First home buyers and the First Home Loan Deposit Scheme 2020 1

Great news for first home buyers – 10,000 First Home Loan Deposit Scheme (FHLDS) places were released in July. If you missed out on the FHLDS for the 2019/20 financial year, this is a second chance opportunity to apply.

In even more good news for first home buyers, provided the eligibility criteria is met, the First Home Loan Deposit Scheme could potentially be combined with other first home buyer assistance available from the government including the First Home Buyer Grants, stamp duty concessions and the recently announced HomeBuilder Grant.

Yes, the Scheme is available for a range of different property purchases, provided both the borrower and the property intended for purchase satisfy the Scheme eligibility criteria and are approved for a home loan by a participating lender.

But there is a limit on how many people can access this scheme, so it’s important to get in quick. Here’s what you need to know.

What is the First Home Loan Deposit Scheme?

It’s tough to get onto the property ladder – this is the government’s answer to that, allowing easier and faster access to the real estate market for first home buyers. It does this by allowing first time buyers to pay a deposit as little as 5%, while avoiding lenders mortgage insurance (LMI). (Most banks and lenders require a minimum deposit of 20% of the property’s value for the borrower to be exempt from LMI.)

How does it work?

You will need to apply to the scheme’s administering body (NHFIC) and demonstrate your eligibility. If you are approved, you can then take out a home loan with a lender and the government will act as your guarantor. Although your lender will still do their normal checks on your financial situation, this will make it easier to get a loan without having saved for a 20% deposit.

Am I eligible? 

The scheme is open to individuals who are earning up to $125,000 per year, as well as couples with combined earnings of up to $200,000. To be eligible, first home buyers must show that they have saved at least 5% of the value of the property they are purchasing. 

The government has also capped the number of homebuyers it will support at 10,000 per year, which means a relatively small number of people will benefits, and not all properties are eligible. The scheme will only underwrite loans for ‘entry properties’, excluding high-value properties – price caps are determined relative to the property’s local market. There’s more information on the first home buyers grant here. Or come in and talk to us about FHLDS and creating your dream home.