Government Benefits Every First-time Homebuyer Should Know

Home » Government Benefits Every First-time Homebuyer Should Know

The pandemic has caused the prices of houses and land to soar around the world last year. Kalkine Media reports that 2021 increases reached double digits. This was triggered by supply chain problems due to Covid-19 resulting in a shortage in available houses for sale, historically low mortgage rates, and inflation.

Two of those factors will continue to push home prices higher this year, according to FitchRatings. The rate of increase will slow down, though, because mortgage rates will start to increase. In New Zealand, Kalkine Media notes that interest rates already increased by 0.5 percent to 0.75 percent for the first time in seven years. The United Kingdom is also increasing its rates. By year-end in 2022, the average 30-year fixed mortgage rate in the United States is forecast to increase from the present 3.3 percent to 3.6 percent.

In Australia, The Sydney Morning Herald reports that the same trend is expected. From an increase of 22.2 percent in housing prices in 2021, Mortgage Business states that the major banks’ forecasts range from a five percent to an eight percent increase this year. Analysts agree, though, that housing prices will flatten by the second half of 2022 and will begin to decrease in 2023.

ABC News highlights the warning from some analysts, though, that should a harsher variant of Covid-19 appear, home prices in Australia could soar again to double digits. According to SQM Research, a worse variant will put off any interest rate increases from the Reserve Bank of Australia and the Australian Prudential Regulation Authority’s (APRA) credit interventions.

U.S. Incentives for First-time Homebuyers

The U.S. Federal Housing Authority (FHA) under the U.S. Department of Housing and Urban Development states that there are various types of assistance for first-time homebuyers in counties and cities across the nation. The incentives can come as grants, tax breaks, no-interest loans, and loans with deferred payments. There are also programs for down payment assistance.

One example is the Arizona Housing Finance Authority’s (AzHFA) HOME Plus Program. In addition to offering a 30-year fixed-rate mortgage, it provides up to five percent of the mortgage amount as a three-year, no-interest, deferred second mortgage to be used as a down payment or for closing costs. Applicants must have an annual household income of not more than $92,984. They must also pass a homebuyer education course.

The FHA has several definitions for first-time homebuyers. These include anyone who has not owned a home before, not owned a primary home in the previous three years, previously co-owned a home with a spouse but is now divorced, owned a home that is not on a permanent foundation like a mobile home, or owned a home that does not conform to building codes like a tiny house.

U.K. Incentives for First-time Homebuyers

In the U.K., the government has a Help to Buy program for homebuyers that runs up to March 2023. The program lends buyers 20 percent of the home price. In London, buyers can borrow up to 40 percent. The deposit is as low as five percent. In England, the requirement is being a first-time homebuyer. In Wales and Scotland, the program is open to all homebuyers. It is not available in Northern Ireland.

U.K. mortgage lenders likewise offer special house and land deals to first-time homebuyers who have not previously owned any property. They ask for a deposit of only five to 10 percent and a loan-to-value mortgage of 90 percent to 95 percent. This means that the borrower can get a loan of 90 to 95 percent of the value of the property. Some lenders add rewards like cashbacks.

Australia’s Incentives for First-time Homebuyers

house for sale

In Australia, the government’s First Home Owner Grant (FHOG) is a one-time sum given to first-time homebuyers and need not be repaid. Every state or territory has its own conditions, and the amount offered varies. In 2022, it is $10,000 in New South Wales, the Northern Territory, Victoria, and Western Australia. It is $15,000 in Queensland and South Australia. In Tasmania, it is $30,000.

The First Home Loan Deposit Scheme enables approved buyers to place a five percent deposit instead of 20 percent since the government guarantees 15 percent of the loan. It has 20,000 slots for the fiscal year 2021-2022, of which 10,000 are for those who are buying a newly built home or are building one while the other 10,000 are for those who are buying existing homes.

First-time homebuyers who are single parents can also apply for the Family Home Guarantee that enables single parents with dependents to place a two percent deposit for a home loan, with the government guaranteeing 18 percent.

Australians are allowed to combine schemes they are qualified for. They can combine the FHOG with either the First Home Loan Deposit Scheme or the Family Home Guarantee.

The Importance of Housing

Across countries, first-time buyers of homes are usually in the lowest bracket. They have no existing homes to sell to offset part of the price of the purchase. They rely on getting a mortgage, with savings as a down payment. They are the ones most often priced out of the market. Governments recognize that housing is a basic need; hence, they provide support to make a home purchase more affordable for this sector.


Real Estate Redefined.

Scroll to Top