Are you looking to enter the housing market for the first time time or know of someone who is? The Federal Government has announced the introduction of a First Home Loan Deposit Scheme to support eligible first home buyers.

The initiative

The First Home Loan Deposit Scheme is an Australian Government initiative to support eligible first home buyers purchase a home sooner. It does this by providing a guarantee that will allow eligible first home buyers on low and middle incomes to purchase a home with a deposit of as little as 5 per cent.

Applications for this scheme are not yet open (the expected open date for applications is 1 January 2020), however in the meantime, anyone wanting to understand their potential eligibility for the scheme is able to use an interactive online eligibility tool launched by the National Housing Finance and Investment Corporation (NHFIC).

The tool is provided as a guide only – meaning if you use it and it appears that you meet the eligibility criteria, it doesn’t mean that you’ll receive either a guarantee or a loan from a participating lender.

First home buyers wishing to apply for a guarantee will need to do so through participating lenders and their brokers. The National Housing Finance and Investment Corporation (NHFIC) will not accept applications directly.

Applicants under the Scheme will be subject to eligibility criteria, including criteria in relation to income thresholds and property prices.

Income thresholds apply

The income thresholds will be up to $125,000 per annum for individuals and up to $200,000 per annum combined for couples (assessed in the financial year preceding the financial year in which the loan is entered into).

The Scheme will apply to owner-occupied loans on a principal and interest basis.

Modest homes matter

To ensure the First Home Loan Deposit Scheme assists those who need support the most, it is only available for the purchase of a ‘modest’ home, or the purchase of land and construction of a modest home. Certain property price thresholds (maximum property purchase price under the Scheme) will apply in capital cities, large regional centres and regional areas.

The eligibility tool complements the property price lookup tool that has also been developed by the National Housing Finance and Investment Corporation (NHFIC), to assist first home buyers determine the property price threshold that applies under the Scheme in relation to properties in every suburb around the country.