You’re tired of renting – all that money that’s been flushed down the drain again and again – and now you’re ready to buy your first home. You may have heard about the government’s program promising money to first time homebuyers is being extended until 31 December 2009. What is this grant about, who is eligible and how much will first time buyers receive?

What is the First Home Buyer’s Grant?

The grant is a one-time boost intended to motivate citizens to purchase property. The amount given in the grant ranges from $10,500 to $21,000 depending upon when the home is purchased and whether the home is new or existing.

Who is Eligible?

According to the Department of Families, Housing, Community Services and Indigenous Affairs, to be eligible for the first home buyer’s grant, you must purchase a new home or home on the plan between 14 October 2008 and 31 December 2009 and

· Have reached at least 18 years of age

· Be either an Australian citizen or a permanent resident of Australia

· Have not previously received the First Home Owner Grant (or a spouse that received the grant)

· Have not previously owned and lived in a home (or a spouse)

· Must plan to live in the home for at least six months beginning within 12 months of the purchase

How Much Do First Time Buyers Receive?

If the home purchase documents are signed prior to 30 September 2009, then eligible purchasers will receive a lump sum of $14,000. After 30 September 2009, the amount decreases to $10,500. If the home purchased is new or under construction, the lump sum amount increases to $21,000 for those completing the transaction before 30 September 2009, and $14,000 between 1 October 2009 and 31 December 2009.

After 31 December 2009, the First Time Buyer’s Grant is $7,000.

How Can I Receive Benefits from the Grant?

The first step to receiving grant benefits is to file an application form with your state or territory revenue office. These forms are available through many of the state websites. You can find links to the government websites where you can download the form here.

What Can I do with Benefits from the Grant?

Before you rush out after receiving your cheque and buy all new furniture for your house, consider and plan what you will do with the money. One thing many people do is use the grant to pay off outstanding debts. This can lower your financial obligations each month.

If you don’t have any debt, you may wish to invest the money or use it to fund a savings account. There is some great information on the FIDO website discussing how to choose an account that suits your needs.

Be careful when looking forward to the grant and don’t take out a larger mortgage than you can afford just because you are receiving this government incentive. Just because you get $21,000 for buying a new home doesn’t mean you can afford another $25,000 on the mortgage. Be clear with what you want and what you can afford when making your purchase. For more information on the grant, specific to your state or territory, visit the First Home website.