What is the First home deposit scheme and how to get a spot!

The federal government has launched an initiative to help first home buyers enter the property market. The scheme effectively has the government acting as the guarantor for the first home buyers. They do this by allowing a 5% deposit without LMI (lenders mortgage insurance), hereby ensuring they will pay the difference should the need arise.

Since 1 January, the banks have registered 3,000 potential first home buyers under the First Home Loan Deposit Scheme.

7,000 Scheme places are currently remaining and were released on 1 February 2020.

By the 10th February, the majority of these places were filled and the government subsequently announced that on 1 July 2020, an additional 10,000 5% First Home Loan Deposits schemes will be released.

We have developed helpful reading material below to help you learn more about the scheme and becoming a Home Owner for the first time.

Main Points

Start Date: 1 January 2020

Eligibility: Singles earning < $125,000 & Couples < $200,000

Minimum Deposit Required: 5%

Property Price Cap: Dependent on the region & the state (see table below)

Administering Body: (NHFIC)

What is the First Home Loan Deposit Scheme?

The government’s scheme is designed to allow easier and faster access to the property market for first home buyers. The scheme will do this by allowing first-time buyers to pay a deposit as little as 5% while avoiding lenders mortgage insurance (LMI). Most banks and lenders require a minimum deposit of 20% of the property’s value for the borrower to be exempt from LMI. The scheme allows first home buyers who can’t reach this threshold to take out a loan if they have saved at least 5% of the value of the property they are buying. The government will underwrite the loan so that borrowers do not have to pay LMI.

How does it work?

You will need to apply and demonstrate your eligibility, this can be done through NHFIC. If you are approved, you can then take out a home loan with a lender (who is approved for the scheme) and the government will act as your guarantor. Although your lender will still do their normal checks, you will be treated similar to clients who have saved 20%.

Benefits?

• LMI is expensive! Avoiding this is a HUGE benefit to you!
• Your rate may be better also! (check with your lender however your lender is likely to treat you as having a 20% deposit)
• Works with First home owners grant
• Works with First home super saver scheme

Cons?

• Only 10,000 spots are available from 01 January 2020 - 30 June 2020. 10,000 more from 01 July 2020
• A limited number of approved lenders*
• You may lose your spot if you don't buy within 100 days*
• If you change your situation you may have to pay back the LMI!*

*Check with your Topbroker!

How do I apply?

Contact us at www.topbrokers.com.au and fill in your details. Alternatively, enter your postcode or suburb and we will highlight the 10 Top brokers servicing your area.

Property values maximum per region

State/territory	Capital city and regional centres	Rest of state
NSW	$700,000	$450,000
VIC	$600,000	$375,000
QLD	$475,000	$400,000
WA	$400,000	$300,000
SA	$400,000	$250,000
TAS	$400,000	$300,000
ACT	$500,000	-
NT	$375,000	-