2020 First Home Loan Deposit Scheme
Overview
The First Home Loan Deposit Scheme is an initiative launched by the Australian Federal Government with the purpose of assisting people in entering the property market easier. The scheme allows first home buyers to purchase a property with just a 5% deposit without need to pay lenders mortgage insurance (LMI). Generally, most banks and lenders require a minimum deposit of 20% of the property’s total value to be exempt from LMI. The scheme will begin on the 1st January 2020.
EXAMPLE
THE LMI FOR A $600,000 PROPERTY PURCHASE WOULD USUALLY BE $18,262, BUT IF YOU WERE TO DEPOSIT $120,000 OR MORE, YOU ARE NOT REQUIRED TO PAY IT.
(TERMS AND CONDITIONS MAY APPLY)
The scheme is most suitable to first home buyers that have saved up at least 5% but not enough to cover 20% of the property they wish to purchase, to which the government will underwrite the loan.
Eligibility and key things to take into consideration
One of the requirements to be eligible is that the offer is only open to individuals who are earning up to $125,000 per year and for couples a combined amount of up to $200,000.
You will still need to demonstrate your ability to service the loan and fit into the eligibility requirements (NEXT SECTION).
The scheme is capped to 10,000 homebuyers per year.
Different regions of Australia will have varying price caps for eligibility.
The scheme can be used in conjunction with the Home Super Saver Scheme. This scheme allows the buyer to withdraw portions of their voluntary superannuation contribution. LEARN MORE
If the home is refinanced, you will no longer be eligible and at the time of refinance if more that 80% of the property value is still owed, you may be required to pay the lenders mortgage insurance fee.
For a more detailed eligibility criteria refer to NHFIC’s official website.
“We want to help make the dreams of first-home buyers a reality”
— PRIME MINISTER SCOTT MORRISON 2019
How to apply for the scheme?
You must lodge an application through the National Housing Finance and Investment Corporation (NHFIC). Click here to be taken to the NHFIC website.