Buying your first home is a dream many Australians share. However, coming up with a down payment can feel more like a nightmare. That is why the Australian government established the First Home Loan Deposit Scheme administered by National Housing Finance and Investment Corporation (NHFIC).
The goal of the First Home Loan Deposit Scheme is to help eligible Australians purchase homes sooner rather than later. Saving 20 per cent of the amount of your home loan is no easy task. However, many homebuyers will do just that so they can avoid paying lenders mortgage insurance. Saving that amount of money will keep first time home buyers from purchasing a home for years while they struggle to accumulate the 20 per cent for a down payment.
How Does This Help?
The deposit scheme guarantees 15 per cent of the property’s value to the lending institution. The first-time buyer needs to come up with five per cent for a down payment, an easier task than saving 20 per cent.
The criteria for eligibility in the scheme is straightforward:
- Australian citizen 18 years old or older
- A single applicant may not exceed a taxable income of $125,000 per annum for the previous financial year
- Couples who are applying may not exceed a combined taxable income of $200,000 per annum for the previous financial year
- Only married couples or those in a de facto relationship are eligible for the home loan. Siblings, friends, or a parent and child are ineligible to receive this loan
- Those applying for the loan must have five per cent saved for the down payment
- If applicants for the scheme have 20 per cent or more are not eligible to take part in the scheme
- Applicants must plan on living in the property. Those planning on purchasing a property for investment purposes are not eligible
- Applicants must be first-time homebuyers to be eligible
- Applicants who have previously owned or were part owners of a property in Australia are not qualified. This includes those applicants who owned residential strata
What Kind of Property Can I Buy?
For a property to be eligible for purchase with help from the scheme, it must be a residential property.
Some examples include:
- A house and land package
- An existing house, apartment, or townhouse
- A parcel of land and a separate contract to build a house
- An off the plan apartment or townhouse
Individual property types have different requirements and dates.
Other Frequently Asked Questions
How Do I Apply?
Applications go through participating lenders. Please do not send applications to NHFIC
How Many Schemes Are Available?
For the 2021-2022 financial year, 10,000 spots are available beginning July 1, 2021
Does the Scheme Have Costs Associated With It?
Homebuyers are responsible for covering all expenses and repayments for the home loan associated with the guarantee.
Is There a Waiting List Through NHFIC?
The National Housing Finance and Investment Corporation does not maintain waiting lists
Remember that not all mortgage products are the same if you choose to move forward with this or any other home loan scheme. Working with an experienced professional can save you untold stress. Feel free to contact Quantum Finance if you would like more information.
*Keep in mind that the material presented here is for informational use only. It should not take the place of a personal consultation with a knowledgeable financial expert.*