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24 Feb

First Home Loan Deposit Scheme

The First Home Loan Deposit Scheme (FHLDS) is designed to help low to middle-income earners enter the property market. Previously, most banks required a minimum deposit of 20% of the property’s value. However, with the Government’s new deposit scheme, first time home buyers are allowed to pay a deposit of as little as 5%. This will help them buy a home sooner.

Initially, 10,000 Scheme places were released on 1 January 2020, and a further 10,000 will be available from 1 July 2020. The ability to secure a scheme place will be subject to eligibility criteria and availability.

How do I apply?

You will need to demonstrate your eligibility to The National Housing Finance and Investment Corporation (NHFIC). You will need your Notice of Assessment for your taxable income for the previous financial year. Once approved, you will be eligible for a home loan with a lender. The government will act as your guarantor, which means there is no need for the bank to take out insurance.

The major participating lenders include National Australia Bank and Commonwealth Bank of Australia. Both have offered guaranteed loans since 1 January 2020. The non-major lenders available from 1 February 2020 include Bendigo Bank, Credit Union Australia, Auswide Bank, UniBank and more.


NHFIC has developed a tool to help first home buyers check their eligibility. You can find this tool on their website. The key eligibility checks include the following:

An income test

The Scheme is available to individuals who earn up to $125,000 per year, and couples with the combined earnings of up to $200,000. Couples are only eligible for the Scheme if they are married or in a de-facto relationship. To be eligible, first home buyers must show that they have saved at least 5% of the property value prior to purchasing.

A prior property ownership test

The Scheme is only available for genuine first home buyers. You cannot have previously 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 minimum age test

The Scheme is only open to current Australian citizens who are 18 years of age or over.

A deposit requirement test

Applicants must hold a deposit of at least 5% but no more than 20% of the property’s value.

An owner-occupier requirement

To meet the owner-occupier requirement, you will need to move into the property within 6 months from the date of settlement. You have to continue to live in that property for as long as your home loan has a guarantee under the Scheme.

The property price threshold

The Scheme is not available for all properties. The Scheme will only underwrite loans for ‘entry level properties’. This means that it excludes high-value properties. Price caps are determined relative to the property’s local market. For Queensland, the price cap for the capital city and regional centres is $475,000 and $400,000 for the rest of the state.

If you are looking to buy a house on the Gold Coast, read our 9 Tips On Buying A Property.


The Scheme can also be used alongside the Government’s First Home Super Saver Scheme. You will be able to put your superannuation contributions made to your super fund towards a deposit on your property. The limit you can withdraw is $30,000 for singles and $60,000 for couples. Unlike the First Home Owner’s Grant which only applies to newly built homes, the First Home Loan Deposit Scheme is available for existing homes, an off-the-plan home, vacant land, or a house and land package.


Although the Scheme allows you to get a home loan sooner, taking out a loan with a smaller deposit will mean that you will be paying more interest in total. Those with a higher loan to value ratio may find it harder to refinance in the future. It may also limit the lenders that are available and you’ll miss out on more competitive rates.

The Scheme only supports a certain number of home buyers nationally. This means that even if you are eligible, you might not be granted the Scheme.

If you are unclear about the Scheme and are looking for experienced Property Lawyers , ABKJ can offer assistance. To make an enquiry, please use the contact page or call us on 07 5532 3199.

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