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The new way for first home buyers to get into the property market.

Great news for first home buyers — the First Home Loan Deposit Scheme has officially gone live as of 1 January 2020. The scheme will help thousands of prospective first home buyers break into the property market with a smaller deposit.

So how do you know if you’re eligible? And what are the steps you need to take? Read our guide to find out everything you need to know about the First Home Loan Deposit Scheme.

How does the First Home Loan Deposit Scheme work?

The scheme is designed to support first home buyers, purchasing their first home, with a smaller deposit. Traditionally, first home buyers had to front a 20% deposit to their lender. If unable to do so, they were required to pay Lenders Mortgage Insurance (LMI).

This scheme enables first homeowners to pay as little as a 5% deposit, with The National Housing Finance and Investment Corporation (NHFIC) guaranteeing the remaining percentage of the deposit. The scheme will support up to 10,000 loans each financial year and is subject to eligibility criteria.

READ MORE: See if you could also be eligible for the First Home Super Saver Scheme here

Am I eligible for the First Home Loan Deposit Scheme?

There are a number of key criteria you must meet in order to be considered eligible. You must be:

  • 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 and couples with a taxable income of up to $200,000 per annum. Incomes will be assessed for the financial year preceding the financial year in which the loan is entered into.
  • Couples are only eligible for the scheme if they are married or in a de-facto relationship. Other persons buying together, including siblings, parent/child or friends, are not eligible for the scheme.
  • Applicants must have a deposit of between 5 and 20% of the property’s value.
  • Loans under the scheme require scheduled repayments of the principal of the loan for the full period of the agreement.
  • If the loan relates both to the purchase of vacant land, and the construction of a house on the land, the loan may be eligible even if the terms of the agreement permit interest-only repayments for a specified period.
  • Applicants must intend to move into and live in the property as their principal place of residence (i.e. they must be owner-occupiers).
  • Applicants must be first home buyers who have not previously owned or had an interest in a residential property either separately or jointly with someone else (this includes residential strata and company title properties, regardless of whether it was an investment or owner-occupied property and whether it was ever lived in).

READ MORE: Here's our complete guide to buying your first home

What can I buy under the First Home Loan Deposit Scheme?

One of the great aspects of the scheme is there are few limitations on what type of property you can buy, giving you the flexibility to choose exactly what you want.

You can purchase:

  • 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.

There are, however, limits to the property purchase you’ll need to be aware of. The following property price thresholds (maximum property purchase price under the scheme) will apply in capital cities, large regional centres and regional areas:

New South Wales

  • Capital city and regional centres - $700,000
  • Rest of the state - $450,000

Victoria

  • Capital city and regional centres - $600,000
  • Rest of the state - $375,000

Queensland

  • Capital city and regional centres - $475,000
  • Rest of the state - $400,000

Western Australia

  • Capital city and regional centres - $400,000
  • Rest of the state - $300,000

South Australia

  • Capital city and regional centres - $400,000
  • Rest of the state - $250,000

Tasmania

  • Capital city and regional centres - $400,000
  • Rest of the state - $300,000

Australian Capital City

  • Capital city and regional centres - $500,000

Northern Territory

  • Capital city and regional centres - $375,000

The capital city price caps will also apply to larger regional centres with a population over 250,000 including the Gold Coast, Newcastle and Lake Macquarie, the Sunshine Coast, Illawarra (Wollongong) and Geelong, recognising that dwellings in large regional centres tend to be significantly more expensive than other regional areas.

READ MORE: Discover a range of resources for buying your first home here

How do I apply for the First Home Loan Deposit Scheme?

You can lodge your application through participating lenders and their brokers. However, you won’t be able to apply directly to the National Housing Finance and Investment Corporation (NHFIC).

Need more information? Head to the National Housing Finance and Investment Corporation website then see how Joust could help you secure the right home loan for your needs.