BY MARIA PAPA
The First Home Loan Deposit Scheme aims to help up to 10,000 eligible first home buyers on low and middle incomes to get into the property market sooner by requiring only a 5% deposit. The government has agreed to guarantee the difference between the borrower’s 5% deposit and the standard 20% deposit required to take out a home loan without paying LMI.
The initial 10,000 places will be made available from the 1st of January 2020. Twenty-seven lenders have been appointed to the initial panel of the government’s First Home Loan Deposit Scheme. Of the 10,000 places, 5,000 will be made available through the two major lenders, currently CBA and NAB, and 5,000 will be made available through the 25 non-major lenders appointed to the panel.
How does it work?
The First Home Loan Deposit Scheme aims to help up to 10,000 eligible first home buyers on low and middle incomes to get into the property market sooner by requiring only a 5% deposit. The government has agreed to guarantee the difference between the borrower’s 5% deposit and the standard 20% deposit required to take out a home loan without paying LMI.
The initial 10,000 places will be made available from the 1st of January 2020. Twenty-seven lenders have been appointed to the initial panel of the government’s First Home Loan Deposit Scheme. Of the 10,000 places, 5,000 will be made available through the two major lenders, currently CBA and NAB, and 5,000 will be made available through the 25 non-major lenders appointed to the panel.
Who is eligible?
- Applicants must be first home buyers (if you owned an investment property, you are not eligible)
- Purpose of the purchase has to be owner occupied
- Applicants must be Australian citizens (permanent residents are not qualified)
- Applicants must be 18 years of age and above
- Income for a solo first home buyers must not exceed $125,000
- Income for a couple, both first home buyers, must not exceed $200,000 combined
- Couples can be married or in a de facto relationship. Friends or siblings borrowing together cannot qualify for this scheme.
- There are property price caps depending on which state or territory you are buying and if property is located in the city or in a regional centre. You can work out the property price cap using the NHFIC’s online tool.
How to apply?
- Check your eligibility. To find out if you are eligible, visit the NHFIC’s Scheme eligibility tool.
- Speak to a participating lender or to a broker and get a conditional approval in place. A list of the different lenders participating in the Scheme can be found here. NHFIC will not accept applications directly and is not able to provide personal financial advice.
- Purchase a property that meets the conditions of the scheme within 90 days.
- Move into your new home within 90 days of settlement
Which lenders are participating in the scheme?
NAB and CBA will be making the Scheme available from January 1, 2020 and the other lenders will make it available from February 1, 2020. The participating lenders will have the ability to write loans for first home buyers (FHBs) who have saved deposits with as little as 5%, with the government set to guarantee the rest of the deposit under the FHLDS.
The full list of lenders on the panel, along with NAB and CBA, are Australian Military Bank, Auswide Bank, Bank Australia, Bank First, Bank of us, Bendigo Bank, Beyond Bank Australia, Community First Credit Union, CUA, Defence Bank, Gateway Bank, G&C Mutual Bank, Indigenous Business Australia, Mortgageport, MyState Bank, People’s Choice Credit Union, Police Bank (including the Border Bank and Bank of Heritage Isle), P&N Bank, QBANK, Queensland Country Credit Union, Regional Australia Bank, Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank), Teachers Mutual Bank Ltd (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank), The Mutual Bank and WAW Credit Union
This article is for general information only and should not be considered personal financial advice. Before making a financial decision, you should seek independent advice from a mortgage broker, financial planner or an accountant.
Maria Papa is a senior finance expert specialising in home loans, investment loans, self-employed loans, Lo Doc loans, car loans, personal loans and loan protection. She has offices in Sydney and Melbourne. If you have questions, you can call Maria at 0430 144 008 or email her at mpapa@maverickfinance.com.au