What is the First Home Deposit Scheme?
The First Home Loan Deposit Scheme (FHLDS) is an Australian Government initiative to support eligible first home buyers purchase their first home sooner. The Scheme is administered by the National Housing Finance and Investment Corporation (NHFIC). Usually first home buyers with less than a 20 per cent deposit need to pay lenders mortgage insurance. Under FHLDS, eligible first home buyers can purchase a modest home with a deposit of as little as 5 per cent (lenders criteria apply). This is because NHFIC guarantees to a participating lender up to 15 percent of the value of the property purchased that is financed by an eligible first home buyer’s home loan.
How does the Scheme Work?
Eligible first home buyers are able to apply for the First Home Deposit Scheme and an eligible loan to purchase an eligible property through a participating lender. FHLDS supports up to 10,000 guaranteed loans per financial year. Eligible borrowers can use the guarantee in conjunction with other government programs like the First Home Super Saver Scheme, Home Builder grant or state and territory first home owner grants and stamp duty concessions. The guarantee is not a cash payment or a deposit for your home loan. FHLD Scheme
There are still places available to apply for The First Home Deposit Scheme so speaking with a mortgae broker who understands the First Home Deposit Scheme is an important start to your process.
Other benefits for First Home Buyers
When you apply the First Home Deposit scheme to other first home buyer benefits you will be able to save thousands on your first home, setting you up for a great start in life.
The stamp duty exemption for first home buyers means that currently up to purchases of $650,000 first home buyers pay zero stamp duty. From July 1, 2023 this will increase to $800,000.
Also included in first home buyer incentives is the First Home Owners Grant for those who decide to build their first home. When you apply the First home Deposit scheme, plus zero stamp duty, you can also add another $10,000 savings as the Gov’t will pay this to you to go towards your construction.
When and how to start
The timing and processes associated with claiming any or all of your entitlements can be tricky to navigate. Sometimes lenders you may have a preference for do not offer the schemes or you are unsure about the process of contruction loans so it’s always a good start to reach out to a broker who is recommended by a friend.
Initially they will work out your borrowing capacity, this will tell you your maximum borrowing amount. Combined with an understanding of how much cash you have to contribute, your broker will help you work out your maximum purchase price, whether for a stand alone home, or a land and construction loan (and how all of that works around single contracts, dual contracts, off the plan, finance on completion etc).
Once you understand your maximum purchase amount you can work out whether you’re buying an established home, or whether you will build and your broker will help you work towards an outcome by getting a pre-approval so you have confidence to begin the process.
The timing of things is always confusing so having access to a person who can talk you through each step will take a good deal of stress away. Especially if you only have a 5% deposit and you need a depost bond for 10%.
Westlend Home Loans have found a number of new home owners a place in the First Home Deposit Scheme and have been able to take them through the process step by step. We have taken many people through the construction process involving First Home Owners Grants and stamp duty exemptions.
Call us for a free consultation today.