First Home Owner Grant vs HomeBuilder Grant
With home ownership rates falling across Victoria in the past few years, the government has introduced a range of measures to try and make it easier for first home buyers to enter the market.
These include the HomeBuilder grant and the First Home Owner Grant (FHOG). If you’re considering taking advantage of either of these grants you need to understand how much they’re worth, who’s eligible and how to apply.
The HomeBuilder Grant
The HomeBuilder grant is a Federal Government scheme. It was designed to give the local residential construction markets in each state and territory a boost in the wake of the Covid-19 pandemic.
Currently, the HomeBuilder Grant is for $15,000 but the house and land package amount has increased to $850,000 from $650,000.
Eligibility for the HomeBuilder grant
To be eligible for the HomeBuilder grant, you will need to be;
- At least 18 years of age
- An Australian citizen (couples must both be Australian citizens)
- A first time recipient of the grant
- Earning less than $125,000 per annum as an individual or less than $200,000 per annum as a couple
- Prepared to live in the home as your principal place of residence for at least six months after completion or settlement
- Buying property worth $850,000 or less or renovating property worth $1.5 million or less
- Spending at least $150,000 on renovations and no more than $750,000
- Undertaking renovations that improve the accessibility, liveability and safety of the property (i.e. not installing a swimming pool or building a tennis court).
How to apply for the HomeBuilder grant
Originally all applications for the HomeBuilder grant had to be lodged by 31 December 2020, but this deadline has now been extended by the government to 14 April 2021.
In light of the Covid-19 restrictions in Victoria, the deadline for construction to commence has also been extended from 3 months to 6 months after the contract is signed.
You can use the Victorian government’s online portal to lodge your HomeBuilder application and then upload any required supporting documentation as it becomes available after the deadline in a multi-step application process.
Once you’ve lodged your application, you’ll generally be advised of the outcome within 15 business days and if successful, the money will be paid into your bank account usually within 5 days of notification.
The First Home Owner Grant
While the HomeBuilder grant is a Federal government initiative in response to COVID-19, the First Home Owner Grant (FHOG) is an ongoing grant that’s been provided to new home buyers for some time by the Victorian government.
It’s available if you buy a newly built home or build one from scratch and it can be a house, townhouse or apartment, as long as it is less than five years old, is being sold as new for the first time and is valued at $750,000 or less.
The grant amount is $20,000 if you are buying or building in a regional area of Victoria and $10,000 if your new home is in a metro area such as Melbourne. And the money can be used for a variety of purposes including topping up your deposit or helping to pay for additional costs such as legal fees and title searches.
Eligibility for the FHOG
The First Home Owner Grant has similar eligibility criteria to the HomeBuilder grant. Both require you to be 18 years or over at the time of application, although unlike the HomeBuilder grant, Australian permanent residents as well as citizens are eligible for the FHOG.
Both grants require the property to be your principal place of residence, not a holiday home or investment property and for you to live in it after settlement (at least 6 months under HomeBuilder and 12 months under FHOG).
And as with HomeBuilder, you must be a first time recipient of the FHOG and the property you are buying must not have been previously sold or occupied as a home.
How to apply for the FHOG
While you can apply for the HomeBuilder grant directly online, a FHOG application is typically lodged on your behalf by an approved agent. This is usually the bank, credit union or other lender providing your finance and if you need the FHOG to guarantee settlement, you will be required to apply in this way.
You can find out more about the First Home Owner Grant (FHOG), including eligibility and the application process by visiting the Victorian State Revenue Office website.
The good news
If you don’t qualify for one of these grants, you’ll probably be eligible for the other and in the best case scenario, you’ll be able to get both together if building or buying new in Victoria.
If you’re an eligible first home buyer, the HomeBuilder grant can be used with the First Home Owner Grant and a range of other Victorian incentives such as the First Home Loan Deposit Scheme, pensioner concessions and the Young Farmer Exemption. The only thing the HomeBuilder grant can’t be used for is to top up your deposit.
Stamp duty concessions also apply for first home buyers in Victoria and if you’re buying a home for $600,000 or less, stamp duty has been totally abolished. Normally it would be between 2 and 4% of the home’s value, so that’s quite a saving. Plus if you’re buying a home for between $600,000 and $750,000, tapered stamp duty concessions also apply.
Government incentives such as the HomeBuilder grant and the FHOG are helping to make it easier for new home buyers to enter the market and the focus on new builds will hopefully lead to a resurgence in residential construction in Victoria.