First Home Buyer Loan Guide: Everything You Need To Know

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Acquiring a first home buyer loan can be a complex process for all Australian citizens, especially for expats. If you’re an expat, you need to know what types of first home buyer loans you can get, the critical time frames, and more.

Continue reading our first home buyer loan guide to learn all the relevant home loan types, what timeframes you need to keep in mind, what the home loan deposit scheme is, what the home owner grant is, and more!

What Home Types Can First Time Buyer Expats Buy?

Unfortunately, not every type of home loan is available for expats to purchase; for the home to be eligible for a first home buyer, it needs to be a residential property. 

Residential properties come under a few different brackets; here are the residential property types you can purchase as an expat first home buyer.

An Existing Residential Property

The most common property type on the property market for first home loan buyers; this type of property must be an existing property in the residential category. Existing residential properties can include:

  • An existing house.
  • An existing townhouse (multi-floor houses that share walls with neighbouring properties).
  • An existing apartment. 
First Home Buyer Loan Guide: Everything You Need To Know

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A House And Land Package

A house and land package is a combined home contract; it’s a combination of a home construction contract and a separate contract for a section of land next to or close to the property.

The separation of contracts is because you usually need to buy them separately from two different companies.

If you get a house and land package, you should consider acquiring a construction loan; construction loans are handy if you need more money for the construction contract.

Two Separate Contracts For Home And Land

Although this might sound similar to a house and land package, it is different because you don’t complete the two contracts in the same process. Instead, they are two separate deals from two providers.

Off-the-plan Properties

Other than existing properties, off-the-plan properties are the most popular. Off-the-plan properties are properties that you buy before the contractors build them. These properties are usually either townhouses or apartments.

Typically, you can buy off-the-plan properties before they go under construction. Because you can buy them in this state, you get added benefits like a larger discount and a small deposit.

First Home Buyer Loan Guide: Everything You Need To Know

What Other Home Loan Information Is Important For Expats?

Other than the specific first home loan options expats can get, there is additional critical information they need to know. 

Expats need to know what the Home Loan Deposit Scheme is, what the first home owner grant is and what Lenders Mortgage Insurance is and why it is important.

What Is The Home Loan Deposit Scheme (HLDS)?

The first home loan deposit scheme is a helpful and vital Australian government initiative that is in place to provide support and alleviation to eligible first home buyers. Specifically, it helps eligible first home buyers to purchase their home in a quicker time.

The best part about the first home loan deposit scheme is that it guarantees an amount of the home loan for a first home owner (guaranteed by the National Housing Finance And Investment Corporation).

The Australian government is issuing 10,000 places for the first home loan deposit scheme in the 2021-2022 financial year to support as many eligible first home buyers as possible Participating lenders will issue these first home loan deposit scheme places to first home buyers. 

You must also have an Australian Credit License to participate in the scheme.

What First Home Loan Deposit Scheme Time Frames Are Important To Remember For Expats?

The time frames for your first home loan deposit scheme depend on several different variables. For example, it can depend on where your place is in the scheme queue or what home type you purchase.

The only specific dates you can be sure of are the contract of sale dates. There will be an exact date when you need to sign the building or property contract (you must sign the contract by the date stated or face multiple fines).

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

What Is The New Home Guarantee?

The New Home Guarantee is very similar to the home loan deposit scheme for first home buyers. There are an additional 10,000 places under the first home loan deposit scheme due to the high demand.

Like the scheme, the first homeowners who have the New Home Guarantee have part of their loan guaranteed, meaning that they can pay less than 5% of their deposit. You must be a first home buyer to qualify for the New Home Guarantee.

You must also have an Australian Credit License to participate in the New Home Guarantee.

What Is The First Home Owner Grant (FHOG)?

The FHOG is a payment scheme for first home buyers; it is a one-off payment for first homeowners to use for new residential properties they want to buy (only one of these grants is available per eligible first homeowner contract).

The FHOG is a maximum of $10,000; if the home buyer has a deposit of less than $10,000 to pay, the grant will also cover it. 

Because the grant is only available once per transaction, you are only allowed one grant if you are buying as a couple.

You can only get the grant if you build or buy a new home; you can’t get the grant if you purchase an existing property.

First Home Buyer Loan Guide Everything You Need To Know

What Is The Lenders Mortgage Insurance (LMI)?

The most important thing to note about Lenders Mortgage Insurance (LMI) is that it protects the lender, not the buyers. 

LMI covers lenders against any risk of the home loan buyer not paying their loan repayments and not paying back the balance. They take the insurance out when the property selling price is less than the loan balance.

If you’re a first home buyer (resident or expat) and pay less than 20% of your deposit, you must pay Lenders Mortgage Insurance. You can pay Lenders Mortgage Insurance in installments (the lender adds it to your mortgage repayments).

How Can An Expat Work Out Their First Home Loan Repayments?

The easiest way for expat first homeowners to calculate their principal and interest repayments is to use our ODINmortgage Mortgage calculator. The calculator can work out your payment for every repayment type, including principal repayments, interest repayments and additional repayments; it will calculate the repayment amount for all these types.

When you use our mortgage calculator, you need to input details like the loan amount, the loan term, the interest rate and the repayment frequency. Then, you need to input the additional amount for repayments and when you want to start the extra repayments (5 years after you take out the loan, for example).

Once you input the information, the calculator will tell you your principal and interest repayments and the interest rate.

Stamp Duty Concessions In Australia

Stamp Duty is a tax on your property transaction. Like repayments, you can calculate stamp duty using our Australian stamp duty calculator (the calculator also has a guide attached). 

When using the calculator, you need to input your property value, state/territory and property type. You also need to answer the following home questions.

  • Are you a first home buyer?
  • Are you purchasing an established home, a new home or vacant land?
  • Are you a foreign purchaser?

After you answer the questions, you can see the results, including your total mortgage, stamp duty, transfer, total concessions, first home grant amount for first home buyers and the overall total.

Can You Get Home Loan Pre Approval If You’re A First Home Buyer?

Home loan pre-approval (or conditional approval) is when a lender agrees to lend you money to purchase a home without the home loan having final approval. Home loan pre-approval means that you can enquire about your home loan with more assurance.

You can get pre-approval if you’re a first home buyer. However, before you seek pre-approval, you should calculate how much you can borrow, work out potential repayments and if you can afford to pay them, examine your local property market, and look at multiple loan types.

To acquire a home loan pre-approval, you can apply via a lender to talk to an expert and confirm you’re eligible.

First Home Buyer Loan Guide Everything You Need To Know

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

First Home Buyer Loan Guide: Final Summary

Our guide for first home buyers should be helpful because we cover lots of information for residents and expats.

We cover what home types you can get home loans for if you’re a first home buyer. You can get multiple residential property types, including an existing property (house, townhouse, apartment, etc.), a house and land package, a house and land with separate contracts and off-the-plan properties.

Additionally, we covered other important things you need to know if you’re an expat first home buyer. There are multiple elements to consider before purchasing a first buyer home loan, including:

  • The first home loan deposit scheme and the new home guarantee. These are in place to help people secure a first home by guaranteeing part of the loan, meaning that they can pay a reduced 5% deposit on their house.
  • The first home owner grant is a one-off payment of up to $10,000 for first home buyers to use for their home loans.
  • LMI is insurance in place for lenders if you cannot pay your monthly repayments. You will need to pay this insurance if the property value (the price you buy the house) is more than the loan value.

If you need any extra help working out your monthly repayments, you can use our mortgage calculator.

Frequently Asked Questions

What Amount Of Deposit Do I Need For A First Home Buyer Loan?

Usually, you’ll need to pay a 20% deposit for a first home buyer loan. 

However, if you go through the first home loan deposit scheme, you can take your deposit down to 5%. The scheme does this by guaranteeing a part of your loan; multiple lenders participate in the scheme and cover the portion of the loan.

How Do I Get My First Home Loan?

You must save for a deposit to get your first home buyer loan. Once you’ve done this, you must check the home loan rates and see if you can afford them.

Then, you need to find a house to buy; it can be an existing property, a house and land package or off-the-plan property. After this, you can buy the property, settle your loan, and start your repayments.

What Is A First Home Buyer Loan?

A first home buyer loan is a loan for a first home buyer. To qualify for one of these loans, you need to be a first home buyer.

You can use a first home buyer loan for a residential property such as an existing property, a house and land package or off-the-plan property.

You can also go through the first home buyer loan scheme to reduce your deposit to 5%.

Can I Purchase A Home With A 5% Deposit In Australia?

You can buy a house with a 5% deposit in Australia if you go through the first home buyer loan deposit scheme or the new home guarantee.

These loans are in place to help Australian people secure a first home by guaranteeing part of the loan (through a qualifying lender), meaning that they can pay a reduced 5% deposit on their first house.

Are There Any Additional Payments For Buying A First Home?

Additional payments will depend on your loan amount, deposit amount, and property price. Some of the extra payments you can come across include:

  • Legal fees (attorney fees, etc.).
  • Potential maintenance and repairs.
  • Fees for mortgage registration
  • Annual mortgage fees
  • Break fees.
  • Valuation fees.
  • Council rates.
  • Water rates.
  • Redraw fees.

Although all of these fees are possible, they will depend on the variables of your first home buyer loan.

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