A first-time home buyer grant is a grant specifically for/targeted at those buying their first home — perhaps a starter home. Like other grants, the first-time buyer does not hold an obligation to repay the grant. In this respect, it differs from a loan and does not incur debt or interest. Grants can be given out by foundations and governments. Grants to individuals can be either scholarships or donations.
First time home buyer grants are typically awarded based on a few criteria, primarily financial need and income qualifications.
Many states have initiated grant programs to help lower income residents with the purchase of their first home. The United States Department of Housing and Urban Development (HUD) also provides grants to first time home buyers.[1] Funding for various state first time home buyer grants is nearly always available. In fiscal year 2006, only two states exhausted their budgets for first time home buyer grants.
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A similar program was introduced in Australia from the 1 July 2000, where first time home buyers can receive a $7,000 once off payment to offset the cost of the GST. While the program is offered nationwide, the scheme is funded by the states and territories and subject to respective legislation.[2]
|- | Established homes | First Home Owner Grant | 1 July 2000–present |$7000 |- | New homes / construction | First Home Owner Grant | 1 July 2000–present |$7000 |- |Established homes |First Home Owner Boost |13 Oct 2008 – 30 Sept 2009 |$7000 |- |New homes / construction |First Home Owner Boost |13 Oct 2008 – 30 Sept 2009 |$14000 |- |- |Established homes |First Home Owner Boost |1 Oct 2009 – 31 Dec 2010 | $7000 |- |New homes / construction |First Home Owner Boost |1 Oct 2009 – 31 Dec 2010 |$7000 |- |}
During the budget announcement for 2011 to 2012, the QLD Government announced a further $10000 QLD Building Boost for new homes, townhouses and units for contracts entered into from the 1st of August 2011 to 31st of January 2012. The QLD Building Boost is eligible for first home buyers, owner occupiers and investors purchasing or building a new home. The total value of the new home must not exceed $600,000 to receive the grant. The aim by the QLD Government is to boost the construction industry that has seen lagging demand over the year.
Because a first time home buyer grant usually pushes up the amount that such a buyer can borrow from a financial institution by more than the value of the grant, in competitive housing markets where a majority of competing buyers will also have access to the grant, the end result is that lower-end houses increase in price also by more than the value of the grant, and first home buyers tend to accumulate more debt than if the grant had not been available.