How to buy your first home through the First Home Loan Deposit Scheme

Saving for your first home deposit can be challenging, likely taking years of scrimping and cutting back.

16 June 2021

Saving for your first home deposit can be challenging, likely taking years of scrimping and cutting back.

The good news?

The federal government’s First Home Loan Deposit Scheme (FHLDS) can help you get the keys to a property faster.

Here’s what you need to know about buying your first home through the FHLDS.

What’s the FHLDS?

Usually, you have to save a deposit of at least 20% of a property’s value to avoid paying lender’s mortgage insurance (LMI). LMI is a one-off insurance premium that protects the lender should you subsequently default on the loan – and it can add thousands of dollars to your costs.

But using the FHLDS, eligible first home buyers can buy a home with as little as a 5% deposit without paying LMI. This is because the federal government guarantees the shortfall between what you’ve saved and the 20% deposit threshold.

How many FHLDS places are there?

During the 2021-22 financial year, there are 20,000 spots available, made up of:

  • 10,000 places for existing homes
  • 10,000 places for new homes under the New Home Guarantee

Are you eligible?

To be eligible for the scheme you must meet certain criteria including:

  • Being an Australian citizen of at least 18 years old who has never have owned property previously in Australia, whether as an owner-occupier or investor
  • Earning an income of up to $125,000 per annum (singles) or $200,000 per annum (couples) – based on the previous financial year’s taxable income

On top of that, there are property price caps depending on where you live. In Tasmania, the maximum purchase price is:

  • In Hobart – $400,000 (existing home) or $550,000 (new home)
  • Elsewhere – $300,000 (existing home) or $400,000 (new home)

How do you apply?

You can apply for a FHLDS spot by approaching a participating lender directly or through a credit adviser like Vie Financial.

Keep in mind, however, that each of the 27 lenders participating in the scheme has its own lending criteria in addition to the FHLDS requirements. These criteria will include income and expenses requirements as well as having a good credit history.

If you don’t meet these criteria, you’ll likely get rejected on your loan application. Rejections can damage your credit score, making it more difficult to get approved for credit in the future.

However, a good credit adviser will know which lender you’ll likely qualify for – saving your credit score in the process.

Want to get on the property ladder? Vie Financial can help. Contact us by calling 1300 400 843 or filling in this enquiry form.