Eview Group

What is the First Home Loan Deposit Scheme?

Remember the Federal Election when there was a lot of talk about making property more attainable for first home buyers?

Well, one of the proposals on the table from the Coalition was something called the First Home Loan Deposit Scheme.

Now that scheme looks set to be introduced in early 2020, so let’s look at what’s involved.


What is the First Home Loan Deposit Scheme?

The First Home Loan Deposit Scheme is an initiative from the Federal Government designed to make it easier for first home buyers to get a foot on the property ladder.

The idea is that if first home buyers can come up with savings of five per cent of the property price and illustrate financial security, the government will guarantee the rest of the 20 per cent deposit.

It’s important to note, the scheme isn’t a loan, but a guarantee, which the government underwrites. The deposit balance is funded by a lending institution and the buyers will still have to pay that 15 per cent balance as part of their mortgage.

The major benefit is that it helps first home buyers avoid the need for Lenders Mortgage Insurance (LMI) which can often be an additional expense and detraction when it comes to buying a first home.

The scheme is administered through the National Housing Finance and Investment Corporation, and there are a number of conditions set. The biggest thing to consider is that it’s only available to 10,000 applicants.

Based on the fact 110,000 first homes were purchased in 2018, that means nine per cent of buyers would have benefitted from the scheme that year.


How it works

The First Home Loan Deposit Scheme is slated to commence in February 2020, and to be eligible, the following conditions need to be met:

  • You must have saved at least five per cent of the property’s purchase price
  • As an individual, you have an income up to $125,000 per year
  • As a couple, you have combined earnings of up to $200,000 per year

In addition, there are also different property price caps applied in different areas. This means you are only eligible to apply if your property is less than a threshold the government has set.

As of 2020, the thresholds are:

State Capital City threshold Rest of State
NSW $700,000 $450,000
Vic $600,000 $375,000
Qld $475,000 $400,000
WA $400,000 $300,000
SA $400,000 $250,000
Tas $400,000 $300,000
ACT $500,000 N/A
NT $375,000 N/A

The First Home Buyer Loan Deposit Scheme is administered through the National Housing Finance and Investment Corporation, and this is where eligible participants need to lodge their application.

If you’re looking to buy your first home, the Eview Group has expert property agents across Australia, and can assist you in finding the right property to meet your needs.