The Victorian Homebuyer Fund: Making Home Ownership More Accessible

For many Victorians, buying a home can feel out of reach due to high property prices and the challenge of saving a large deposit. Fortunately, the Victorian Homebuyer Fund is designed to ease this burden by providing financial support through a shared equity scheme. This initiative not only makes it easier to enter the housing market but also offers long-term benefits for eligible homebuyers.

How Does the Victorian Homebuyer Fund Work?

The Victorian Homebuyer Fund allows eligible participants to purchase a home with as little as a 5% deposit, with the Victorian Government contributing up to 25% of the property's value. For Aboriginal and Torres Strait Islander participants, the deposit requirement is even lower at 3.5%, and the government’s contribution can increase up to 35%.

By participating in the fund, buyers can significantly reduce their mortgage and avoid costly Lenders Mortgage Insurance (LMI). This financial relief makes home ownership much more achievable, especially for those who may struggle to save a large deposit.

What Happens After Purchase?

Participants are required to eventually buy back the government’s share in their property. This can be done over time through refinancing, using savings, or when the property is sold. Importantly, the government does not charge interest on its equity in the property, though it will share proportionally in any capital gains (or losses) when the property is sold or when participants buy back the government’s share.

Expanding Eligibility from June 2024

As part of a $700 million expansion, the Victorian Homebuyer Fund will introduce several changes to further benefit aspiring homeowners. Key changes from 1 June 2024 include:

• An increase in the regional property purchase cap from $600,000 to $700,000. This change will open up more opportunities for homebuyers in regional areas.

• Single parents will now be included under the joint applicant income threshold of $216,245, making the scheme more inclusive for those with dependent children.

  
  

It’s worth noting that the number of applications will be capped from 1 June 2024 to 30 June 2025, so eligible buyers are encouraged to apply as soon as possible to take advantage of this opportunity.

Eligibility Criteria

To participate in the Victorian Homebuyer Fund, applicants must meet certain criteria, including:

• Be an Australian or New Zealand citizen, or a permanent resident of Australia

• Be at least 18 years old at settlement

• Have saved the required minimum deposit of 5% (or 3.5% for Aboriginal and Torres Strait Islander participants)

• Earn $135,155 or less annually as an individual, or $216,245 or less annually for single parents or joint applicants

• Plan to live in the purchased property as their principal place of residence

• Not own any interest in land in Australia or overseas at the time of purchase

• Have an approved loan from a participating lender and sufficient funds to cover the associated acquisition costs

  
  

Ongoing Obligations

Once participants have purchased their property, they will be responsible for maintaining it and ensuring they meet the ongoing obligations associated with the fund. This includes completing annual reviews, maintaining building insurance, and ensuring the property remains well-kept.

We covered this topic in a recent podcast episode of The Property Files.

You can listen here: