Boost for first-home buyers in this year's Budget


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First-home buyers are among the winners of this year's Federal Budget, with the government floating a new Regional Home Guarantee and boosting the number of places available under several existing schemes.

Under the new Regional Home Guarantee scheme both Australian citizens and permanent residents who have not owned a home for at least five years will be encouraged to either purchase a newly built property or build a home of their own in regional areas.

Similar to the existing First Home Guarantee scheme, eligible buyers using the new scheme will be able to take out a home loan with a deposit as low as 5% without the need for mortgage insurance. Instead, the government will act as the guarantor for the loan.

first home buyers housing affordability federal budget

Starting this year, 10,000 places will be available annually under the scheme until June 2025.

"The introduction of the Regional Home Guarantee has the potential to help these home buyers but also to boost home building in the regions," said Housing Industry Association managing director Graham Wolfe.

"Many people have chosen to move to regional areas over the last two years to build a new life, placing pressure on housing affordability in these areas. Supporting home building at the same time as supporting people re-enter the housing market can make a real difference."

The Budget also outlines an expansion to the number of places available under the existing First Home Guarantee and Family Home Guarantee schemes.

First of all, 35,000 new First Home Guarantee places each year for three years will be made available to first home buyers with low deposits starting from July 1.

An additional 5000 spots each year will also be opened up for single parents through the Family Home Guarantee scheme.

The initiative also allows low deposit buyers to purchase a home without the added expense of lenders mortgage insurance, though eligible single parents are able to purchase with a deposit as low as 2% of the property price.

While these schemes are intended to help more Australians enter the housing market by lowering the deposit bar, rising house prices have also made saving up for a deposit harder.

According to the latest CoreLogic data, the median home value in Australia is now $728,034 - 20.6% higher than it was this time last year.

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Tom Watson is a senior journalist at Money magazine, and one of the hosts of the Friends With Money podcast. He's previously worked as a journalist covering everything from property and consumer banking to financial technology. Tom has a Bachelor of Communication (Journalism) from the University of Technology, Sydney.
Sam Kris
March 31, 2022 12.10am

What seems to all financial journalists and advisers as evil/bad, is probably being sidelined too much.

I'm talking about LMI or Loan Mortgage Insurance.

Yes, it covers the bank, not the borrower. But why is always promoted as "wasted money"?

I'd rather it be approached as a cost of doing business, like stamp duty is.

With an average property for 1st home buyers costing $700K, that's $140K for the 20% deposit plus another if 3% $21K on the stamp duty. Quite impossible to save up for.

But what exactly is the LMI if you had just 10% deposit, $3,000, $6,000?

Even if $6K, one will then be able to get off the rent treadmill with just $97K in savings!

Why is that $6K LMI so bad??

Or is it a lot more than $6K??

What if with a 5% deposit of $35K?!!

The majority who have been paying rent for sometimes decades are surely not going to default on their mortgages!

LMI is easy money for the banks, and a real - not wishful - solution to so many struggling renters.

No? What have I missed??

Money magazine
March 31, 2022 9.31am

Hi Sam,

When Money ran the numbers on this back in 2017, we found that rapid property appreciation could make up for the cost of LMI, and that buying sooner - without a 20% deposit - could make more financial sense in the long run.

You can read that story here:

- Money team

victoria Hurst
April 1, 2022 4.18am

will disability people qualify? i have bipolar schizophrenia its fairly permanent, i struggle massive ups n downs. can i use my pension to buy a portion of land? i have found 2.5 acres nearby and currently im doing up a van to live in. its terrible for my mental health. this would take that struggle away if i was able to use the money that way