When you’re buying your first home, every dollar counts - and one of the most common questions we hear is: can I use the First Home Owner Grant (FHOG) as part of my deposit to build a new home?
It’s a great question, and like many things in home buying, the answer isn’t one-size-fits-all. How the $10,000 FHOG works depends on whether you’re using it on its own or alongside another government scheme.
Let’s walk through how it all fits together.
Using the FHOG without other schemes
If you’re purchasing your new home the traditional way - without a government deposit scheme - you might expect the FHOG to go straight towards your deposit.
In reality, it works a little differently.
- The FHOG can’t be used as your initial deposit
- Instead, it’s applied at your first progress payment once construction begins
- You’ll still need to have your deposit saved upfront before your loan is approved
While that may feel like a hurdle at first, the FHOG still reduces your financial commitment during construction - freeing up funds when you need them most.
To strengthen your position even further, you can combine the FHOG with the First Home Super Saver Scheme (FHSSS):
- Access voluntary super contributions to boost your savings, which can be used for your deposit
- Pair this with the FHOG to improve your overall purchasing power
And importantly, most lenders will allow this structure, making it a widely accessible pathway.
Using the FHOG with the 5% Deposit Scheme
This is where things start to open up.
If you’re eligible for the 5% Deposit Scheme, the FHOG can move from being a later benefit to playing a role upfront - helping you get into your home sooner.
With this scheme you can use the FHOG as part of your deposit. For a property purchase price of $650,000, a 5% deposit would be $32,500. But with a $10,000 boost from the FHOG, you’ll only need to save a cash deposit of $22,500.
That’s a meaningful reduction - and one that can bring home ownership within closer reach.
There are a few conditions to keep in mind:
- You must apply through one of 25 nominated lenders who offer this non-standard loan structure
- Lenders will still require evidence of genuine savings, even if the FHOG is included
A flexible option for some buyers
We know saving a deposit isn’t always straightforward - especially when you’re already managing rent and everyday expenses.
That’s why it’s worth knowing that two lenders currently accept rental history as an alternative to genuine savings, and a strong record of consistent rent payments can demonstrate your ability to manage repayments.
This creates a more flexible pathway for eligible buyers:
- FHOG contribution
- The remaining portion of your 5% deposit
- A rental history letter
Together, these may help unlock access to the 5% Deposit Scheme sooner than you might expect.
Using the FHOG with the Help to Buy Scheme
If you’re considering the Help to Buy Scheme, the FHOG plays a different role again.
In this case you can’t use the FHOG as part of your deposit, but the required deposit is typically around 2%, making it easier to save.
So while the FHOG doesn’t reduce your upfront cost here, the lower deposit requirement can still make entering the market more achievable.
Finding the right approach for you
Every first home journey looks a little different. For some, it’s about building savings steadily. For others, it’s about making the most of grants and schemes to fast-track their plans.
That’s where the right advice can make all the difference.
We recommend speaking with our finance partners at Mortgage Domayne. As construction loan specialists, they can help you understand exactly how the FHOG fits into your situation - and which pathway could work best for you.
Get mortgage advice for your new home from the experts at Mortgage Domayne, or chat to a friendly new home consultant at one of our display locations across Melbourne and Geelong.
