Article up to date as of 29 June 2021
The eligibility requirements for the FHLDS (New Homes) are similar to the existing FHLDS that was originally announced in 2019. To be eligible for the FHLDS new home guarantee you will need to meet the following conditions:
You can apply for a place in the new home guarantee if you are a single applicant with a taxable income of no more than $125,000 per year or $200,000 for couples for the previous financial year. For example any applications made to the FHLDS (New Home Guarantee) up to 30 June 2022, the relevant financial year that will be assessed is FY2020-21. To apply for this scheme you will need to provide the relevant Notice of Assessment from the ATO for that previous financial year.
Joint applications will only be eligible for the FHLDS (New Homes) if they are a married couple or in a de-facto relationship. Other types of joint applications - siblings, parent/child, friends, ect - are not eligible.
To be eligible for the FHLDS (New home guarantee) scheme, you must be a genuine first home buyer, meaning that you have not previously owned, or had an interest in, any property in Australia. This includes any joint ownership, commercial property, investment property or company title properties.
All applicants must by Australian citizens who are at least 18 years to be eligible for the FHLDS (New Home Guarantee) Scheme.
The FHLDS (New home Guarantee) is specifically provided for first home buyers who intend to live in their home. This scheme is not eligible for investment properties and you will need to move into the property within six months of owning your home and continue to live in that property for so long as your home loan has a guarantee under the scheme.
The FHLDS (New Home Guarantee) is only available to first home buyers who have at least a 5% deposit. It is designed to help first time buyers enter the market quicker by reducing the need to save a full 20% deposit that is usually required. If you have saved a 20% deposit or more, this scheme will not apply to you as your home loan will not need to be covered.
How does the New Home Guarantee work?
This scheme works to allow eligible first home buyers who are looking to purchase or build a new home to apply for a home loan with a 5% deposit without paying lenders mortgage insurance (LMI).
The FHLDS (New Homes) is administered by the National Housing Finance and Investment Corporation (NHFIC). If you are successfully approved for a place in the new home guarantee the NHFIC will provide a guarantee to the participating lender of up to 15% of the value of the property that is being financed. This allows you, as a first home buyer, to get a home loan using a 5% deposit without incurring the costs of LMI.
It is of course important to understand that owning a home and purchasing a property with a mortgage involves more than the deposit. During the purchase process, extra costs may arise and home buyers will need to factor these into their budget. Extra costs may include pest and building, legal fees and more.
This is where expert advice comes in. Your local Mortgage Choice broker works in your best interest. They can help provide you with approximate costs when it comes to the overall purchase of your home and avoid the shock of any surprises costs later down the track. Read more here on the hidden costs of buying a home.
What Types of Properties are Eligible?
As this scheme is only available to first home buyers that are looking to build or purchase new built properties, there are certain property types that are eligible. However, for all eligible property types, to be eligible for the FHLDS (New Home Guarantee) you will need to enter a contract of sales and/or building contract prior to the expiry of your 90 day pre-approval.