Can You Use a First Home Buyers Grant as a Deposit?

Everyone · Explainer · Updated October 1, 2026 · LearnLife Editorial

What is a First Home Buyers Grant?

A First Home Buyers Grant is a government incentive designed to assist eligible first-time home buyers in purchasing their first home. The grant is typically a one-time payment that helps cover part of the costs associated with buying or building a new home. Most grants are offered at the state or territory level, each with its own eligibility rules, application process, and amount offered. The primary goal is to make it easier for first-time buyers to enter the housing market by easing the financial burden.

This grant is not a loan, so recipients do not have to pay it back, but it is usually only available for new homes or homes that have never been occupied. To check if you qualify and how much you can get, you should contact your local housing authority or relevant government department.

How does using the grant as a deposit work?

Using the First Home Buyers Grant as a deposit means applying the grant money toward the upfront costs of your home purchase. The deposit is the amount of money you put down to secure the property before taking out a mortgage loan for the remainder. When the grant is paid directly to you or your lender, it can reduce the size of the deposit you need to save.

Example:

Imagine you want to buy a new home priced at $300,000. The lender requires a 10% deposit, so you need $30,000 upfront. You qualify for a $10,000 First Home Buyers Grant. If the grant money is paid to your lender or directly to you, you only need to save $20,000 from your own funds because the $10,000 grant counts toward your deposit. This reduces your financial barrier to securing the mortgage.

However, the exact process varies. Some states apply the grant after the purchase is complete, not as part of the deposit, so the timing and use of the funds can differ. Always confirm with your lender and local grant office how the grant can be used in your situation.

Why does it matter if you can use the grant as a deposit?

Using the First Home Buyers Grant as part of your deposit can significantly ease the financial stress of buying a home. Saving for a deposit is often the biggest hurdle for first-time buyers. The grant can help reduce the amount you need to save, which might speed up your ability to buy a home.

Additionally, a larger deposit can help you secure better mortgage terms, such as lower interest rates or avoiding private mortgage insurance (PMI). Knowing whether you can count the grant toward your deposit helps in planning your finances, talking to lenders, and budgeting for other costs like closing fees and moving expenses.

What are some related terms people confuse with the First Home Buyers Grant?

Several terms are often mixed up with the First Home Buyers Grant, so it helps to clarify differences:

• First Home Owner Grant (FHOG): This is another name for the First Home Buyers Grant in some places.
• First Home Super Saver Scheme: A government program that allows you to save money for your first home inside your superannuation fund, which is different from a direct cash grant. Learn more about how it works here.
• Mortgage Deposit: The upfront money you pay toward a property purchase, which may include grant funds if rules allow.
• First Home Loan Deposit Scheme: A separate government initiative that helps eligible buyers purchase with a smaller deposit without paying lender’s mortgage insurance.
• Stamp Duty Concessions: Some states offer reduced taxes for first home buyers, which differ from grants.

Understanding these terms helps you avoid confusion and make the most of the available assistance.

What restrictions or conditions might affect using the grant as a deposit?

The ability to use the First Home Buyers Grant as a deposit can be influenced by several factors:

• Property type: Grants are typically only for new homes or substantially renovated homes; existing homes often don’t qualify.
• Location: Different states and territories have different rules about the grant’s use.
• Timing: The grant might be paid after settlement, so it cannot be used upfront as a deposit in some cases.
• Lender policies: Some lenders may not accept grant money as part of the deposit, so always confirm with your mortgage provider.
• Income and property price limits: Grants often have eligibility criteria, including maximum property values and income caps.

Knowing these conditions helps you plan realistically and avoid surprises during the buying process.

What should you do next if you want to use the grant as a deposit?

If you’re considering using a First Home Buyers Grant as part of your deposit, take these steps:

1. Check your eligibility: Visit your state or territory’s housing website or contact their office to confirm eligibility criteria.
2. Understand the grant rules: Learn whether the grant can be applied toward your deposit or is paid after settlement.
3. Talk to your lender: Ask if they accept the grant as part of the deposit and how it affects your loan application.
4. Plan your budget: Consider all costs involved in buying a home, including the deposit, fees, and moving expenses.
5. Apply for the grant: Submit your application according to your local government’s process, usually before settlement.
6. Explore other assistance: Look into other programs like the First Home Loan Deposit Scheme or savings accounts designed for first-time buyers.

Following these steps helps you use the grant effectively and increases your chances of a smooth home-buying experience.

How can you prepare financially besides using the grant?

While the grant can help with the deposit, preparing financially for homeownership involves more:

• Saving for additional costs: Such as stamp duty, legal fees, inspections, and moving.
• Improving credit score: A better score increases mortgage approval chances.
• Budgeting monthly expenses: Include mortgage repayments, property taxes, insurance, and maintenance.
• Considering professional advice: A financial advisor or housing counselor can provide personalized guidance.
• Using savings tools: Like a First Home Savings Account, which can offer tax benefits. Learn more about these accounts here.

These steps build a strong financial foundation for owning your first home.

Frequently asked questions

Can the First Home Buyers Grant be used to cover closing costs?

Generally, the grant is intended to assist with the purchase price or deposit, not closing costs like legal fees or inspections. However, rules vary by location, so check with your local housing authority for specifics on what expenses the grant can cover.

Is the First Home Buyers Grant taxable income?

Typically, the grant is not considered taxable income, but tax laws can vary. It’s wise to consult a tax professional to understand any implications in your state or for your personal situation.

Can I apply for the grant if I’ve owned a home before?

Usually, the grant is only available to first-time buyers who have never owned property. Some exceptions may apply, like if you owned a home overseas. Check eligibility details specific to your area.

What happens if I sell the home soon after buying with the grant?

Some grants require you to live in the home for a minimum period, often 6 to 12 months. Selling too soon might mean you have to repay the grant. Confirm the conditions before accepting the grant.

Can the grant be combined with other home buyer assistance programs?

Often, you can combine the grant with other programs like stamp duty concessions or loan schemes, but eligibility for each varies. Review all program rules to avoid conflicts or disqualification.