The First Home Loan Deposit Scheme (FHLDS) is an initiative by the Australian government intended to help first-time borrowers purchase their first home sooner. If you’re new to the property market and struggling to reach the 20% deposit, the scheme may be a great way for you to get your foot in the door.
How does it work?
The FHLDS allows eligible first-home-buyers to borrow up to 95% of the property value from participating lenders, meaning you can get your new home with a deposit as low as 5%. Outside of the First Home Loan Deposit Scheme, loans above 80% of the property price require the borrower to pay LMI, or Lenders Mortgage Insurance. [something more about this]. Under the FHLDS, the National Housing Finance and Investment Corporation (NHFIC) guarantees to pay up to 15% of the property’s value when purchased using an eligible First Home Buyers loan.
Each financial year 10,000 FHLDS places are made available to those that meet the criteria.
How do I know if I’m eligible?
In addition to being a first home buyer, you will also need to be within the following criteria:
- Earn less than $125,000 as an individual, or $200,000 as a couple.
- Be buying as an individual or as part of a married or de facto couple (friends, family members, and other joint purchasers are excluded).
- Be over the age of 18.
- Be able to show proof of Australian citizenship.
- Purchasing for the purpose of occupying – you cannot use the scheme to purchase an investment property.
- Have a minimum of a 5% deposit in genuine savings.
- Have adequate funds to cover stamp duty, bank fees, and any other associated costs.
You can check the complete list of eligibility requirements on the NHFIC website.
How can I get a spot in the FHLDS?
If your in the market for a property and think the First Home Loan Desposit Schemeis right for you, here’s what you can do to secure one of the limited spots:
- Check your eligibility. In addition to the points listed above, some restrictions apply to property types and postcodes. To be certain of your eligibility you can visit the NHFIC website.
- Connect with a broker. While not necessary in order to get a place in the scheme, a broker can help you navigate the application process and find the right loan product for you. Brokers are considered especially useful for first home buyers, their industry experience making the home buying process a great deal smoother for those who haven’t been through it before.
- Get your finances in order. Make sure you lodge your tax return as soon as possible. You’ll be required to submit it as part of your application process, and as with any limited offer, it’s better to get on top of it sooner rather than later.
You can also take a look at some of our previous articles about boosting your application approval chances. - Purchase your new home! Once you’ve been approved, you’ll have 90 days to purchase your new property.
