Making Your Dream Home a Reality: A Guide to First Home Owner Loans

For many people, owning a home is a significant life goal and people are often wondering about first home owner loans. However, the high property cost can be a barrier for many first-time homebuyers. Fortunately, there are first homeowner loans that can help you achieve your dream of homeownership. 

Here, you’ll get to know everything you need to know about the first home owners loan.

What are first home owner loans?

First home owner loans are specialised loans designed to help first-time homebuyers purchase their first property. These loans usually offer lower interest rates and reduced deposit requirements, making home buying more accessible for people with limited savings. Some first homeowner loans also offer other benefits, such as government grants and exemptions from specific fees.

Types of first home owner loans

Different types of first home owners loans are available, depending on your circumstances and financial situation. Here are some of the common types of first homeowner loans:

1. First Home Loan Deposit Scheme (FHLDS)

The FHLDS is a government-backed loan scheme designed to help first-time homebuyers purchase a home with a smaller deposit. Under the scheme, the government guarantees up to 15% of the property’s value, allowing borrowers to avoid paying lenders’ mortgage insurance (LMI). To be eligible for the FHLDS, you must meet certain income and deposit requirements.

2. First home buyer grants

Many states and territories offer first-home buyer grants to help first-time homebuyers purchase a home. These grants are usually one-time payments that can be used to purchase the property. The eligibility requirements and grant amount vary depending on the state or territory.

3. Low-deposit home loans

Low-deposit home loans allow you to purchase a home with a smaller deposit. These loans usually require a deposit of at least 5%, sometimes even as low as 3%. However, low-deposit home loans usually have higher interest rates and may need you to pay lenders’ mortgage insurance (LMI).

4. Family guarantor loans

Family guarantor loans allow you to use the equity in a family member’s property as security for your home loan. This can help you avoid paying LMI and reduce the amount of deposit required. However, family guarantor loans can be risky, as the family member’s property may be at risk if you default on your loan.

How to apply for a first homeowner loan?

To apply for a first home owner’s loan, one must meet certain eligibility criteria and provide documentation to support the application. Here’s what you need to do to apply for a first homeowner loan:

1. Check your eligibility

Before applying for a first homeowner loan, check the eligibility requirements for the loan or grant you’re interested in. This may include income and deposit requirements and other criteria such as residency or citizenship.

2. Gather the necessary documentation

To apply for a first homeowner loan, you must provide certain documentation, such as proof of income, identification documents, and savings. You may also need to provide a pre-approval certificate showing that you have been pre-approved for a loan.

3. Compare loans and lenders

Before choosing a first homeowner loan, compare different loans and lenders to find the best deal for your needs. Look at factors such as interest rates, fees, and loan features.

4. Apply for the loan

Once you have found a loan or grant you are interested in, you can apply for the loan. You must fill out an application form and provide the necessary documentation to support your application.

In conclusion, first home owner loans can help first-time homebuyers achieve their dream of homeownership. With the right loan and proper planning, you can make your dream a reality.