Buying your first home is a significant life event. Chances are you’ve been saving carefully for the deposit over a number of years while looking for the perfect place to call home. If you were to purchase a home today, you’d most likely need to have 20% of the property’s value saved as a deposit to secure a home loan. From January 1, 2020, things may get a little easier if you’re one of 10,000 borrowers eligible for the First Home Loan Deposit Scheme.
The Commonwealth government has allocated $500 million in the form of equity to the National Housing Finance and Investment Corporation (NHFIC). The aim is to make housing more affordable, and the pathway to first home ownership more achievable and faster. But what exactly is the First Home Loan Deposit Scheme, and what does it mean for you?
What is the First Home Loan Deposit Scheme?
Simply put, the First Home Loan Deposit Scheme will assist an eligible first home buyer to purchase a house with a 5% deposit. The government will provide a loan guarantee of up to 15% of the property’s value to individuals earning up to $125,000, or couples earning up to $200,000, per year. The scheme could also save you up to $10,000 in lenders mortgage insurance.
Eligibility for the Scheme will also depend on where you live. In a media release dated 27 October 2019, the government announced, “Property price caps under the Scheme set appropriate price thresholds in capital cities, large regional centres with a population over 250,000 and regional areas.”
These thresholds are listed below:
|
State/territory |
Capital city and large regional centres |
Rest of state |
|
NSW |
$700,000 |
$450,000 |
|
VIC |
$600,000 |
$375,000 |
|
QLD |
$475,000 |
$400,000 |
|
WA |
$400,000 |
$300,000 |
|
SA |
$400,000 |
$250,000 |
|
TAS |
$400,000 |
$300,000 |
|
ACT |
$500,000 |
- |
|
NT |
$375,000 |
- |
The Government explained why higher caps will apply in some regional centres: “The capital city price caps will apply to large regional centres with a population in excess of 250,000, namely the Gold Coast, Newcastle and Lake Macquarie, the Sunshine Coast, Illawarra (Wollongong) and Geelong, recognising that dwellings in large regional centres tend to be significantly more expensive than other regional areas.”
What does it mean for you?
If you’re an eligible first home buyer, you’ll only need a 5% deposit to apply for a home loan. The additional 15% will be provided by the NHFIC, and administered by an approved lender.
Applications for the Scheme are expected to open on January 1 2020. The NHFIC will be providing further details about the Scheme, including information about:
- eligibility
- participating financial institutions, and
- the application and assessment process.2
It’ll also be consulting with relevant parties in the lead up to the Scheme’s commencement. To stay up to date, you could consider following the NHFIC on LinkedIn and Twitter.
Source:https://www.suncorp.com.au/learn-about/buying-a-home/first-home-loan-deposit-scheme.html