The First Home Loan Deposit Scheme – How it works?

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The First Home Loan Deposit Scheme aims to help up to 10,000 eligible first home buyers on low and middle incomes to get into the property market sooner by requiring only a 5% deposit.  The government has agreed to guarantee the difference between the borrower’s 5% deposit and the standard 20% deposit required to take out a home loan without paying LMI.

The initial 10,000 places was made available on the 1st of January 2020.  Twenty-seven lenders have been appointed to the initial panel of the government’s First Home Loan Deposit Scheme.  Of the 10,000 places, 5,000 will be made available through the two major lenders, currently CBA and NAB, and 5,000 will be made available through the 25 non-major lenders appointed to the panel.

The Treasurer recently announced the 2021 Federal Budget which included a range of measures aimed at driving job creation, economic growth, helping more Australians purchase a home, increasing female workforce participation and putting more money into individuals’ and business owners’ pockets.

Here are a few initiatives from the Budget that you might be able to take advantage of:

  • The First Home Loan Deposit Scheme will be made available to an additional 10,000 first-home buyers, so you can buy a home with a deposit of only 5% if eligible.
  • An additional 10,000 places in the New Home Guarantee scheme will also be available to help first-home owners build or purchase a new home with a deposit as low as 5%.


What’s in this guide?

How does it work?

Who is eligible?

How to apply?

Which lenders are participating in the Scheme?

How does it work?

If you’ve saved 5% of the purchase price of the property, the government will guarantee the remaining 15% of the deposit. You will still need to borrow 95% of the purchase price but you don’t pay LMI. To be eligible, the purpose of the loan has to be owner occupied and the mode of repayment is principal and interest. 


John and Mary are both first home buyers looking at purchasing an established house for $600,000 in Melbourne, Victoria. Their combined income is $150,000. They have $30,000 in genuine savings to be used for the deposit. The loan mortgage insurance premium with CBA if they borrow up to 95% of $600,000 is $24,804.  They are both eligible for the first home loan deposit scheme, thus the LMI is waived.  With just the 5% deposit of $30,000, John and Mary can purchase their first home.

Who is eligible?

  1. Applicants must be first home buyers (if you owned an investment property, you are not eligible)
  2. Purpose of the purchase has to be owner occupied
  3. Applicants must be Australian citizens (permanent residents are not qualified)
  4. Applicants must be 18 years of age and above
  5. Income for a solo first home buyers must not exceed $125,000
  6. Income for a couple, both first home buyers, must not exceed $200,000 combined
  7. Couples can be married or in a de facto relationship. Friends or siblings borrowing together cannot qualify for this scheme. 
  8. There are property price caps depending on which state or territory you are buying and if property is located in the city or in a regional centre. You can work out the property price cap using the NHFIC’s online tool.

How to apply?

  1. Check your eligibility. To find out if you are eligible, visit the NHFIC’s Scheme eligibility tool.
  2. Speak to a participating lender or to a broker and get a conditional approval in place. A list of the different lenders participating in the Scheme can be found here.  NHFIC will not accept applications directly and is not able to provide personal financial advice.
  3. Purchase a property that meets the conditions of the scheme within 90 days. The NHFIC’s Property Price Threshold can be found here
  4. Move into your new home within 90 days of settlement

Which lenders are participating in the Scheme?

NAB and CBA will be making the Scheme available from January 1, 2020 and the other lenders will make it available from February 1, 2020. The participating lenders will have the ability to write loans for first home buyers (FHBs) who have saved deposits with as little as 5%, with the government set to guarantee the rest of the deposit under the FHLDS.

The full list of lenders on the panel, along with NAB and CBA, are as follows:

    • Australian Military Bank
    • Auswide Bank
    • Bank Australia
    • Bank First
    • Bank of us
    • Bendigo Bank
    • Beyond Bank Australia
    • Community First Credit Union
    • CUA
    • Defence Bank
    • Gateway Bank
    • G&C Mutual Bank
    • Indigenous Business Australia
    • Mortgageport
    • MyState Bank
    • People’s Choice Credit Union
    • Police Bank (including the Border Bank and Bank of Heritage Isle)
    • P&N Bank
    • QBANK
    • Queensland Country Credit Union
    • Regional Australia Bank
    • Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank)
    • Teachers Mutual Bank Ltd (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank)
    • The Mutual Bank
    • WAW Credit Union 

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