluation is conducted, taking into account several key factors. These factors inlcude an assessment of your income, the requested loan amount, and your financial history of home acquisitions.
To meet the eligibility criteria for this loan program, certain prerequisites must be satisfied:
maintaining a Loan to Value (LVR) ratio falling within the range of 80% to 95%,
adhering to a limit on property price depending on the specific geographic area
submitting the application through authorized lending institutions
ensuring that all applicants are first-time home buyers, expressing the intent to acquire a residential property,
limiting the number of borrowers to a maximum of two,
and restricting the loan term to a maximum of 30 years.
If you have more questions there is by no means a comprehensive conveyancers checklist, contract Horrocks Solicitors today to learn more about buying your first home in Queensland.
QUEENSLAND FIRST HOME GUARANTEE SCHEME ELIGIBILITY TOOL
You can find an eligibility tool for the First Home Guarantee Scheme in Queensland here: Housing Australia
The eligibility criteria cover income, joint applications, prior ownership, citizenship, and owner-occupied status.
BRISBANE CONVEYANCERS HELP: WHAT IS LMI OR LENDERS MORTGAGE INSURANCE?
Lenders Mortgage Insurance, abbreviated as LMI, functions as a safeguard for lenders in the event that a borrower faces challenges in meeting their home loan repayment obligations. This insurance provision typically comes into play when the borrower seeks to finance more than 80% of the property's appraised value. The First Home Buyer Grant (FHBG) serves as an innovative solution, alleviating the financial burden on borrowers by eliminating the obligation to pay LMI fees. In this scenario, the government assumes the pivotal role of underwriting the home loan, essentially acting as a guarantor for the borrower.
WHAT ARE THE LIMITATIONS OF THE FIRST HOME BUYERS GUARANTEE SCHEME?
The First Home Guarantee Scheme is subject to specific constraints that prospective homeowners should be aware of. Firstly, it mandates that the property acquired through the scheme must serve as the primary residence for the homeowner. Additionally, it is crucial to note that the scheme does not extend its applicability to investment properties. Furthermore, there are stipulated price caps imposed on properties eligible for consideration within the scheme. Lastly, it is imperative to recognize that the scheme's capacity is restricted to 35,000 spots per financial year, underscoring the importance of timely consideration and application.
WHAT ARE THE UPDATES TO THE FHBG SINCE 2023 IN QUEENSLAND?
From 2023 substantial enhancements and expansions have been incorporated into the First Home Buyer Guarantee (FHBG) framework, broadening the scope of eligibility and fostering inclusivity. One notable change is the introduction of collaborative applications, allowing friends, siblings, and other family members to jointly apply for both the First Home Guarantee and the Regional First Home Buyer Guarantee. This collaborative approach provides an avenue for shared homeownership aspirations.
Crucially, the eligibility criteria for the Family Home Guarantee have been updated to include single legal guardians of children, encompassing aunts, uncles, and grandparents. This adaptation acknowledges the diverse structures of family units and extends the benefits of the guarantee to a broader spectrum of caregivers.
In addition there is the removal of the previous restriction on property ownership within the last ten years as a disqualifying factor for applicants. This adjustment opens up opportunities for individuals with past property ownership experiences to benefit from the FHBG and its associated guarantees when buying property in Queensland.
Further expanding the inclusivity of the schemes, permanent residents are now eligible to apply for any of the three guarantees. This extension of eligibility criteria transcends the conventional confines of married or de-facto couples and single applicants, embracing a more diverse demographic of aspiring homeowners.
In the specific context of Queensland, the FHBG caters to lower to middle-income earners, with income caps set at $125,000 for single applicants and $200,000 for couples. As with any financial application, considerations such as borrowing capacity, credit checks, and stable employment remain integral components of the evaluation process for ensuring responsible lending practices.
This comprehensive set of updates to the FHBG not only reflects a commitment to adaptability and inclusivity but also underscores the Queensland government's dedication to supporting a diverse range of individuals and family structures in their journey towards homeownership.
HOW TO APPLY FOR THE FHBG IN QUEENSLAND?
If you’re buying in Queensland and it’s your first home you have the option to initiate the application process through either direct submission with one of the scheme's participating lenders or by engaging the services of a qualified mortgage broker. This dual avenue of application is intentionally designed to accommodate diverse preferences and facilitate a streamlined process for potential homeowners looking to access the scheme.
For those who opt for a direct approach, the submission of applications directly with participating lenders entails a straightforward engagement with the financial institutions affiliated with the First Home Guarantee Scheme. This direct submission allows applicants to interface directly with the lending institutions involved in the scheme, thereby enabling a more hands-on and personalized application process.
On the other hand, individuals may choose to leverage the expertise and intermediary services of a mortgage broker to navigate the application procedure. Mortgage brokers, equipped with industry knowledge and insights, act as intermediaries between applicants and the lending institutions, providing valuable assistance in compiling documentation, understanding eligibility criteria, and ensuring a comprehensive and well-prepared application.
In essence, this dual-channel application process reflects the scheme's commitment to accessibility and flexibility, catering to the varied preferences and needs of prospective homeowners as they embark on the application journey for the First Home Guarantee.
WHAT IS THE INCOME TEST FOR FHBG QUEENSLAND?
To ascertain eligibility for the income test, it is imperative that taxable income falls below the threshold of $125,000 for individual applicants and $200,000 for couples based on the preceding financial year. This stipulation is designed to ensure that the benefits of the scheme are directed towards individuals and households within specific income brackets, aligning with the goal of supporting lower to middle-income earners in their pursuit of homeownership.
Citizenship requirements are delineated based on specific timelines. Australian citizens are eligible for the scheme before July 1, 2023, while Australian Permanent Residents become eligible from July 1, 2023, onwards. This phased approach reflects a strategic timeline for extending the benefits of the scheme to a broader demographic, aligning with the government's commitment to supporting a diverse range of aspiring homeowners.
Upon successfully securing homeownership through the scheme, it is mandatory for recipients to reside in the acquired property within six months. This residency requirement is instituted to ensure the intended purpose of the scheme is realised, promoting active occupancy and utilization of the purchased property.
WHAT ARE THE PROPERTY PRICE CAPS FOR THE FHGB IN QUEENSLAND?
In terms of property price caps, the First Home Guarantee Scheme in Queensland, applicable for the 2022 to 2023 period, imposes specific limits. For the capital city of Brisbane and regional centers, the cap stands at $700,000, while for other areas within the state, the limit is set at $550,000. These caps are established to align with regional variations in property prices and contribute to responsible and sustainable homeownership within the designated income brackets.
THE FIRST HOME LOAN DEPOSIT SCHEME IN QUEENSLAND
THE FIRST HOME LOAN SUPER SAVER SCHEME
The FHSSS was first introduced in 2017 by the Australian government and allows prospective first home buyers to make voluntary contributions to their superannuation to later withdraw (alongwith any associated earnings) to use as a deposit to purchase or build their first home.
What is the FHSSS?
The FHSSS legislation sought to make housing more affordable to first home buyers, retirees and the wider Australian market. Older Australians benefit from the FHSSS as they can contribute the proceeds of the sale of their home to superannuation.
What are the changes to the FHSSS?
Following changes to the scheme first home buyers (FHBs) who are saving for a deposit using their superannuation will soon have more time to access their funds. In addition more updates have been made to make the scheme more flexible.
The legislative changes generally apply retrospectively to FHSS Scheme applications made from 1 July 2018. “The changes will also apply to eligible individuals who applied from 1 July 2018, which will help Australians who engaged in the scheme in good faith, finally access the money they saved to purchase their first home.’
New legislation was passed in September 2023 that expands the time frame from 14 days to 90 days with which to request a release authority of savings in order to access funds to purchase their first home after they have entered into a contract.
Currently prospective FHBs can make personal contributions of up to $15,000 a year with $50,000 able to be withdrawn to use as a deposit towards a first home.
The new changes permit candidates to amend and revoke their FHSSS applications before they receive funds.
It also allows applicants to withdraw and reapply for the FHHSS Scheme releases in the future.
The new bill will also make it possible for any FHSSS monies to be returned to superannuation funds if the amount is not yet released to the individual. Further clarifying ‘that FHSS Scheme amounts returned to superannuation funds are treated as funds’ non-assessable non-exempt income and do not count towards individuals’ contribution caps.’ Withdrawals are taxed at a marginal tax rate, less a 30 per cent offset.
For Australians who are downsizing the FHSSS allows people aged 65 and over to make additional non-concessional contributions of up to $300,000 into superannuation when they sell their home that they’ve held for at least 10 years This is able to be utilised by both members of a couple therefore up to $600,000 can be contributed.
FAMILY HOME GUARANTEE
What is the Family Home Guarantee?
The Family Home Guarantee (FHG) is a program by the Australian Government, part of the Home Guarantee Scheme (HGS). It aims to help single parents or legal guardians with at least one dependent buy a home sooner. Housing Australia administers this initiative.
How Does the Family Home Guarantee Work?
Starting from July 1, 2023, to June 30, 2025, the FHG offers 5,000 guarantees each year. Eligible single parents or legal guardians with dependents can build a new home or purchase an existing one with just a 2% deposit, subject to lenders' credit criteria. This opportunity is available to both first-time and previous homeowners.
How the FHG Assists Home Buyers
The FHG allows qualified single parents to apply for a home loan through participating lenders. Housing Australia guarantees up to 18% of the property's value, provided the borrower has a minimum 2% deposit and meets other eligibility requirements. This support helps single parents enter or re-enter the housing market faster.
Costs and Obligations
There are no extra costs for the guarantee itself. However, recipients must handle all usual home loan costs, including mortgage repayments and associated fees. The FHG is strictly for purchasing a home to live in, not for investment properties.
Eligibility Criteria
To qualify for the FHG, applicants must:
Be a single parent or legal guardian with at least one dependent.
Be over 18 years old.
Be an Australian citizen or permanent resident.
Have a taxable income not exceeding $125,000 for the previous financial year (excluding child support).
Be the sole name on the loan and property title.
Ensure the loan term does not exceed 30 years.
Have a deposit of at least 2% but less than 20% of the property's value.
Intend to live in the property and not currently own any other property.
Property Requirements
Eligible properties include:
Existing houses, townhouses, or apartments.
House and land packages.
Land with a contract to build a home.
Off-the-plan apartments or townhouses.
The property's cost must stay within state and regional price caps, and applicants usually need to apply for a Principal and Interest loan unless it's a specific Construction Loan.
Legal and Financial Considerations
Applicants should consult a conveyancer for advice on purchasing land or building a home. They must sign a fixed-price building contract, with any changes potentially affecting their place in the scheme. Additionally, lenders might require Lenders Mortgage Insurance (LMI) or extra costs if contract changes increase expenses.
Loan Repayments
Regular repayments covering both the loan amount and interest are necessary throughout the loan term, with few exceptions for interest-only loans mainly used for construction. It's advisable to discuss potential impacts of interest rate changes with the lender or broker.
Property Price Thresholds
The property price limits for the FHG are the same as those for the First Home Guarantee.
Getting Help
To navigate the legal complexities and ensure you're well-prepared for the financial commitments, consult with a qualified conveyancing expert. They can guide you through the process and help mitigate risks.
By understanding and meeting these requirements, eligible single parents and legal guardians can take advantage of the Family Home Guarantee to secure a home for themselves and their dependents.