What is the First Home Loan Deposit Scheme (New Homes) and who can benefit?

You may have heard about the First Home Loan Deposit Scheme (New Homes) but want to understand if the scheme is right for you? In this article, we will look at how the First Home Loan Deposit Scheme (New Homes) works and who is eligible for a place in the Scheme.

 

What is the First Home Loan Deposit Scheme (New Homes)?

The First Home Loan Deposit Scheme (New Homes), (FHLDS (New Homes)), is an Australian Government initiative announced in the Federal Budget in October 2020. The purpose of the Scheme is to help first home buyers purchase or build a new home.

 

For the 2020-21 financial year, there are 10,000 Scheme places available for eligible first home buyers.

 

How does the FHLDS (New Homes) work?

The Scheme allows first home buyers to purchase or build a new home with as little as a 5% deposit - without the need for Lenders Mortgage Insurance (LMI).

 

Instead of having to pay LMI, eligible buyers can receive a place under the Scheme, and the National Housing Finance and Investment Corporation (NHFIC) provide a guarantee to the lender covering up to 15% of the property’s value. 

 

Let’s look at this in more detail through an example:

 

Jenny is looking to purchase her first property, a newly built apartment. The property’s purchase price is $500,000. Jenny has $25,000 saved, a 5% deposit. As she meets the eligibility criteria and was successful in receiving a Scheme place, NHFIC will guarantee her lender the remaining 15% (i.e. $75,000) of the required 20% deposit.

This enables the lender to lend Jenny 95% of the property price without the need for her to pay for Lenders Mortgage Insurance (LMI).

 

Note: Only a select number of lenders have been appointed by NHFIC to offer guaranteed loans under the FHLDS (New Homes).

 

 Who is eligible for the scheme?

There are strict criteria around who is eligible for a Scheme place. NHFIC have put together detailed information on who qualifies as well as information around the types of properties that are covered under the Scheme.

 

You can read more about the eligibility criteria for First Home Loan Deposit Scheme (New Homes) here.

 

Where can I learn more about the Scheme?

Gateway Bank is one of the selected lenders able to offer access to the First Home Loan Deposit Scheme (New Homes).

 

To learn more about the FHLDS (New Homes), visit our dedicated webpage where you can find out more about how to apply for your home loan and Scheme place through Gateway Bank.