Buying a House in Australia – Money and Finance

First Home Owner Grant | How Much Can I Borrow?

First Home Owner Grant – A Gift from the Government

Anyone buying a house in Australia for the first time (including migrants with permanent residence) is eligible for the First Home Owner Grant, a lump sum worth $7,000.

The First Home Owner Grant is paid directly to the buyer of a house in all Australian states. The grant is not payable for land purchases.

In New South Wales, Victoria, South Australia, Queensland, and most of Western Australia there is a house price cap of $750,000 for properties eligible to receive the grant.

Each individual state offers incentives in addition to the First Home Owner Grant.

First home buyers in NSW are exempt from paying stamp duty on house purchases of up to $500,000.

In Victoria first time purchasers are entitled to receive an additional payment $13,000 (for new homes only), known as the First Home Bonus (the Bonus). The First Time Bonus expires on 30th June 2011.

First home buyers in Western Australia pay no stamp duty on houses costing less than $500,000.

In Queensland, first home buyers in regional areas (not Brisbane or near Brisbane) can receive a $4,000 regional bonus. First time buyers of homes costing less than $505,000 can also receive a reduction of $8,750 on stamp duty – the First Home Concession.

In South Australia first home buyers are eligible for a First Home Bonus Grant (FHBG) of up to $8,000. A FHBG of $8,000 is available for first home purchases with a market value of up to $400,000, reducing to zero grant for properties of $450,000 or more.

In Tasmania a rebate of up to $4,000 is also available to First Home Owners purchasing property valued between $140,000 and $350,000.

Welcome as these are, these grants will not buy you a house in Australia. Unless you have substantial savings, you will need to get a mortgage from an Australian Bank.

How Much Can You Borrow?
The amount of money you can borrow for a mortgage depends on the lender. Lenders typically use your salary to decide the maximum amount they will lend you. On average, lenders allow couples to borrow 5 times their joint pre-tax income. Some will lend more, some less. If you need a mortgage, many lenders prefer you to be settled into a job for a few months before offering you a mortgage.

Stamp Duty on the Purchase – A Major Cost for Many Buyers
When you buy a house, you will have to pay tax on the purchase price. This is called Stamp Duty. First time buyers in New South Wales, Queensland and Western Australia, especially of lower priced properties, may get a discount on stamp duty.

The rate of stamp duty you pay depends on the house price. The more expensive the house, the higher the rate of tax. Each Australian state levies stamp duty at different rates.

For example, a buyer in 2010 – 2011 would pay stamp duty on properties as follows:

Stamp Duty on a $700,000 House

Stamp Duty on a $500,000 House

Stamp Duty on a $400,000 House

Stamp Duty on a $250,000 House

Stamp Duty on your Mortgage
All Australian states have now abolished mortgage stamp duty.