Last Updated: 20th July, 2021

First Home Loan Deposit Scheme: 10,000 New Places Added

Published by Otto Dargan on October 7, 2020

The federal government added another 10,000 new places under the First Home Loan Deposit Scheme for new homes also known as the New Home Guarantee for first home buyers looking to purchase a new home or a newly built home.

Also known as the FHLDS New Home Guarantee, eligible first home buyers can reserve one of the scheme places starting from 6 October 2020.

Under the scheme, first home buyers can buy a modest home with a deposit as low as 5% without paying Lenders Mortgage Insurance.

This will save eligible first home buyers tens of thousands of dollars in LMI fees.

So far, 20,000 scheme places have already been snapped up by first home buyers. However, considering the number of first home buyers in any given year, these scheme places are expected to be snapped up very quickly as well.

What is a ‘new home’ under the FHLDS New Home Guarantee?

Eligible ‘new homes’ under the FHLDS New Home Guarantee include:

  • newly constructed dwellings (e.g. whether a freestanding house, townhouse or apartment)
  • off-the-plan dwellings (e.g. whether a freestanding house, townhouse or apartment)
  • house and land packages
  • land and a separate contract to build a new home.

To be eligible, the borrower purchasing the newly built dwelling must be a first home buyer.

Price cap increased for new homes under the FHLDS New Home Guarantee

The price caps for new properties that first home buyers can purchase has also been increased throughout the capital cities and regional areas under the scheme.

It’s worth pointing out that the price cap for existing or established properties remains the same.

Nonetheless, this is a significant win for first home buyers looking to buy new homes. Because the previous lower price cap meant many buyers were not able to buy the property that they wanted to be eligible under the scheme.

Price cap for new homes under the extended First Home Loan Deposit Scheme

State/Territory Capital City/ Regional Centres Rest of State
NSW $950,000 $600,000
VIC $850,000 $550,000
QLD $650,000 $500,000
WA $550,000 $400,000
SA $550,000 $400,000
TAS $550,000 $400,000
ACT $600,000 NA
NT $550,000 NA

Source: Federal government

The NHFIC has announced that they’ll be releasing further information towards the end of the week – 9 October 2020.

The capital city price caps also apply to large regional centres with a population over 250,000. This includes the Gold Coast, Newcastle and Lake Macquarie, the Sunshine Coast, Illawarra (Wollongong) and Geelong, given that property prices in large regional centres tend to be significantly more expensive than other regional areas.

Can you use the scheme with the $25,000 HomeBuilder Grant?

Yes, if you’re looking to build as a first home buyer, you may also be eligible for the $25,000 HomeBuilder Grant. The grant is available to all who sign a contract before 31 December 2020.

The grant can also be used with other federal and state grants such as the First Home Owners Grant (FHOG) and territorial or state stamp duty concessions/exemptions.

These schemes and grants represent an unprecedented level of Government support for home buyers and the construction industry alike.

Limited number of slots

Before the announcement, most participating lenders were not accepting any further applications as all the places had already been snapped up by first home buyers in record time.

Similarly, we expect that these new scheme places will also be quickly snapped up within the next couple of months.

The major particiapting lenders have started accepting new requests from eligible first home buyers purchasing new homes to join the FHLDS: New Home Guarantee waitlist.

Get your tax return done soon!

Apart from checking their eligibility, first home buyers wanting to apply for the scheme need to get their tax returns done quickly.

The FHLDS was amended so that borrowers need to provide their Notice Of Assessment (tax return) from the ATO starting from 1 July 2020.

The problem with this is that most people don’t lodge their tax return right away. For most people, the deadline is 31 October 2020. For people using an accountant or tax agent, the deadline varies but can be as late as 15 May 2021.

In other words, if you are quick to lodge your tax return, then you can get in before everyone else and secure one of the limited spots in the scheme.

Reserve your scheme place today

Did you know mortgage brokers reserved half of all scheme places?

Don’t miss out on the scheme this time. Reserve your scheme place today!

Talk to one of our specialist mortgage brokers by giving us a call on 1300 889 743 or by filling in our online assessment form to reserve your scheme place today.