First Home Loan Deposit Scheme (FHLDS) | Perth CBD
Saving up a deposit to buy your first home can be daunting and overwhelming. But the Government’s First Home Loan Deposit Scheme is helping Australians buy their first home with as little as 5% deposit!
What is the First Home Loan Deposit Scheme?
The First Home Loan Deposit Scheme (or FHLDS) is a recent initiative from the Federal Government that was created to help first home buyers purchase property more easily and quickly. This year, this initiative was extended with an additional 10,000 places available until 30 June 2022.
The FHLDS allows first home buyers to secure a home loan to purchase or build a new home or buy an established property with as little as 5% deposit. As the government acts as the security guarantor for your home loan, Lenders Mortgage Insurance (LMI) is not required. This is a huge advantage as it allows for such great savings and a fast-tracked way to buy your first home without having to wait to save up a hefty deposit.
Better yet, the FHLDS can also potentially be combined with other first home buyer assistance initiatives, such as the First Home Owners Grant, First Home Super Saver Scheme and stamp duty concessions. So it’s a great time to be a first home buyer and find out what options you may be eligible for.
Our team at Mortgage Choice in Perth CBD have helped several clients apply for the First Home Loan Deposit Scheme and buy their first home sooner. So we understand all the requirements and can offer expert advice on applying for and securing the FHLDS. We’ll guide you through the entire process from start to settlement so you can trust your finances are in good hands.
Contact us today if you’d like to find out more about the First Home Loan Deposit Scheme and if you’re eligible.
How does the First Home Loan Deposit Scheme work?
The First Home Loan Deposit Scheme is available through a select group of lenders, so firstly our brokers will check your eligibility and then apply for the scheme on your behalf with your most suitable lender.
If you are approved for the scheme, you will take out a home loan with the lender and the government will act as your guarantor on the loan. However, your lender still does the standard assessment of your financial situation to ensure you can afford the loan, but this scheme makes it easier to get a home loan by not requiring you to have saved a 20% deposit.
Typically, if a lender is willing to approve a loan with a deposit of less than 20%, the borrower is required to pay lenders’ mortgage insurance (LMI). This is a type of insurance that the lender requires to cover the risk of the borrower not being able to repay the mortgage. But with the FHLDS, since the government is acting as guarantor on the loan, the bank doesn’t require lenders' mortgage insurance to be paid.
LMI can often be pretty pricey, depending on how much deposit you have, the loan size and the lender terms. So being able to avoid this LMI cost is a great advantage for first home buyers!
If you secure a loan under the FHLDS, the government will act as guarantor until your loan’s balance is paid down to below 80% of the property’s value at purchase. But if you were to refinance your home loan, sell or move out of your home, then you will no longer be eligible anymore to receive this government support.
Who is eligible for the First Home Loan Deposit Scheme?
We take a look at the basic requirements of the FHLDS and the criteria you need to meet to be eligible;
- Income test: Singles with a taxable income less than $125,000, couples less than $200,000 for the previous financial year. Please note to apply for a place in this scheme from 1 July 2021 to 30 June 2022, you will need to provide the relevant Notice of Assessment from the ATO for the previous financial year.
- Joint applications: Couples are only allowed to apply if they are married or in a de-facto relationship. Other joint applicants (siblings, friends, parent/child, ect) are not eligible.
- Prior Ownership: You must provide proof you have never owned or held interest in property in Australia before. This includes commercial property, investment or company title properties.
- Citizenship: All applicants must be Australian Citizens, aged 18 years or over.
- Owner Occupied: You 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.
Minimum Deposit Required: 5%
Property Price Cap: This is dependent on the region and property type. In Perth metro area, it is $500,000 when purchasing an established property, and $550,000 when purchasing or building a new home.
We can also help you secure other grants and incentives
As a first home buyer, there are other grants and incentives up for grabs right now that you can take advantage of. As your broker, we’ll make sure that you don’t miss out on any incentives or cash grants that you’re eligible for, including;
- The $10,000 First Home Owners Grant
- Stamp duty concessions
- First Home Super Saver Scheme
- The latest HomeBuilder $25,000 cash grant
- WA's Building Bonus $20,000 cash grant
With so many incentives and grants on offer, there’s never been a better time to be a first home buyer!
Book an appointment with our team at Mortgage Choice in Perth CBD to find out what you're eligible for.
Other ways you can buy your first home sooner
If the First Home Loan Deposit Scheme isn’t an option for you, don’t worry. There are other ways you can achieve the milestone of buying your first home, such as using a guarantor or rentvesting for instance.
So it’s always worth having a chat with a mortgage broker to find out your options and put some plans or strategies in place to help you reach your goal.
Our team at Mortgage Choice in Perth CBD will take the time to understand your financial situation and goals, and help find a solution that works best for you to help you buy your first home.
Other helpful first home buyer resources you might find useful
- Read: What is a Guarantor?
- How our team can help First Home Buyers
- Try our online home loan calculators to work out how much you can borrow
Download our Free First Home Buyers Guide for everything you need to know!