First Home Loan Deposit Scheme (FHLDS)
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 (lender’s criteria apply).
Scheme places
Since starting on 1 January, the banks have registered 3,000 potential first home buyers under the First Home Loan Deposit Scheme.
The remaining 7,000 Scheme places for the current financial year will be available from 1 February 2020 when potential applicants will have a panel of 27 lenders to choose from.
NHFIC is releasing 10,000 First Home Loan Deposit Scheme guarantees this financial year. Another 10,000 places will be available from July 2020.
The staged release of Scheme places provides first home buyers with the opportunity to gather the necessary financial information to support their application and enables a broader choice between the major banks and smaller lenders. Twenty-five smaller lenders join the Scheme’s lending panel on 1 February.
Eligibility
Am I eligible for the First Home Loan Deposit Scheme?
NHFIC has developed a tool to help first home buyers find out whether they meet the Scheme’s eligibility criteria.
Please note that this tool is provided as a guide only and does not mean that you will receive either a guarantee or a loan from a participating lender.
Are you an eligible first home buyer?
The Scheme is open to singles or couples.
Singles
If you are looking to purchase your first home as the only person named as a borrower in your home loan, then you would apply under the Scheme as a single.
Couples
If you are looking to purchase your first home with your spouse or de facto partner, where you are both named as borrowers in your home loan, then you would both apply under the Scheme as a couple.
Arrangements with other people that do not qualify
If you are intending to be named as a borrower in your home loan with someone else who is not also your spouse or de facto partner, and whether that is under a home loan that:
• only has 2 borrowers, or
• has 3 or more borrowers, even if one of the other borrowers is also your spouse or de facto partner, then that home loan will not be eligible for the Scheme.
For example, a loan arrangement with a relative – such as with a sibling – will not be eligible for the Scheme.
Your eligibility checks
There are several criteria used to determine eligibility under the scheme. You should consider whether your personal circumstances satisfy all of the following checks. They relate to your eligibility as a first home buyer who is able to have the benefit of the Scheme.
The key checks for your personal circumstances are:
- an income test
- a prior property ownership test
- a minimum age test
- a deposit requirement, and
- an owner-occupier requirement.
If you do not satisfy any of these checks – which are described below – you should not ask your lender to make any submissions or applications to the Scheme. If you are unsure of any of these matters, you should ask your lender and/or seek appropriate advice.
Income test
The Scheme includes an income test for:
• singles – your taxable income for the previous financial year must not be more than $125,000
• couples – your combined taxable income for the previous income year must not be more than $200,000.
For all Scheme Places Reservations made up to 30 June 2020, the relevant financial year will be the 2018-19 income year. You will need to provide a copy of your Notice of Assessment from the ATO for the 2018-19 financial year to any participating lender you apply for a scheme place reservation with.
The income test is assessed by your lender.
Prior ownership test
The Scheme is only in place to assist genuine first home buyers.
The property ownership test requires you to not have ever owned:
• a freehold interest in real property in Australia
• an interest in a lease of land in Australia with a term of 50 years (or more), or
• a company title interest in land in Australia.
These tests apply for property interests in all States and Territories of Australia, regardless of whether the property was commercial property, an investment or owner-occupied and whether it was ever lived in.
They also apply to you whether or not any of the interests listed above have been held by you on your own or together with someone else – for example, where you held an interest in property with a former spouse or de facto partner.
Note that if either of you – whether individually or with someone else – have held any of the interests listed above, as a couple you are not eligible first home buyers.
For your home loan to be covered by the Scheme, you will need to make a statutory declaration that confirms you have not held any interests of this kind. This declaration is made under the First Home Buyer Declaration provided to you by your participating lender.
If you are unsure of whether or not you have held any of the interests listed above you should ask a professional adviser, as you will need to be sure that you are not giving a false declaration.
Citizenship test
The Scheme is only open to current Australian citizens.
The citizenship test for you being an ‘eligible first home buyer’ for the Scheme is that you will need to be an Australian citizen at the time you enter into a home loan with your participating lender.
If you are applying under the Scheme as part of a couple then you will both need to be Australian citizens.
The Scheme is not open for permanent residents who are not Australian citizens.
Minimum age
The Scheme is only open to persons that are 18 years of age or over.
The minimum age test requires you to be 18 years of age or over at the time you enter into a home loan with your participating lender.
Deposit requirement
There is a minimum deposit requirement for the Scheme.
The Scheme is to assist singles and couples (together) who have at least 5% of the value of an eligible property saved as a deposit. If you have 20% or more saved, then your home loan will not be covered by the Scheme.
Your Participating Lender will be able to tell you if you satisfy this requirement.
Owner occupier requirement
The Scheme is provided to assist Australians to purchase their first home.
Investment properties are not being supported by the Scheme.
To meet this requirement, you will need to:
• move into the property within 6 months from the date of settlement or, if later, the date an occupancy certificate is issued, and
• continue to live in that property for so long as your home loan has a guarantee under the Scheme.
If you don’t live in your property – including where you move out of the property at a later time – your home loan will cease to be guaranteed by the Scheme. In these circumstances there may be terms and conditions of your home loan that require you to take certain actions – including that you may be need to pay fees and charges and/or take out insurance that would not have otherwise applied if your home loan were participating under the Scheme.
Your participating lender will be able to explain these to you.
Which properties are eligible for the Scheme
For a property to be eligible for the scheme it must:
be a ‘residential property’ – this term has a particular meaning under the Scheme, and you should ask your lender if there is any doubt.
have a purchase price under the price cap for its location – click here to view the property price caps.
be purchased by an eligible first home buyer under the scheme.
at the settlement date for your home loan, you will be the sole registered owner/s of the property.
be a property which is (1) an established dwelling, or (2) a new-build dwelling that is purchased under a house and land package, a land and separate contract to build a home or an ‘off-the-plan’ arrangement that is financed under an Eligible Loan from a participating lender
The relevant dates and requirements for the different property types are set out in the table below.
Contract and settlement dates To be eligible for the Scheme:
• You must enter into your home loan on or after 1 January 2020
• the settlement date for your home loan must be on or after 1 January 2020, and
• the contract of sale and/or eligible building contracts may have specific requirements in terms of when they may be signed by you (as described in the relevant sections below).There are no exceptions from these required dates.
Purchase of existing dwelling Where you are purchasing an existing dwelling:
• you must move into the property within 6 months of settlement of your home loan, and
• the property must be purchased under a contract of sale that you sign on or after 1 January 2020.This category does not include ‘off-the-plan’ purchases, which are described below.
House and land package For house and land packages, prior to the settlement date for your home you will need to have entered into:
• a contract of sale for the land; and
• an eligible building contract to build your dwelling on that land (either as part of the contract of sale for the acquisition of the land or as a separate stand-alone contract),where both contracts are with the same person (or with 2 members of a corporate group) and they can have been signed by you at any time (including where you have signed them before 1 January 2020).
Land and separate contract to build a home Where you are acquiring land with a separate contract to build a home, prior to the settlement date for your home loan you must have:
• acquired the land under a contract of sale, and
• entered into an eligible building contract to build your dwelling on that land.In a land and separate contract to build scenario, these contracts are entered into with different persons and both must be signed on or after 1 January 2020.
‘Off-the-plan’ purchases Where you are making an ‘off-the-plan’ purchase:
• you must have entered into the contract of sale before the settlement date for your home loan, and
• the settlement date for your home loan must occur within 90 days that your home loan becomes guaranteed under the Scheme.
Eligible building contracts To be an eligible building contract under the Scheme, your building contract must:
• be with a licensed or registered builder
• specify a contract sum for all costs in respect of the construction of the dwelling, and
• require the builder to (1) commence construction within 26 weeks of the settlement date for your home loan, and (2) complete construction and procure the issuance of an occupancy certificate within 24 months of the settlement date for your home loan.‘Owner builder’ contracts are not eligible building contracts for the Scheme.
Which home loans are eligible for the Scheme?
Not all home loans are able to take the benefit of the Scheme.
The Scheme is restricted to ‘Eligible Loans’, which are home loans:
• made by a Participating Lender to (1) a single eligible first home buyer, or (2) a couple who are both eligible home buyers, and
• that are for the purchase of an Eligible Property that is to be occupied by you as the owner
In addition to these overarching eligibility requirements, the loans must:
be secured by a registered first ranking mortgage over the eligible property
have no other registered owners at the time of settlement other than the eligible borrower/s
have 100% of the loan drawdown proceeds used for the purchase (or towards the purchase and improvement) or construction of the eligible property
have a loan amount commitment not less than 80% and not more than 95% of the relevant Value of the property
have a loan term of 30 years or less
require regular principal and interest loan repayments.
Exception to this will be granted during the construction of a new dwelling, whereby lenders will be able to allow borrowers to make interest only repayments for the period in which the dwelling is being constructed until it can be occupied by the borrower.
allow for no changes to loan terms, such as increased limit
The loan may comprise more than one tranche, for example fixed and variable loan tranches.
If you are intending to construct a dwelling on vacant land, your home loan must finance both the acquisition of the land and construction of a dwelling. If you are intending to purchase land where a dwelling is not affixed and you are not also using your home loan to construct a dwelling, this your home loan is not eligible for the Scheme. You will need to contact your lender to clarify whether your home loan finances both the acquisition of land and
Property price thresholds
To ensure the Scheme is only available for the purchase of a modest home, or the purchase of land and construction of a modest home, the following property price thresholds (maximum property purchase price under the Scheme) will apply in capital cities, large regional centres and regional areas:
The capital city price caps will apply to large regional centres with a population over 250,000 (the Gold Coast, Newcastle and Lake Macquarie, the Sunshine Coast, Illawarra (Wollongong) and Geelong), recognising that dwellings in large regional centres tend to be significantly more expensive than other regional areas.
Search property price thresholds
NHFIC has developed a tool to help first home buyers find out the property price threshold for the suburb in which they are looking to purchase a property.
Simply enter the postcode or suburb of the property in the box below to display the relevant property price threshold.
How to apply
The First Home Loan Deposit Scheme started on 1 January 2020.
You can contact participating lenders for further details.
Lodge your application through participating lenders and their authorised representatives.
NHFIC will not accept applications directly and is not able to provide personal financial advice. First home buyers (and those advising a first home buyer) are encouraged to consult with a participating lender and seek their own independent financial and legal advice on how to structure their loan arrangements in a way that suits their own personal circumstances.
Participating Lenders
Following a competitive procurement process, NHFIC has appointed 27 lenders on the panel of residential mortgage lenders to offer guarantees under the Scheme.
Both National Australia Bank and Commonwealth Bank of Australia offered guaranteed loans from 1 January 2020.
The 25 non-major lenders will begin offering guaranteed loans from 1 February.
All participating lenders are supporting the Scheme by not charging eligible customers higher interest rates than equivalent customers outside the Scheme.
Lenders panel procurement
In October 2019, NHFIC commenced a procurement process to establish an initial panel of lenders to participate in the Scheme. NHFIC invited residential mortgage lenders to respond to a Request for Proposal (RFP), against which respondents were assessed for participation in the Scheme.
