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Federal Budget 2021 focuses on housing affordability

Federal Budget 2021 focuses on housing affordability

The 2021 Federal Budget, handed down on 11 May, has plenty of sweeteners for would-be first home buyers. With new home construction at an all-time high thanks to last year’s HomeBuilder grants, and rock-bottom interest rates, the property market has come roaring back from recession.

That’s good news for home owners, but for those who are still looking to buy, the price rises can be a struggle.

Accordingly, the latest Budget introduces four new or extended measures to help first home buyers get into the market.

First Home Loan Deposit Scheme (New Homes)

The First Home Loan Deposit Scheme (FHLDS) was first introduced in 2019, and allowed eligible first home buyers to build or buy a new home with a 5% deposit and no lenders’ mortgage insurance. Under the scheme, the government guaranteed up to 15% of a home loan, so buyers only had to find 5%.

In the 2021 Budget, the FHLDS has been extended with 10,000 new places made available for new homes from 1 July 2021 to 30 June 2022.

To be eligible, you must be buying a new home. These include:

  • House and land packages
  • New builds on existing land
  • Off-the-plan homes
  • ‘Recently built’ homes: any home that was built after 1 January 2020 and has never been lived in.

The price of the property is capped and varies depending on location. Timeframes also apply.

Family Home Guarantee

Following the model of the FHLDS, the government has introduced a new Family Home Guarantee. This allows single parents to buy a home with a deposit of just 2%, with the government guaranteeing the remaining 18% required by the bank.

The FHG offers 10,000 guarantees to single parents over the next four years, or 2,500 places per year. To be eligible, buyers must be:

  • An Australian citizen
  • 18 years or older
  • Earning $125,000 or less
  • With dependants in their care

Enhancing the First Home Super Savers Scheme

The First Home Super Savers Scheme (FHSSS) allows first home buyers to save money towards a home deposit inside their superannuation fund. Buyers can make additional contributions to their superannuation, thus taking advantage of the lower concessional taxation rates, and then use those contributions towards a home deposit.

In the 2021 Budget, the amount you can save within super for this purpose increases from $30,000 to $50,000 effective from 1 July 2022. The savings must be used for an owner-occupier dwelling.

Superannuation incentives for downsizers

Older Australians who still live in the family home can unlock their asset without a large tax penalty.

From 1 July 2022, the minimum age to access the ‘downsizer scheme’ will be lowered from 65 to 60. The scheme allows eligible Australians to make a one-off post-tax contribution of up to $300,000 to their superannuation scheme when they sell the family home.

Downsizers can benefit from the lower concessional tax rate that applies to superannuation funds. At the same time, housing stock is freed up for new buyers looking for a family home.

Other aspects of the Budget which might be of interest to home buyers include:


  • $110 billion in infrastructure commitments over 10 years, making outer suburbs and regional areas more accessible
  • $250 million in regional projects
  • An extension of the low-to-middle-income tax offset (LMITO), which will return up to $1080 per year per taxpayer

You can find full details of the Federal Budget here.