New 2% deposit loans for first homebuyers in South Australia

There’s a new two per cent deposit loan now available to some first homebuyers. Find out if you’re eligible here.

Aerial view of sprawling leafy eastern suburbs of Adelaide with Mt Lofty Ranges in the background.

South Australian first homebuyers purchasing a home-land package can from today be eligible for a home loan with a deposit of just two per cent, in a bid by the state government to get young people out of “a lifetime of renting”.

However, further stamp duty cuts have been ruled out.

On Monday, Treasurer Stephen Mullighan announced the new loan available through the government’s HomeStart program.

For a build valued at $519,000 – the average price for a HomeStart build – buyers would only require a $10,380 upfront deposit excluding fees and charges.

This is compared to a usual 20 per cent deposit of $103,800.

Aerial view of leafy eastern suburbs homes in Adelaide.

It will sit alongside the existing five per cent deposit for those buying an existing home and eight per cent deposit for those building, both available to all homebuyers.

“It has never been a better time financially for people to make this decision to get into home ownership, which seems a remarkable thing to say given how challenging the housing market has been in South Australia,” Mr Mullighan said.

Mr Mullighan said Adelaide was in an enviable position compared to Sydney and Melbourne where young people have been “consigned to a lifetime of renting”.

The median house price in Adelaide was $740,000 in December.

The two per cent minimum deposit loan requires homebuyers to build in metropolitan Adelaide and some surrounding regions with a HomeStart partner.

Unlike many commercial lenders, HomeStart does not require lenders mortgage insurance if buyers don’t have a 20 per cent deposit, which can cost in excess of $10,000.

Eligible buyers also benefit from the $15,000 first homeowners grant and the government’s abolition of stamp duty for first home buyers on new homes valued up to $650,000 – or vacant land up to $400,000 to build a new home.

However, Mr Mulligan ruled out further cuts to stamp duty.

First homebuyer, Ellissa Noolan. Picture: George Yankovich

“For those people who are already in home ownership, they’ve got a tremendous benefit against those young South Australians who have been locked out of the market,” Mr Mullighan said.

“Our focus has been on trying to help them get into the market where they previously felt it’s beyond them.

“If we have capacity for future measures down the track, we’ll wait and see what we announce for our future budgets.”

Nurse Ellissa Noolan, 25, said she was currently living at home with her mother, having searched the last six months for affordable options with her partner.

“Our struggle has been saving a deposit, on top of stamp duty and all the associated costs of buying a home.

“Getting rid of stamp duty and having that lower deposit will definitely help us.”

Originally published as New 2% deposit loans for first homebuyers in South Australia