Australian government helps homebuyers acquire their first property

How the Australian Government Helps Homebuyers Acquire Their First Property With the FHLDS

The Australian government’s First Home Loan Deposit Scheme (FHLDS) released another 10,000 places on 1 July 2021, giving people who are purchasing a home for the first time a real chance at purchasing a property, even if they wouldn’t be able to do so with their current income and lender’s rates.

10,000 First Home Loan Deposit Scheme places will be available to eligible first home buyers from 1 July 2021 to 30 June 2022.

If you are interested in purchasing your first home under the First Home Loan Deposit Scheme, but are wondering just what the Scheme entails, and whether you’re eligible for it to begin with, please read on.

How the First Home Loan Deposit Scheme works

The First Home Loan Deposit Scheme is an initiative by the Australian government to support first-time buyers in purchasing a property sooner than they might have been able to otherwise.

Should people interested in purchasing their first home not have a deposit of at least 20% of the property’s value saved up, they would normally be obliged to pay lenders mortgage insurance. Lenders mortgage insurance, or LMI for short, refers to a one-off, non-transferable and non-refundable premium that is added to a home loan. The less a prospective buyer is able to put down as a deposit on the property, the more this amount will be, as it is calculated based on the amount that a buyer borrows, as well as the deposit that they have at hand.

Under the FHLDS, eligible first home buyers can purchase a property with as little as 5% deposit, as 15% of the value of the purchased property that is financed by the buyer’s home loan will be guaranteed by the National Housing Finance and Investment Corporation (NHFIC), bringing the deposit amount to 20%.

A number of Australian lenders participate in the FHLDS. Major bank lenders include National Australia Bank (NAB) and the Commonwealth Bank of Australia (CommBank), while the participating non-major lenders are the Australian Military Bank, Auswide Bank, Bank Australia, Bank First, the Bank of Heritage Isle, Bank of us, Bendigo Bank, Beyond Bank Australia, Border Bank, Community First Credit Union, Credit Union Australia, Defence Bank, Endeavour Mutual Bank, Firefighters Mutual Bank, Gateway Bank, G&C Mutual Bank, Health Professionals Bank, Indigenous Business Australia, Mortgageport, MyState Bank, People’s Choice Credit Union, Police Bank, P&N Bank, Queensland Country Bank, Sydney Mutual Bank, Teachers Mutual Bank, The Mutual Bank, UniBank, and WAW Credit Union.

As per agreement under the Scheme, participating lenders do not charge eligible customers higher interest rates than equivalent customers who do not take advantage of the Scheme.

First-time buyers interested in applying for the First Home Loan Deposit Scheme approach lenders directly in this regard, as the NHFIC does not accept applications directly from buyers.

Interested parties can apply for the Scheme as a single individual (in which case their taxable income for the previous financial year may not have exceeded $125,000) or as a couple with their spouse or de facto partner (in which case the couple’s combined income may not have exceeded $200,000 in the previous financial year).

Other eligibility tests for the FHLDS include:

  • A prior ownership test (applicants may not ever have owned a freehold interest in real property in Australia, an interest in a lease of land in Australia with a term of 50 years or more, or a company title interest in land in Australia),
  • A citizen test (as the Scheme is only open to Australian citizens),
  • A deposit requirement in general savings of no less than 5%, but no more than 20% of the value of the property that is to be purchased, and
  • A minimum age test, as applicants must be 18 years and older.

In addition, applicants will also be subject to an owner occupier requirement, under which the applicant will need to move into the property within six months of the date of settlement, and continue to live in said property for so long as the home loan has a guarantee under the Scheme.

According to the specifications under the First Home Loan Deposit Scheme, the property a buyer is interested in purchasing should be a residential property with a purchase price and value under the price caps set for its location.

According to the government’s latest announcement regarding the additional 10,000 available applications, homes that are now being purchased under the FHLDS will need to newly constructed dwellings (a freestanding house, townhouse or apartment), off-the-plan dwellings (freestanding houses, townhouses or apartments), house and land packages, or land and a separate contract to build a new home. While the New Home Guarantee means that the FHLDS will not pay for existing properties anymore, this decision was made to give the Australian construction sector a boost.

The latest regulations of the First Home Loan Deposit Scheme also provides revised price caps for different regions in Australia:

  • New South Wales (Capital City and Regional Centre): $950,000
  • New South Wales (Other): $600,000
  • Victoria (Capital City and Regional Centre): $850,000
  • Victoria (Other): $550,000
  • Queensland (Capital City and Regional Centre): $650,000
  • Queensland (Other): $500,000
  • Western Australia (Capital City): $550,000
  • Western Australia (Other): $400,000
  • South Australia (Capital City): $550,000
  • South Australia (Other): $400,000
  • Tasmania (Capital City): $550,000
  • Tasmania (Other): $400,000
  • Australian Capital Territory: $600,000
  • Northern Territory: $550,000
  • Jarvis Bay Territory & Norfolk Island: $600,000
  • Christmas Island & Cocos (Keeling Island): $400,000

The value of the property an applicant is interested in purchasing may not exceed the price cap for the region.

First home buyers who signed a contract before the end of 2020, where building commenced within three months of the contract being signed, were also able to secure an additional cash grant of $25,000 under the government’s HomeBuilder scheme. For the $15,000 grant first home buyer had to enter into a contract on or after 1 January 2021 up to and including 31 March 2021.

Should you apply for the First Home Loan Deposit Scheme?

Despite the fact that the coronavirus is still very much among us, the Australian property market has certainly shown a great bounce back. Add to that the fact that the interest rates on mortgages are at record-lows, with the lowest variable rate – just 1.89% – available from non-bank lender, Reduce Home Loans, it looks like the odds are in buyers’ favour, whether they are thinking of applying for the FHLDS or not.

The First Home Loan Deposit Scheme is definitely a useful tool in the arsenal of prospective homebuyers, but it is important to mention that this depends on the cash a buyer has available for the deposit and other costs, as well as on whether their job prospects are looking stable for the foreseeable future.

Speaking to a real estate agent that is qualified and experienced, while also knowing all the ins and outs of the FHLDS, is the best way to ascertain whether you are in the right financial space to purchase a property.

Real estate agents understand the exact requirements and rules related to purchasing real estate, and will also be able to point you to a lender that can offer you the best possible deal under the First Home Loan Deposit Scheme.

Do I really need a real estate agent to help me find a property?

Experienced real estate agents understand the ebb and flow of the property market in which they conduct their business. They have access to a large database of potential properties, and can also provide invaluable advice about trustworthy contractors and tradies that can help to construct the perfect new home according to the guidelines set out as a part of the New Home Guarantee of the FHLDS.


The Australian government’s First Home Loan Deposit Scheme has been expanded to allow for an additional 10,000 applicants. The New Home Guarantee aims to support the Australian economy by only letting the additional 10,000 applicants secure funding for a new property – this, in turn, supports the local building industry.

The FHLDS is a great way for first-time homebuyers to acquire a property sooner than they might have otherwise. Provided they adhere to the eligibility requirements of the FHLDS, buyers may be able to snap up moderately priced properties, even if they have a deposit of only 5% saved up. With that being said, interested applicants do need to make sure they have job security and at least some savings before applying, as this is crucial to being able to keep up with the property’s mortgage and to cover additional costs associated with the sale of the property.

Whether you are buying or selling property, a good real estate agent is simply indispensable. Not sure where to start looking? Perfect Agent recommends real estate agents according to your specific needs.