About The First Home Loan Deposit Scheme

January 22, 2020

If you’re buying your first home at the Edge and the value of the house and land package is under $400,000, keep reading! You might be able to buy your house sooner than you think.

The First Home Loan Deposit Scheme exists to help first home buyers purchase a home faster. Eligible first home buyers will be able to buy a home with a 5% deposit.

It is an initiative from the Australian Government that is administered by the National Housing Finance and Investment Corporation (NHFIC).

How Does The First Home Loan Deposit Scheme Work?

Eligible first home buyers on low to middle incomes will be able to purchase a home with a deposit of just 5% of the property’s value. The NHFIC will provide a guarantee for the remaining 15% of the deposit. Normally you need to save at least 20% of the property’s value to secure a home loan and avoid paying Lenders Mortgage Insurance or a Low Deposit Premium.

Eligibility Criteria for the First HomeLoan Deposit Scheme

• Australian citizens who are at least 18 years of age. Permanent residents are not eligible.
• Applicants must not have previously owned or had an interest in a residential property, either separately or jointly with someone else.
• Singles with an annual taxable income of up to $125,000 per year and married/de facto couples with a combined annual taxable income of up to $200,000. Other people buying together – such as siblings, parent/child or friends, are not eligible.
• The Scheme only applies to Owner Occupied home loans paid on a principal and interest basis. Property investment and Interest Only loans are excluded. If the loan relates both to the purchase of vacant land and the construction of a house on that land, the loan may still be an eligible loan, even if the terms of the loan agreement permit Interest Only payments for a specified period.
• Applicants must have a deposit of between 5% and 20% of the property’s value.
• Your maximum property purchase price for the Edge is a House and Land Package value of up to $400,000.
• You can only receive this Government Guarantee once.

Note that the NHFIC states that participating lenders in this scheme will not charge eligible customers higher interest rates than equivalent customers outside the scheme.

You can check the NHFIC Eligibility Tool here.

When Does It Finish

NHFIC is releasing 10,000 First Home Loan Deposit Scheme guarantees this financial year. Another 10,000 guarantees will be available from July 2020. This Scheme started on 1 January 2020.

How To Apply

The NHFIC has appointed 27 lenders on the panel of residential mortgage lenders to offer guarantees under the Scheme. This includes National Australia Bank and Commonwealth Bank of Australia, as well as 25 non-major lenders.

The 25 non-major lenders will begin offering guaranteed loans from 1 February.

You need to contact the lenders directly. View who they are and link through here.