First Home Loan Deposit Scheme
A further 7000 places have been released in a government scheme that allows first-home buyers with as little as a 5 per cent deposit to get a foot onto the first rung of the property ladder.
Limited spots. Don’t miss out. Reserve your spot today!
What is the First Home Loan Deposit Scheme?
The Australian Government has introduced the First Home Loan Deposit Scheme to support first home buyers to purchase a home sooner. It does this by providing a guarantee that will allow eligible first home buyers to purchase a home with a deposit of as little as 5 per cent without needing to pay for lenders mortgage insurance.
The Scheme will support up to 10,000 guaranteed loans per financial year from 1 January 2020. Eligible borrowers can use the guarantee in conjunction with other government programs like the First Home Super Saver Scheme or state and territory first home owner grants and stamp duty concessions.
The guarantee is not a cash payment or a deposit for your
home loan.
How does the Scheme work?
Eligible first home buyers are able to obtain an eligible loan to purchase an eligible property through a participating lender with up to 15 per cent of the value of the property guaranteed by NHFIC.
What type of property can be bought under the Scheme?
For a property to be eligible it must be a ‘residential property’ – this term has a particular meaning under the Scheme, and you should ask your lender if there is any doubt. Eligible residential properties include:
An existing house,
townhouse or
apartment
A house and land
package
Land together with
a separate contract
to build a home
An off-the-plan
apartment or
townhouse
Specific dates and requirements apply for the different property types.
Who is eligible for the Scheme?
Eligible first home buyers are able to obtain an eligible loan to purchase an eligible property through a participating lender with up to 15 per cent of the value of the property guaranteed by NHFIC.
- Australian citizens who are at least 18 years of age. Permanent residents are not eligible.
- Singles with a taxable income of up to $125,000 per annum for the previous financial year and couples with a taxable income of up to $200,000 per annum for the previous financial year. For all Scheme applications made from 1 January to 30 June 2020, the relevant financial year will be 2018-19.
- Applicants must be first home buyers who have not previously owned or had an interest in a property in Australia either separately or jointly with someone else (this includes residential strata and company title properties).
- The Scheme is to assist singles and couples (together) who have at least 5 per cent of the value of an eligible property saved as a deposit. If you have 20 per cent or more saved, then your home loan will not be covered by the Scheme.
- Loans under the Scheme require scheduled repayments of the principal and interest of the loan for the full period of the agreement (with limited exceptions for interest-only loans, which mainly relate to construction lending).
- Applicants must intend to be owner occupiers of the purchased property. Investment properties are not supported by the Scheme.
- Couples are only eligible for the Scheme if they are married or in a de-facto relationship with each other. Other persons buying together, including siblings,parent/child or friends, are not eligible for the Scheme.
Need more information?
Please contact Badu Capital to discuss your situation with one of our experts.
Do property price thresholds
apply?
Yes, the objective of the Scheme is to assist in the purchase or construction of a modest home and the value of the residential property must not exceed the relevant price cap for the area in which it is located. The price caps for capital cities, large regional centres and regional areas are:
State/territory
Capital city and regional centres
Rest of state
Other
The capital city price thresholds apply to regional centres with a population over 250,000 (Newcastle & Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast and Sunshine Coast), recognising that dwellings in regional centres can be significantly more expensive than other regional areas.
How do I apply?
- You must apply for the Scheme through a participating lender. You can see the full list of participating lenders on NHFIC’s website at www.nhfic.gov.au/what-we-do/fhlds/how-to-apply
- There are no costs or repayments associated with the Scheme guarantee. However, you are responsible for meeting all costs and repayments for the home loan associated with the guarantee.
- The Scheme commences on 1 January 2020 for the participating major bank lenders and on 1 February 2020 for the non-major lenders.
- NHFIC will not accept applications directly and does not maintain a waiting list for places under the Scheme.
Frequently asked questions (FAQs)
What is the First Home Loan Deposit Scheme?
The Australian Government has introduced the Scheme to assist eligible first home buyers to purchase a home sooner. It does this by providing a guarantee to participating lenders that will allow eligible first home buyers to purchase a home with a deposit of as little as 5 per cent without needing to pay for lenders mortgage insurance. The Australian Government will operate the Scheme through the National Housing Finance and Investment Corporation (NHFIC).
Do I get a cash payment?
No, the guarantee is not a cash payment or a deposit for your home loan.
What is the “guarantee”?
The Australian Government provides a guarantee on an eligible loan provided by a participating lender to an eligible first home buyer. The guaranteed amount is the difference between the first home buyer’s deposit (of at least 5 per cent) and 20 per cent of the value of the eligible property. It is similar to parental or family guarantees which already exist, but in this case NHFIC acts as the guarantor.
I have already signed a contract to purchase a property, can I still apply?
This depends on the type of property you are purchasing. More information about contract and settlement dates for different types of properties is available on NHFIC’s website at https://www.nhfic.gov.au/what-we-do/fhlds/eligibility/
How do I apply?
You must apply for the Scheme through a participating lender. A participating lender is a bank or other residential mortgage lending institution that has been appointed by NHFIC to offer guaranteed loans under the Scheme. You can see the full list of participating lenders on NHFIC’s website at https://www.nhfic.gov.au/what-we-do/fhlds/how-to-apply/
My bank isn’t on the list of participating lenders, can I still apply with them for the First Home Loan DepositScheme?
No, only participating lenders can offer guaranteed loans under the Scheme.
Will more banks be able to offer guarantees in the future?
NHFIC may expand the panel of participating lenders in the future.
When do I find out if I have a guarantee?
You need to apply for the Scheme with a participating lender or their authorised representative, such as a mortgage broker. Your participating lender will tell you whether or not you have been successful in reserving a place under the Scheme for a guaranteed loan. Processing times may vary between different participating lenders so you will need to check with your lender in the first instance. Generally, however, the time it takes to assess your eligibility for a guarantee aligns with the participating lender’s timeframe for assessing your loan application.
Your home loan cannot be guaranteed under the Scheme unless you are also approved by your lender for an eligible loan on an eligible property. NHFIC is unable to provide advice about the status of your guarantee or associated loan application.
How many places are available?
The Australian Government is making up to 10,000 guarantees available per financial year from 1 January 2020.
Will the property price thresholds change?
The property price thresholds for the Scheme are set by the Australian Government through NHFIC’s Investment Mandate.
They have been set to ensure the Scheme is available for the purchase of a modest home, or the purchase of land and construction of a modest home, consistent with the Scheme’s objectives.
Can I use a broker?
Yes. Eligible borrowers may apply for a guaranteed loan through a registered mortgage broker, provided that the broker has a relationship with a participating lender.
You can view the full list of participating lenders on NHFIC’s website at https://www.nhfic.gov.au/whatwe-do/fhlds/how-to-apply/
What happens if I need to sell my home?
You can sell your home at any time even if your loan is guaranteed under the Scheme. The guarantee will cease when the home is sold.
Can I sell my house and buy another one and keep the guarantee?
No, the Scheme is only available for first home buyers. The purchase of a second home would mean that you do not meet the eligibility criteria for the Scheme
What happens if I need to move and rent out my house?
If you don’t live in your property – including if you move out of the property at a later time – your home loan will cease to be guaranteed by the Scheme. In these circumstances, there may be terms and conditions of your home loan that require you to take certain actions – including that you may need to pay fees and charges and/or take out lenders mortgage insurance that would not have otherwise applied if your home loan were participating under the Scheme.
What happens if I can’t afford my mortgage repayments?
Guaranteed home loans under the Scheme are subject to usual lending arrangements by participating lenders and relevant consumer laws. If you require access to hardship provisions you should contact your participating lender at the earliest opportunity to discuss your situation of sale to purchase land from an entity who is different to the entity you enter into a contract with to build your home.
For a land and separate contract to build a home, you must have:
• purchased the land under a contract of sale dated no earlier than the settlement date of your home loan; and
• entered into an eligible building contract to build your home on that land by no later than the settlement date of your home loan.
Each of the contracts must be dated on or after 1 January 2020.
Eligible building contract
To be an eligible building contract under the Scheme, your building contract must:
• be with a licensed or registered builder
• specify a contract sum in respect of the construction of your home; and
• require the builder to (1) commence construction within 26 weeks of the settlement date for your home loan, and (2) complete construction and procure the issuance of an occupancy certificate within 24 months of the settlement date for your home loan.
‘Owner builder’ contracts are not eligible building contracts for the Scheme.
You can find out more information about building your own home under the Scheme on NHFIC’s website at https://www.nhfic.gov.au/what-we-do/fhlds/eligibility/ or by contacting a participating lender
Is there a waiting list for places under the First Home Loan Deposit Scheme?
NHFIC does not maintain a waiting list for places under the Scheme.
NHFIC will not accept applications for the Scheme. You must apply through a participating lender.
You can see the full list of participating lenders on NHFIC’s website at https://www.nhfic.gov.au/whatwe-do/fhlds/how-to-apply/
For further information
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