What is the First Home Loan Deposit Scheme and How Does It Work?
The Australian Government is introducing a First Home Loan Deposit Scheme (FHLDS) to support eligible first home buyers with purchasing an owner-occupied property. It does this by providing a guarantee that will allow eligible first home buyers to purchase a home with a deposit of as little as 5 per cent without having to pay Lenders Mortgage Insurance (LMI). Eligible borrowers can use the guarantee in conjunction with other government programs like the NSW Stamp Duty Concession scheme.
Who is eligible?
There are several eligibility criteria first home buyers must meet to qualify for the first home loan deposit scheme:
- A minimum deposit of at least 5% is needed (most lenders require the deposit to have been accumulated through genuine savings).
- Only Australian citizens who are at least 18 years of age and hold a medicare card are eligible. Permanent residents are not eligible.
- Single first-home buyers earning up to $125,000 p.a. or couples earning up to $200,000 p.a. are eligible. Income from the financial year preceding the year in which the loan is entered into will be assessed.
- Couples are only eligible for the Scheme if they are married or in a de-facto relationship. Other persons buying together, such as siblings, parent/child or friends, are not eligible.
- Loans under this Scheme require scheduled repayments of the principal of the loan for the full period of the agreement. Interest-only repayments for a specific period are accepted only for loans relating to both the purchase of vacant land and the construction of a house on the land.
- Applicants must be first home buyers who’ve not previously owned or had an interest in a residential property either separately or jointly with someone else. This includes residential strata, company title properties, regardless of whether it was an investment or owner-occupied property and whether it was ever lived in.
- Applicants must intend to move into and live in the property as their principal place of residence (i.e. they must be owner-occupiers).
- The value of homes that can be purchased under the Scheme has been set, with Sydney at $700,000
It’s a great opportunity for First Home Buyers to take the first step on the property ladder. Get in touch today for more information on how to apply.