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HomeBuilder Grant: The Definitive Guide 

Step by step guide on the new $25,000 building scheme
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This is a complete guide to the new $25,000 HomeBuilder Grant in 2020. 

In this all-new guide you’ll learn:

  • If you will qualify for the HomeBuilder Grant
  • The exact criteria you need to meet to receive $25,000. 
  • If permanent residents can qualify for the HomeBuilder grant. 
  • Lots of advanced tips, strategies and common questions. 

So if you want to take advantage of the $25,000 HomeBuilder Scheme, you’ll love today’s guide.

Update 20 June 2020: We have just updated the guide with the most recent frequently asked questions as confirmed by the government, including will HomeBuilder apply on a newly constructed off-the-plan units or townhouses, and will permanent residents qualify for home builder.

Let’s get started. 

 

1. HomeBuilder Basics

Let’s start off things with a quick review of the basics.

Specifically, I’m going to share what the HomeBuilder Grant is, and if you will qualify for the scheme.

You’ll learn who will qualify, and who won’t qualify for this scheme in 2020.

 

What is the HomeBuilder Grant?

HomeBuilder is a government grant of $25,000 payable to eligible homeowners that either build a new home, or substantially renovate an existing home in 2020. Eligible homeowners need to build a new home valued under $750,000 or spend between $150,000 to $750,000 on renovations of a property valued up to $1.50M. 

The HomeBuilder grant is only available on building contracts signed between 4th June 2020 and 31 December 2020 and construction must begin within 3 months of the contract date. 

 

Do I qualify for the scheme? 

The HomeBuilder scheme does have several qualifying criteria, including the type of property, your income and who you use as the builder. 

To be eligible for the HomeBuilder grant you must:

  • ✅  Be earning below an income cap, if you are applying for the grant as an individual your ‘2018-2019 tax return or later’ must be below $125,000 or if you are applying as a couple the combined income on ‘your 2018-2019 tax return or later’ must be below $200,000.  
  • ✅  Sign a building contract after 4th June 2020 and before 31st December though a licensed or registered builder, so you cannot be an owner builder or use a contract from earlier in the year even if construction hasn’t started yet. 
  • ✅  Be building a new property that you will live in as your home, where the total value of the property (house and land) is not more than $750,000. So you cannot use HomeBuilder on an investment property.
  • ✅  Be buying an off the plan apartment or townhouse that you have signed a contract to buy on or after 4th June 2020 and on or before 31 December 2020 and construction needs to start on or after 4 June 2020 (and no later than 3 months after the contract is signed). So if you are wanting to buy an off the plan property, and the construction started before 4th June 2020 – even if you signed the contract after 4th June you will not be eligible. 
  • ✅  Substantially renovate the existing home that you live in, and spend between $150,000 and $750,000 on a renovation contract where the value of your home (house and land) is not more than $1,500,000. The renovations need to “improve the accessibility, livability and safety” of your home and cannot be used to build things outside of your home like a swimming pool, tennis court or sheds. 
  • ✅  Begin construction of your new home, or renovations within 3 months of the building contract date. So if the contract is dated 1 October 2020, your builder needs to have started construction on or before 1 January 2021. 
  • ✅  Own, or be buying a property in your individual name and not a company or trust. 
  • ✅  Be an Australian Citizen, unfortunately the scheme is not available to non residents, permanent resident’s or New Zealand Citizens. 

 

Do I have to be a first home buyer to qualify for HomeBuilder? 

No, you don’t need to be a first home buyer to get the $25,000 HomeBuilder grant provided you meet the eligibility criteria above. You do however need to be living in the property for it to meet the criteria, so you won’t qualify if the funds are for an investment property. 

Buying First Home During Coronavirus

 

Gross or net income?

The income cap is similar to the First Home Loan Deposit Scheme, so your income as an individual needs to be under $125,000 per year and as a couple your combined income needs to be under $200,000. 

  • ✅  The income limit is based on your gross income, before tax and excluding superannuation. 

The easiest way to check your income is to download your 2019 Notice of Assessment, which shows your taxable income for the 2018-2019 financial year. 

The government has since updated the HomeBuilder Fact Sheet confirming the way they will want you to prove taxable income is:

Taxable income is shown on your notice of assessment. The notice of assessment is issued by the Australian Taxation Office once your tax return for an income year is processed and this can be used to demonstrate your taxable income.

Note: Taxable income is your gross income less allowable deductions and represents the amount of income you pay tax on. More information on taxable income can be found at https://www.ato.gov.au/Individuals/Lodging-your-tax-return/In-detail/What-is-income-/#Taxableincome

 

Which year will the income eligibility be based on?

The Government has also said the income cap will be based on your individual ‘2018-19 tax return or later’.

At this stage it is unclear if you apply for the HomeBuilder Grant from 1 July 2020 if they will allow you to use your 2018-19 income, or if they will require the 2019-20 income.

The eligibility criteria says that it is based on the ‘2018-19 tax return or later‘ implying the most recent financial year, but the case studies provided by the government show examples of people applying for the grant post 1 July 2020 with income being verified from 2018-19 returns.

The First Home Loan Deposit scheme, which uses the same income eligibility cap of $125k for a single person, or $200k for a couple states that: 

  • Singles – your taxable income for the previous financial year must not be more than $125,000.
  • Couples – your combined taxable income for the previous financial year must not be more than $200,000.

On the First Home Loan Deposit scheme, it explicitly says: 

  • For all First Home Loan Deposit scheme places reserved up to 30 June 2020, you will need to provide a copy of your Notice of Assessment from the Australian Taxation Office for the 2018-19 financial year.
  • For all First Home Loan Deposit scheme places reserved from 1 July 2020, you will need to provide a copy of your Notice of Assessment from the Australian Taxation Office for the 2019-20 financial year.

As we do not have the application form and official paperwork for HomeBuilder we cannot confirm if you apply for HomeBuilder after 1 July 2020 how the government will test your income.

In other words, we do not know if the government will base your income on the 2018-19 tax return, or use 2019-20 tax return as this would be considered the previous financial year from 1 July 2020 onwards.

An update from the government in their FAQ published 18th June 2020 says:

“The income caps will be assessed against your taxable income and based on your 2018-19 Australian tax return (or 2019-20).”

So it still doesn’t definitively confirm from what point they will want to see your 2019-20 returns.

We will update this article when this is confirmed, but if you have a change of situation – i.e. income change of income – you need to be aware in the HomeBuilder FAQ they do state

WHAT HAPPENS IF THERE IS A CHANGE IN CIRCUMSTANCE AND I’M NO LONGER ELIGIBLE?

If your circumstances change after you have applied for HomeBuilder but have not yet received the payment, and no longer meet the eligibility criteria, you will need to notify your State or Territory revenue office immediately.

 

Do Permanent Residents, or Indefinite Visa Holders Qualify for the HomeBuilder?

Again they have used a similar criteria to the First Home Loan Deposit Scheme, which is only available to Australian Citizens.  

So you will not qualify if you are a:

  • ⛔️  Permanent Resident
  • ⛔️  New Zealand Citizen 
  • ⛔️  Indefinite Stay Visa 

Unlike the First Home Owners Grant which is available to permanent residents and New Zealand citizens, unfortunately the HomeBuilder will not be available to you if you aren’t an Australian citizen. 

Read More: Can NZ Citizen’s buy property in Australia?

 

Can I get HomeBuilder on a brand new off-the-plan apartment or townhouse?

This was something that was up for interpretation when the HomeBuilder was first released, as it said that the $25,000 grant will apply on “All dwelling types (house, apartment, house and land package, off-the-plan, etc).”

On 18th June 2020, the government has since clarified this.

HomeBuilder Off the plan home

In other words, if:

  • You have found a newly completed property you want to buy.
  • That has never been lived in before.

Then:

The $25k HomeBuilder grant may only apply if:

  • You sign the contract to buy the off-the-plan dwelling on or after 4 June 2020 and on or before 31 December 2020
  • Construction commences on or after 4 June 2020 and no later than three months after the contract is signed.
  • And it will not apply if construction has commenced on the property before 4th June 2020.

 

HomeBuilder Eligibility

So if the construction of the property started before 4th June 2020 – HomeBuilder will not apply.

But being a new property if you are a first home buyer, you may still be eligible for the first home buyers grant in your state.

Would you like to learn about your situation?
Check if you qualify for a loan

2. What won’t HomeBuilder Cover? 

If that is a bit too much info on what HomeBuilder will cover, you might be better off looking at the exclusions from HomeBuilder.

In this section I’ll show you all the exclusions, what you cannot use HomeBuilder… and how to make the scheme work for your situation. 

renovate home equity

 

HomeBuilder Exclusions 

HomeBuilder is only available for building contracts, so it is not available if you are:

  • ⛔️  Building or renovating an investment property 
  • ⛔️  Building a new home which has a combined land and home value over $750,000
  • ⛔️  Building a granny flat 
  • ⛔️  An owner builder, or constructing or renovating through a licensed or registered builder 
  • ⛔️  A permanent resident, New Zealand Citizen or visa holder. 
  • ⛔️  Building something not connected to your home for example, a swimming pool, tennis court, outdoor spa, sauna, shed, garage or granny flat. 

The government has specifically mentioned Granny Flats in their most recent FAQ, answering the question: Are Granny Flats eligible for HomeBuilder?

Standalone granny flats are not eligible for HomeBuilder. For more information, please refer to the FAQ ‘What renovations are eligible?’.

 

So what happens if you already own land, but haven’t signed a build contract?

You will be eligible if:

  • ✅  If you own a property (house and land), and knock the house down to rebuild – this will be counted as a substantial renovation, and therefore subject to the renovation price range of $150,000 to $750,000 provided the total value (house and land) of the property does not exceed $1.5 million pre-renovation;
  • ✅  If you own vacant land before 4 June 2020, and then build, the total value of the land and new build cannot exceed $750,000; or
  • ✅  If you buy the land after announcement, and then build, the total value of the land and build cannot exceed $750,000.

 

Renovation Exclusions 

If you are renovating a property, you need the works to be completed by a registered or licensed builder – so you will not be able to get a friend or individually employ tradespeople to complete the renovations. 

As we covered above when renovating HomeBuilder needs to “improve the accessibility, livability and safety of the property” and excludes building a tennis court, pool or shed for the renovation contract for eligibility purposes.

You also need to be using a currently registered builder, this will be confirmed by providing their building license details when you apply for HomeBuilder the government specifically says

Renovations must be completed by a licensed or registered builder. In addition, any building or renovation contract entered into must be at arm’s length. This means the contract must be made by two parties freely and independently of each other. The terms of the contract should be commercially reasonable and the contract price should not be inflated compared to the fair market place

The way they will determine if the contract price is reasonable is by requesting this information from the builder specifically

The registered or licensed builder (depending on the State or Territory) must demonstrate that the contract price for the new build or substantial renovation is no more than a comparable product (measured by quality, location and size) as at 1 July 2019, if requested by the purchaser.

renovate grant

Read More: Complete Guide to Renovation Loans

 

How will they determine the valuation of your property?

This is another point that has been a grey area, the government confirmed on the 18th June 2020 how they the $1.50M value will be assessed for substantial renovations being:

The evidence to demonstrate the value of your property is a matter for determination by each State and Territory. States and Territories may consider evidence such as a recent contract of sale for the property, a rates notice that identifies the Capital Improved Value, or a bank or independent valuation.. Further information will be available through your State or Territory.

So still pretty grey and we’ll have to wait until each state publishes their individual HomeBuilder application form.

 

Can you Build a Duplex and claim HomeBuilder?

While Homebuilder will apply to all dwelling types if you are building a duplex you will only be able to claim one of the properties as your principle place of residence, making the other property an investment and therefore ineligible for the HomeBuilder Grant. 

“Owner-builders and those seeking to build a new home or renovate an investment property are ineligible for HomeBuilder.”

Read More: Building a Home in Brisbane

3. Using HomeBuilder Towards Your Deposit 

Now it’s time to cover a SUPER exciting part of the HomeBuilder scheme:

5.Using it towards your deposit. 

HomeBuilder could help reduce your Lenders Mortgage Insurance cost by thousands. 

Or just help you borrow less, and pay off your loan faster

And in this chapter I’ll show you how to use HomeBuilder towards your deposit. 

first home buyer grants

 

Home Deposit Basics 

This is the first question that home buyers ask us, and it should be straightforward to work out… but often isn’t.

While you might have read some banks will do 95% loans, lots of people assume this means you only need a 5% deposit which is not correct.

house deposit in queensland

There are other costs that need to be factored in there, which is a common mistake of many home buyers so you actually need closer to 8% deposit.

If you are buying your second your home will also need stamp duty on top of this, so the costs might be over 10% minimum of the purchase price.

Read More: Deposit Calculator

 

Bank Deposit Criteria 

Most banks will consider HomeBuilder in the same light as the First Home Owners Grant, and it will be viewed as non-genuine savings

Unlike the First Home Owners Grant which can be factored as part of your bank deposit, because we currently don’t know when the HomeBuilder is going to be paid the banks will not factor this as part of your savings or deposit when assessing your loan application. 

Put another way, at this stage you will not be able to use HomeBuilder towards your initial deposit. 

 

Can we include this 25K in our initial deposit

At this stage it looks unlikely that you will be able to use HomeBuilder towards your initial deposit  because the government hasn’t clearly confirmed the time frames around when they are going to be paying the HomeBuilder grant. 

They have confirmed that “The relevant State or Territory revenue office will distribute the $25,000 grant directly to the applicant.” 

So the good news is they will pay the grant directly to your account once approved, the bad news is that it may be a little while down the track and won’t help with reducing your LMI costs. 

homebuilder grant

 

No deposit loans with HomeBuilder

I have to say, this was probably the most exciting prospect for many first home buyers out there. 

You could get a three way boost, hypothetically in Queensland on a $500,000 house and land package you could get $52,234 in benefits from the government! 

This could look like:

(PLUS you could have been using the First Home Super Saver Scheme and have another $30,000 deposit but let’s not go there)

On a $500,000 house and land package you could:

  • ✅. Borrow $460,000 
  • ✅. Put in $15,000 first home owners grant
  • ✅. Get $25,000 

You’d only need to put in $2,736 in deposit!! Less than I spent on my first car. 

homebuilder grant deposit

 

This is the dream, but what is the reality? 

As I said above, right now the government hasn’t said exactly when the HomeBuilder scheme is going to be paid – we don’t know if they are going to pay it at settlement of your land, when the slab is poured on the build or once the house is completed. 

This being the case, in this same scenario the banks are going to want to see you have at least $27,736 in savings to cover your deposit. 

homebuilder deposit

And then provided you meet all the requirements of HomeBuilder the government will pay you back your $25,000 grant in the future which you can use to pay down your loan! 

Read More: Deposit Calculator, learn how much deposit you need today

 

4. First Home Buyers Grant, First Home Loan Deposit Scheme & HomeBuilder 

When it comes to government grants, one is good but three is better. 

That said:

Is it possible to use both the first home owners grant and HomeBuilder scheme together? 

And if you can, are you also able to use the First Home Loan Deposit scheme? 

In this section we’ll take you through the difference schemes for first home owners state, by state. 

 

Using Multiple Grants 

Provided you meet the criteria of both schemes, you can apply for the First Home Owners Grant in your state, and also access the HomeBuilder Scheme. 

new building grants

 

First Home Buyer Schemes – State by State

Let’s break down the different first home owners grants, state by state remembering that these first home owners grants are only available on newly built properties that have never been lived in before. 

  • Queensland: $40,000 for first home buyers
    • First Home Owners Grant in QLD: $15,000 
    • HomeBuilder Scheme in QLD: $25,000 
    • Restrictions: Only available on new homes valued up to $750,000 
    • Read More: Check out our complete guide to the First Home Owners Grant 2020
  • New South Wales: $35,000 for first home buyers 
    • First Home Owners Grant in NSW: $10,000 
    • HomeBuilder Scheme in NSW: $25,000 
    • Restrictions: While the stamp duty exemptions are on houses valued up to $800,000, the first home owners grant + HomeBuilder scheme will limit your new build to a land and build value of $750,000. 
    • Read More: Check out the NSW Office of State Revenue’s First Home Owner Grant (New Home) page here.

builder grant

  • Victoria: $45,000 for first home buyers
    • First Home Owners Grant in VIC: $10,000 urban, $20,000 regional 
    • HomeBuilder Scheme in VIC: $25,000 
    • Restrictions: Only available on new homes valued up to $750,000 up to $10,000 in urban areas and $20,000 for homes in regional Victoria. 
    • Read More: Check out VIC’s Office of State Revenue’s first home owner grant page here. The definition of regional areas is here.
  • South Australia: $40,000 for first home buyers 
    • First Home Owners Grant in SA: $15,000 
    • HomeBuilder Scheme in SA: $25,000 
    • Restrictions: Only available on new homes valued up to $750,000 
    • Read More: Check out SA’s Office of State Revenue’s first home owner grant page here.
  • Tasmania: $45,000 for first home buyers
    • First Home Owners Grant in TAS: Up to $20,000 
    • HomeBuilder Scheme in TAS: $25,000 
    • Restrictions: Only available on new homes valued up to $750,000.
    • Read More: Check out Tasmania’s Office of State Revenue’s first home owner grant page here.

building a house

  • ACT: $25,000 for first home buyers 
    • First Home Owners Grant in ACT: None
    • HomeBuilder Scheme in ACT: $25,000 
    • Restrictions: Only available on new homes valued up to $750,000 
    • Read More: Check out ACT Office of State Revenue’s first home owner grant page here.
  • Western Australia: $35,000 for first home buyers 
    • First Home Owners Grant in WA: $10,000 
    • HomeBuilder Scheme in WA: $25,000 
    • Restrictions: Only available on new homes valued up to $750,000
    • Read More: Check out WA’s Office of State Revenue’s first home owner grant page here.
  • Northern Territory: $35,000 for first home buyers 
    • First Home Owners Grant in NT: $10,000 
    • HomeBuilder Scheme in NT: $25,000 
    • Restrictions: Only available on new homes valued up to $750,000
    • Read More: Check out NT’s Office of State Revenue’s first home owner grant page here.

 

Do you know if there are any states that are opting out / not offering the grant?

The HomeBuilder Grant is available in every state and territory in Australia, and will be processed by your State’s Office Of State revenue. 

5. HomeBuilder Application Process 

Now it’s time for the rubber to hit the road.

  • How do you actually apply for the HomeBuilder Grant?
  • What is the process and what documents will you need?
  • And more importantly, what stage during the construction will the HomeBuilder be paid? 

In this section I’ll answer all of these questions and more. 

home building grant

 

How do you actually ‘apply’ for the grant?

You will need to apply for the HomeBuilder through your local state or territory revenue office, their details are below.

The government has said that the states will backdate acceptance of HomeBuilder applications to 4th June 2020 once the official agreement has been signed. 

State Website
Queensland https://www.qld.gov.au/housing/buying-owning-home/financial-help-concessions/qld-first-home-grant
New South Wales https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer
Victoria  https://www.sro.vic.gov.au/first-home-owner
Western Australia https://www.wa.gov.au/organisation/department-of-finance/fhog
South Australia https://www.revenuesa.sa.gov.au/grants-and-concessions/first-home-owners
ACT https://www.revenue.act.gov.au/home-buyer-assistance/home-buyer-concession-scheme/home-buyer-concessions-from-1-July-2019
Northern Territory  https://nt.gov.au/property/home-owner-assistance
Tasmania https://www.sro.tas.gov.au/first-home-owner

 

When and at what stage during the Construction the grant Can be applied and when do we get it finally?

The government hasn’t yet confirmed when this will be paid, but it does say the HomeBuilder grant will be paid directly to the applicant – i.e. you!

This most likely means that it will get paid to you after the construction has started, and with it not being paid to the bank its unlikely that the $25,000 grant will be usable towards your deposit.

The government has confirmed that the HomeBuilder Grant will not be taxed, inline with the the First Home Owners Grants. 

 

What documents do you need to apply for HomeBuilder?

Your local office of state revenue will have their own checklist, but at a minimum the government has said you will need to provide:

  • ✅  Proof of identity, photo ID
  • ✅  A copy of the contract, dated and signed by you and the nominated registered or licensed builder;
  • ✅  A copy of the builder’s registration or licence (depending on the state you live in);
  • ✅  A copy of your 2018-19 tax return (or later) to demonstrate your eligibility against the income cap; and
  • ✅  Documents such as council approvals, building contracts or occupation certificates and evidence of land value.

 

6. Advanced HomeBuilder Tips

Now that you’ve mastered the basics of HomeBuilder, it’s time to cover some of the advanced stuff.

Specifically, I’m going to reveal a bunch of structures that could implement right away.

So without further ado, let’s dive right into the tips. 

 

Buying With a Partner That Isn’t a Citizen 

I’ve been asked this a question lots of times in the past few days:

  • ❓ Would we still get the grant if the mortgage is in joint names (one applicant PR & one applicant citizen) & the title is in the citizen applicant’s name?
  • ❓ But what if my wife is citizen and im still on p.r am I qualified for that?
  • ❓ I  am a citizen and my wife is not. Would I still qualify for the homebuilder grant ?

This is a tricky one, as we haven’t received the application form for the HomeBuilder Scheme so we don’t know the specific questions they are going to ask on the form. 

However, if it’s going to be similar paperwork to the First Home Owners Grant in Queensland for example – than the eligibility is based on the applicants – which is based on the property ownership. 

  • If the property is just in the Australian citizens name you may qualify – AND Note that this is ultimately up to the Office of State Revenue to decide

In the latest update published June 18 2020 from the Government, their FAQ implies that the eligibility MAY be based on the property ownership not your relationship status, by saying:

The Scheme is only open to Australian citizens. Eligible owner-occupier(s) must be listed on the property’s certificate of title, and they must meet the eligibility criteria of the program. Permanent residents are not eligible for the Scheme.

Chat to our Mortgage Brokers and see if you can structure your loan in this way. 

Recently Changed Jobs to a New Company 

Just changed jobs to a new company. Still full time employed with a good income in a similar industry. How long would I have to have been in a new job for a bank to give me a loan?

Chat to our Mortgage Brokers as we have several banks that only need 1 pay slip from your new job to qualify for a home loan. You can even be on a probation period. 

 

Now It’s Your Turn

I really hope you enjoyed my new HomeBuilder guide.

And now I’d like to hear from you.

Which tip from today’s guide are you going to try first? 

The double down grant? 

Either way, let me know by leaving a quick comment below. 

 

Resources and further reading

 

NOTE: That this article is general in nature and not to be taken as advice. Please seek legal advice before applying for the Home Builder Grant and if you want to 100% confirm you qualify please contact your local Office of State Revenue. 

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