Are you looking to enter the housing market for the first time  or know of someone who is? The Federal Government has announced the introduction of a 2020 First Home Loan Deposit Scheme to support eligible first home buyers.

But how does the First Home Owners Deposit Scheme work? Keep reading to learn more or speak to one of our experienced conveyancers if you have any questions.

Overview:

 

What is the First Home Loan Deposit Scheme?

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

How to apply for First Home Loan Deposit Scheme

All applications need to be with participating lenders and their brokers. The National Housing Finance and Investment Corporation (NHFIC) will not accept applications directly.

Anyone wanting to understand their potential eligibility for the scheme is also 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.

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

2020 First Home Loan Deposit Scheme: eligibility

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 2020 First Home Loan Deposit Scheme will apply to owner-occupied loans on a principal and interest basis.

Modest homes matter

To ensure the 2020 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.

You can use the property price lookup tool (developed by the National Housing Finance and Investment Corporation (NHFIC)), to determine the property price threshold that applies under the 2020 First Home Loan Deposit Scheme to your location or postcode.

What property can I buy?

Under the 2020 First Home Loan Deposit Scheme, the property you buy must be a residential property. This can include:

  • An existing house, apartment or townhouse
  • An off-the-plan apartment or townhouse
  • Land and a separate contract to build
  • A house and land package

First Home Buyers Loan Deposit Scheme FAQ

Can I buy a house with a 5% deposit?

With the 2020 First Home Loan Deposit Scheme, it is possible to buy a house with a 5% deposit. However, there are certain eligibility criteria that you must meet first.

Will the First Home Loan Deposit Scheme continue in 2021?

Yes it will. An additional 10,000 First Home Loan Deposit Scheme places will be offered to eligible first home buyers from 1 July 2021 to 30 June 2022.

Do first time home buyers have to pay mortgage insurance?

Normally, first home buyers with less than a 20% deposit will need to pay lenders mortgage insurance. However, under the First Home Loan Deposit Scheme in Australia, buyers can avoid paying the lenders mortgage insurance all together.

Need help buying your first home? Eckermanns are here every step of the way. Let us take the stress out of the big move with our Eckermann Select Service or guide you on the homebuyer grants available.

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