Can You Use the First Home Owner Grant as a Deposit?

By Deltos Finance on March 28, 2024
A young couple buying their first home.

Dreaming of owning your first home in Australia? While you can use all your savings to pay for your home deposit, you must know that there are government grants that can help lower the initial cost of your first home purchase. Today, we’ll zero in on one of those grants: the First Home Owner Grant (FHOG). We will also try to answer this commonly asked question: ‘Can you use the First Home Owner Grant as a deposit?’

Understanding the First Home Owner Grant

The FHOG is a government incentive that supports first-home buyers in making their dream of homeownership a reality. This grant provides a one-time payment to eligible individuals purchasing their first residential property. While the FHOG can provide significant financial assistance and make homeownership more affordable, it is vital to understand how it can be used in the context of a home deposit.

Using the First Home Owner Grant as a Deposit

So, can you use the First Home Owner Grant as a deposit? 

The short answer is yes. You are free to use it as a deposit towards your new home. However, it is crucial to note that it may not be sufficient to cover the entire deposit amount required by lenders. Typically, lenders require 20 percent of the property’s purchase price as a deposit, and the FHOG can help meet this requirement.

How to Apply for the First Home Owner Grant 

Follow these steps to apply for the First Home Owner Grant (FHOG) in Australia:

  1. Check your eligibility.

Before applying for the FHOG, see if you meet the eligibility criteria. These criteria can vary depending on the state or territory. Generally, you need to be an Australian citizen or permanent resident, over 18 years old, and have never owned a property before.

  1. Determine the grant amount.

The amount of the FHOG can vary depending on the state or territory. For example, in Queensland, the grant amount is $15,000 or $30,000 for buying or building a new home, while in Tasmania, it is $30,000 for buying or constructing a new home.

  1. Apply for the FHOG. 

You can apply for the FHOG through an approved agent, such as a bank or lending institution, or directly to the relevant state or territory revenue office. The fastest way to receive the grant is to apply through an approved agent, who will confirm your eligibility, manage and forward your application to the necessary office. When you apply for the FHOG, you must provide supporting documents, such as proof of identity, proof of citizenship or permanent residency, and evidence of your income.

  1. Wait for the grant to be paid.

The FHOG is paid at different times. It is based on how and when you apply for the grant and whether you are constructing or buying your first home. 

How Long Does It Take for the FHOG to Be Paid? 

Factors that can affect the time it takes to receive FHOG in Australia include:

  • State or Territory Processes: The processing time for the FHOG can vary depending on the state or territory where you are applying. Each state or territory may have different procedures and timelines for assessing and approving grant applications. Read our blog about FHOG in Tasmania if you want to learn more about the processes and requirements in Tasmania. 
  • Completeness of Application: Want to use FHOG for your house deposit? Note that the time it takes to receive the grant can be influenced by the completeness of your application. Providing all required documentation and information can help expedite your grant application.
  • Verification Processes: The verification of your eligibility for the FHOG, such as confirming your identity, residency status, and property details, can also impact the time it takes to receive the grant. Delays in verifying this information may prolong the processing time.
  • Volume of Applications: The number of applications received by the relevant state or territory revenue office can also affect the processing time for the FHOG. A high volume of applications may lead to longer processing times.
home loans for first time buyer

Supplementing Your House Deposit

We’ve already answered the question: ‘Can the First Home Owner Grant be used as a deposit?’ Now, let’s talk about how you can supplement your FHOG. 

In most cases, the FHOG can be used in conjunction with your savings to form a suitable or high deposit for your new home. So, while the FHOG can provide a financial boost towards your deposit, you may still need to tap into your savings account or contribute additional funds to meet the lender’s deposit requirements.

What Are the Best Ways to Save for a House Deposit in Australia?

Reports have shown that it takes years for first-home buyers to save for a house deposit in Australia. So, apart from leveraging grant schemes like FHOG, you must figure out different ways to boost your savings to own your first house faster. 

The best way to save for a house deposit in Australia is to follow a few key steps. First, it’s important to know how much you need to save. Most lenders suggest a loan-to-value ratio (LVR) of 80%, which means you should aim to save 20% of the purchase price of the property you plan to buy. This will help you avoid paying Lenders Mortgage Insurance (LMI), which can add significantly to your costs.

Next, you should decide on the deposit amount for your home purchase. While a larger deposit can help you secure a lower interest rate, you should also weigh the upsides and downsides of having a higher deposit versus a lower one. Some lenders may offer a lower interest rate and better terms to borrowers who can provide a larger deposit for a home. However, if you can’t provide a 20% deposit, you may still secure a home loan with a smaller deposit, although you’ll need to pay LMI.

Once you’ve decided on an amount, it’s time to start saving. Review your finances and spending habits to identify where to cut back and save more. Consider setting up a separate savings account specifically for your house deposit and make regular contributions to it. You may also want to consider other ways to boost your savings, such as by taking advantage of the First Home Super Saver Scheme (FHSS), which allows first-home buyers to make voluntary concessional and non-concessional contributions to their super fund, which can later be withdrawn for a house deposit.

More importantly, it’s important to be patient and disciplined. It can take time to save up enough for a deposit, but the effort will be worth it in the long run. 

Consulting with a Mortgage Expert

To determine how to best utilise the FHOG as part of your home loan deposit and find ways to save faster for your deposit, it is advisable to consult with a reputable mortgage broker or financial adviser. Our mortgage brokers in Hobart can help assess your financial situation, guide you on the deposit requirements set by lenders, match you to the best first-home buyer loans in Australia, and help you navigate the process of using the FHOG effectively in your home-buying journey.

Contact us today to schedule a consultation.

Enquire Now

Find Your Perfect Finance Solution

Let's discuss your finance needs. We’re here to help.

More posts from Deltos Finance

first home guarantee scheme

The First-Home Buyers 5% Home Loan Deposit Scheme Explained

As a first-time home buyer in Australia, one of the biggest hurdles you’ll face is coming up with a substantial deposit. Traditionally, lenders have required a deposit of at least 20% of the property’s value, but what if you could secure your dream home with just a 5% deposit? That is possible through the First […]

costs of buying a house

What Are the Upfront Costs of Buying a Home?

Are you searching for a one-bedroom apartment close to the city or planning to a big house with a garden in one of the best Tasmanian suburbs? Either way, it pays to know the upfront costs of buying a house apart from the home loan deposit. These costs may include government taxes and other associated […]

buying your first home

The Ultimate First-Home Buyer Checklist

Although owning your first property is incredibly exciting, it can also be complicated, time-consuming and a bit stressful. So, today, we’ll make your home-buying experience less confusing, smoother and more convenient. Here’s our ultimate first-home buyer checklist to help you know what to do and expect at every step. 1. Budget for Deposit & Other […]

local mortgage broker benefits

The Advantages of Engaging a Local Mortgage Broker

When you’re in the market for a new home, you’re bound to face several challenges—from overlooking loan comparisons to underestimating additional upfront costs and avoiding other common home loan mistakes. You might also be tempted to go directly to a bank, but there’s a compelling case for choosing a local mortgage broker instead. Today, we’ll […]

first home super saver scheme

Can First-Home Buyers Use Their Super for a Deposit?

You already know what you want for your first home. You even have nailed down the specifics—from the location or suburb to the number of rooms you want. The only problem left is the deposit. Like most Australians, you probably have a difficult time saving enough for the optimal home loan deposit amount.  In Tasmania, […]

regional first home buyer guarantee

A Quick Guide to Regional First Home Buyer Guarantee

It’s no secret that buying your first home comes with certain challenges, especially when you need to pay for a substantial deposit. However, if you’re looking to buy in regional Australia, the Regional First Home Buyer Guarantee (RFHBG) could be the helping hand you need. Today, we’ll provide a quick guide to help you understand […]

stamp duty concessions tasmania

Buying a House in Hobart? Here’s What You Need to Know About Stamp Duty Concessions in Tasmania

When you purchase a house or investment property in Hobart, Tasmania, you will likely pay a stamp duty—just like in all other states of Australia. Stamp duty can be a hefty upfront cost, so you may wonder whether concessions or exemptions are available. Today, we’ll help discuss how stamp duty works, how it is calculated […]

how long does it take to refinance a home loan

How Long Does It Take to Refinance a Home Loan?

Switching to a new home loan, also known as refinancing, is a wise move, especially when you want to take advantage of lower interest rates or access the equity in your property. But how long does it take to refinance a home loan in Australia?  Refinancing may seem lengthy and overly complicated, but it can […]

first home owners grant

Five Common Questions About the First Home Owner Grant in Tasmania

Are you considering purchasing your first home in Tasmania soon? Before you apply for home loans, it pays to know that the Tasmanian government offers various grants and incentives to help you save money on your first big purchase. You can start by learning about the First Home Owner Grant in Tasmania. Today, we’ve compiled […]

financial advisor vs mortgage broker

Financial Advisor vs Mortgage Broker: Which One Do You Need? 

Buying a home can be an overwhelming experience, especially for first-home buyers. Fortunately, you can seek professional guidance on mortgages. The problem, however, is it can be confusing to know who to seek advice from regarding a home loan. Should you engage a financial advisor? Or is it wiser to hire a mortgage broker instead? […]