Blog » Making home ownership easier - An overview of the First Home Loan Deposit Scheme (FHLDS)
December 2019 | Money Matters

Making home ownership easier - An overview of the First Home Loan Deposit Scheme (FHLDS)

Heard about the Australian Government’s new first home buyer deposit scheme, but not sure if you qualify or completely understand what it means for you? To help you, we’ve pulled together a brief overview of the Scheme and provided some useful links to help you on your way to home ownership a little more quickly.

What is the First Home Loan Deposit Scheme?

Set to commence on 1 January 2020, the Australian Government’s new First Home Loan Deposit Scheme (FHLDS) initiative is fantastic news for up to 10,000 Australians on low and middle-incomes, as it’s been introduced specifically to help eligible first home buyers enter the property market and purchase their first home, a little earlier – and without incurring additional costs.

Essentially, the FHLDS will grant eligible purchasers with the opportunity to purchase property on a deposit as low as 5%, with the Federal Government acting as guarantor for the remaining balance – around 15% of the typical 20% deposit that most lenders require in order to avoid insurance premiums paid on house deposits of less than 20%.

The Scheme will be overseen by the National Housing Finance and Investment Corporation (NHFIC), a corporate Commonwealth body whose primary remit is to implement housing programs that are designed to make home ownership more affordable. The NHFIC will be responsible for managing the FHLDS, including partnering with select lenders, and overseeing annual allocation of $500 million earmarked for the Scheme. The Scheme is available to 10,000 applicants each year on a ‘first come, best dressed’ basis.

For up-to-date information on the Scheme please visit: https://www.nhfic.gov.au/what-we-do/fhlds/.

Who is eligible for the First Home Loan Deposit Scheme?

In order to be considered for the FHLDS, first home buyers will need to meet specific eligibility criteria. Key amongst these are the following:

  • Applicants must be Australian citizens aged at least 18 years old. Permanent residents and foreign buyers are not eligible.
  • The FHLDS is open to singles with a taxable income of up to $125,000 per annum and couples with a combined taxable income of up to $200,000 per annum.
  • Couples are only eligible for the Scheme if they are married or in a de-facto relationship.
  • Applicants must be able to provide 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.
  • Applicants must be owner occupiers and live in the property as their primary residence.

For more information regarding eligibility and to check your eligibility visit: https://www.nhfic.gov.au/what-we-do/fhlds/eligibility/

What type of property can be bought under the scheme?

There’s a range of housing options that first home buyers can purchase under the Scheme, including:

  • An established house, townhouse or apartment;
  • A house and land package;
  • Vacant land with a separate contract to build a house; and
  • An off-the-plan apartment or townhouse.

For more information regarding the types of properties available for purchase under the scheme visit: https://www.nhfic.gov.au/media/1169/fact-sheet-first-home-loan-deposit-scheme-261119.pdf.

How can you apply for the First Home Loan Deposit Scheme?

Applications for the Scheme open on 1 January 2020. The NHFIC will not accept applications directly, nor provide financial advice. Instead, applications can be lodged through endorsed lenders and/or their brokers.

To date, NHFIC has selected 27 lenders to participate in the Scheme. From 1 January 2020 applications can only be made through the National Australia Bank and Commonwealth Bank of Australia. But from 1 February 2020, an additional 25 non-major lenders are expected to be able to offer guarantee loans.

For more information regarding how to apply and participating lenders visit: https://www.nhfic.gov.au/what-we-do/fhlds/how-to-apply/

Are there property price caps in order to quality for the First Home Loan Deposit Scheme?

Yes. The Scheme sets out the property price thresholds, and these vary for each State and Territory. In Victoria, the property price threshold is $600,000 for properties located in Melbourne and regional centres like Geelong, and $375,000 for all other parts of the State.

For more information regarding property price thresholds visit: https://www.nhfic.gov.au/media/1169/fact-sheet-first-home-loan-deposit-scheme-261119.pdf

First come, first serve basis

Whilst the Scheme does include eligibility criteria and property price thresholds, the Government has not suggested that there’ll be a predetermined allocation to each State and Territory. Instead, the FHLDS will be based on demand and will support the first 10,000 buyers who apply and are approved for the Scheme, on a ‘first come, first serve’ basis,.

It’s worth considering that each year approximately 100,000 Australians buy their first home, which means the new Scheme is likely to support around 10% of those looking to enter into the property market. This means it is likely to prove very popular as it will help first home buyers enter the property market with a smaller deposit and a little sooner.

Will other Government grants, such as the first home buyer grant, also be available?

Yes. In even more good news for first home buyers, they can apply for the new FHLDS from 1 January 2020 as well as other Government grants such as the First Home Buyer Grant.

So, if you are a first home buyer thinking about entering the market, speak to your financial advisor to find out more information and any grants you might be entitled to.

The final word

The purpose of the Government’s First Home Loan Deposit Scheme is to support first home buyers seeking to enter the property market earlier and to help them avoid additional charges.

It has the potential to reduce the number of years it generally takes for buyers to save for their first property.

However, you will need to be quick to take advantage of it given its popularity and demand is expected to be high!.




Information herein has been obtained from government and other sources and Dennis Family Corporation does not assume responsibility for the accuracy or completeness of any information published other than to the extent required by law. Please consult the URL webpages referenced above for up-to-date information.  Contents herein are for general information only and do not constitute investment, legal, business, tax or other advice.  You should consult your professional adviser for legal, business or tax advice before making decisions. © 2019 Dennis Family Corporation Pty Ltd