Enter the email address associated with your account, and we'll email you a link to reset your password.
The First Home Loan Deposit Scheme (FHLDS) is a new government measure designed to help people enter the property market for the first time.
Usually, Australian home buyers have to either save up a deposit of at least 20% of their property’s value, or take out Lender’s Mortgage Insurance
– which can often cost thousands of dollars. Under this new scheme, the Australian Government will guarantee 10,000 low-deposit loans a year, from 1 January 2020,
for eligible low- and middle-income earners who have saved up a deposit of as little as 5% of a property’s value.
Not according to the National Housing Finance and Investment Corporation (NHFIC) – the government body administering the scheme – which states that participating lenders in the FHLDS will not charge eligible customers higher interest rates than equivalent customers outside the scheme. However, it’s worth keeping in mind that taking out a home loan with a lower deposit would mean paying interest on a larger sum, potentially making it more expensive as a result.
The scheme’s first wave is expected to support 10,000 first home buyers a year. In the year to August, there were around 108,000 first home buyers, based on data from Domain.com.au. Going by that statistic, there’s just under a one in 10 chance that you could access one, if you’re eligible. However, the launch of the scheme could see a spike in applications, as would-be first home buyers rush to apply, which could reduce those odds as a result.
Not true. While the First Home Owner’s Grant scheme only allows newly built homes to be bought, under the FHLDS, an eligible first home buyer could purchase the following types of property, according to the NHFIC:
It’s worth noting that there are price limits that apply to homes, which differ from region to region, and a list of eligibility requirements, too.
There could be risks to weigh up when applying for a home loan with a low deposit, including:
Canstar surveyed 2,061 Australian adults about the new First Home Loan Deposit Scheme. This is what we found:
Source: Canstar.com.au, November 2019
The FHLDS can be combined with other first home buyer assistance available from some state and territory governments.
For example, the First Home Owners Grant (FHOG) is a national scheme, administered locally in most states and territories, which provides financial incentives for people to build or buy brand new homes.
Stamp or transfer duty concessions could also apply to both new and existing homes.
If you are eligible to buy your property as a single using the First Home Deposit Scheme, you may also be eligible for:
Note: 26th Parallel refers to a line that divides Australia from east to west, located at Shark Bay in Western Australia.
The Australian Government says that the FHLDS “is only available for the purchase of a modest home” and so it has capped the price of the homes eligible under the scheme.
The caps are different depending on where you want to buy:
|Region||Price Cap ($AUD)|
|NSW – capital city||$700,000|
|NSW – regional centre (Newcastle and Lake Macquarie)||$700,000|
|NSW – regional centre (Illawarra)||$700,000|
|NSW – other||$450,000|
|VIC – capital city||$600,000|
|VIC – regional centre (Geelong)||$600,000|
|VIC – other||$375,000|
|QLD – capital city||$475,000|
|QLD – regional centre (Gold Coast)||$475,000|
|QLD – regional centre (Sunshine Coast)||$475,000|
|QLD – other||$400,000|
|WA – capital city||$400,000|
|WA – other||$300,000|
|SA – capital city||$400,000|
|SA – other||$250,000|
|TAS – capital city||$400,000|
|TAS – other||$300,000|
|Jervis Bay Territory & Norfolk Island||$450,000|
|Christmas Island & Cocos (Keeling) Island||$300,000|
|Source: National Housing Finance and Investment Corporation|
The scheme’s website says that “capital city price caps will apply to large regional centres with a population over 250,000”, such as the Gold Coast, Newcastle and Lake Macquarie, the Sunshine Coast, Illawarra (including Wollongong) and Geelong. This is because “dwellings in large regional centres tend to be significantly more expensive than other regional areas”.
As well as the purchase price of the property, factors such as your income could determine whether or not you would be able to secure a government guarantee on your home loan under the FHLDS. Here are some quick facts about who may be able to qualify, if they meet all of the following criteria, according to the NHFIC:
Australian citizens who are least 18 years old.
Singles with a taxable income of up to $125,000 per year or couples with taxable income of up to $200,000 per year (incomes would be assessed for the financial year preceding the one in which the loan is entered into).
Couples are only eligible for the scheme if they are married or in a de-facto relationship. So other people such as siblings, a parent and child or two friends buying together would not be eligible for the Scheme.
Applicants must have a deposit of at least 5% – but no more than 20% – of the property’s value.
Loans under the Scheme normally require scheduled repayments of the principal (as well as the interest) of the loan for the full period of the home loan contract. However, if the loan relates both to the purchase of vacant land to the construction of a house on the land, the loan may be eligible even if the terms of the loan agreement permit interest-only repayments for a specified period.
Loans are only eligible for the scheme if they’re for the purchase of a ‘residential property’. The NHF