Your guide to Victoria’s Homebuyer Fund
December 16, 2021
The dream of owning a home is now in the reach of more Victorians thanks to the Victorian Homebuyer Fund.
The state government introduced the $500 million fund in July as an extension of the HomesVic Shared Equity Initiative.
While Victorians can apply for the Homebuyer Fund with just a 5 per cent deposit, it’s important to understand the eligibility requirements and ongoing obligations of this shared equity scheme.
What is the Homebuyer Fund?
The Victorian Homebuyer Fund is a shared equity scheme in which the state makes a financial contribution in exchange for a share in a property.
Eligible homebuyers receive a contribution of up to 25 per cent towards the purchase price, or up to 35 per cent for eligible Aboriginal and Torres Strait Islander homebuyers.
The fund also reduces the minimum required deposit to 5 per cent and helps the homebuyer avoid paying Lenders Mortgage Insurance.
In exchange, the homebuyer may need to share any gains in the property’s value with the state government.
The fund’s share in your property can be repaid by refinancing (which is encouraged), through savings, or from proceeds when the property is sold. In the case of the latter, you will also need to share with the fund any profit on sale.
Who is eligible for the Homebuyer Fund?
You must be an Australian or New Zealand citizen or a permanent Australian resident and at least 18 years old at the time of settlement to be eligible for the fund.
You need to have saved the minimum required deposit – between 3.5 and 5 per cent of the property price depending on your circumstances – and earn no more than $125,000 per annum as an individual or $200,000 for joint applicants.
The property must be your principal place of residence and you must not buy the property from a vendor who is related to you.
Read the full list of eligibility requirements here.
What are the eligible locations and properties for the Homebuyer Fund?
The Homebuyer Fund applies to properties in metropolitan Melbourne, Geelong and more than 40 specified regional locations.
Eligible regional areas include Ballarat, Bendigo, Daylesford, Echuca, Horsham, Latrobe, Mildura, Sale, Shepparton and Warrnambool. See the full list of eligible locations here.
The property must be a residential property such as a house, townhouse, apartment or unit with a maximum purchase price of $950,000 in Melbourne or Geelong, or $600,000 in regional areas.
Off-the-plan properties and vacant land are not eligible.
What are the ongoing obligations for the Homebuyer Fund?
There are a number of ongoing obligations a homebuyer must fulfil if they are approved.
These include an annual review of your eligibility for the Homebuyer Fund, maintaining the property, having home insurance, and making all home loan repayments on time.
You will have to start repaying the fund’s interest in your property if your gross annual income exceeds the threshold for two consecutive years, if you receive a gain such as an inheritance or lotto win, or your lender approves an increase to your home loan.
You can make voluntary repayments, but you will need to seek approval to pay the full amount back in the first two years.
How to apply for the Homebuyer Fund
It’s also important to review the frequently asked questions about the Homebuyer Fund to ensure you understand all requirements and ongoing obligations.
Once you are approved for a compliant home loan by a participating lender, your lender will lodge your application for the Homebuyer Fund with the State Revenue Office.
If your application is successful, you will be granted provisional approval. You will then have six months to enter into a contract of sale for an eligible home.
Speak to the property experts
In addition to the Homebuyer Fund, you may be eligible for other grants, exemptions or concessions.
If you need assistance navigating the rules, contact the experts at LDB Group for property and investment advice. Simply call (03) 9875 2900 or send us a note via the contact form below.