First Home Loan Deposit Scheme 2022: Explained

What Is the First Home Guarantee?

The First Home Guarantee (previously known as the First Home Loan Deposit Scheme) allows first-home buyers with deposits as low as 5% to qualify for a home loan without paying Lenders Mortgage Insurance (LMI) fees.

Essentially, the government will act as the mortgage insurer; for example, if a borrower provides a deposit worth 5% of the property value, the government guarantees 15% of the property value, making the risk to the lender the same as if the borrower provided a 20% deposit.

Based on the maximum regional price cap under the scheme, first home buyers can save anywhere between $10,000 and $30,000 in LMI fees.

10,000 Scheme places have been made available from 1 July 2021 for the 2021-2022 financial year.

50,000 Places From 1 July 2022

Beginning in financial year 2022-23, the government will provide a total of 50,000 places each year under the various schemes:

  • 35,000 total places a year under the First Home Guarantee; this is an increase from the 10,000 currently available
  • 5,000 additional places a year under the Family Home Guarantee, from 1 July 2022 to 30 June 2025
  • 10,000 places under the new Regional Home Guarantee from 1 October 2022 to 30 June 2023; this scheme would be open to first-home buyers and anyone who has not owned property within the last five years. The legislation has not passed yet.

First Home Guarantee Eligibility Calculator 2022-2023

Disclaimer: This calculator can help you determine whether or not you could be eligible for the First Home Loan Deposit Scheme. However, it only acts as general guidance as to the various eligibility criteria but does not constitute a determination of eligibility.

How does the First Home Guarantee work?

The First Home Loan Deposit Scheme first began on 1 January 2020.

The scheme is aimed at helping low- and middle-income Australians buy their first home sooner by reducing the amount they need for a deposit and eliminating LMI costs, saving borrowers tens of thousands of dollars.

Typically, to avoid paying thousands in LMI fees, a borrower needs a 20% deposit. However, under the scheme, even with a 5% deposit, you avoid LMI fees since the government will guarantee up to 15% of the value of the property.

Moreover, eligible first home buyers will be able to use the scheme together with other government programs such as the First Home Super Saver Scheme, state and territory First Home Owners Grant and stamp duty concessions.

We’ve compiled a list of other government schemes and grants available for first home buyers here.

Under the First Home Guarantee, participating lenders and mortgage brokers will assess a first-home buyer’s eligibility alongside other standard home loan considerations such as serviceability (borrowing power), credit checks etc.

Borrowers must apply through a participating lender. The NHFIC will not be accepting direct applications.

As accredited mortgage brokers, we can help you reserve your place, subject to availability

Due to the limited number of slots on offer each year, you should ensure your application is “first-in-best-dressed” for the best possible outcome as soon as possible.

It is for these reasons that we recommend that first home buyers get their applications pre-assessed by our award-winning mortgage brokers.

To apply and reserve a place for the First Home Guarantee, give us a call on 1300 889 743 or fill in our short online assessment form.

Am I eligible?

There are several eligibility criteria first home buyers must meet to qualify for the First Home Guarantee:

  • A minimum deposit of at least 5% is needed (most lenders require the deposit to have been accumulated through genuine savings).
  • Only Australian citizens who are at least 18 years of age and hold a Medicare card are eligible. Permanent residents are not eligible.
  • Single first-home buyers earning up to $125,000 a year or couples earning up to $200,000 a year are eligible. Income from the financial year preceding the year in which the loan is entered into will be assessed.
  • Couples are eligible for the scheme only if they are married or in a de facto relationship. Other persons buying together, such as siblings, parent/child or friends, are not eligible.
  • Loans under this scheme require scheduled repayments of the principal of the loan for the full period of the agreement. Interest-only repayments for a specific period are accepted only for loans relating to both the purchase of vacant land and the construction of a house on the land.
  • Applicants must be first-home buyers who’ve not previously owned or had an interest in a residential property, either separately or jointly with someone else. This includes residential strata, company title properties, regardless of whether it was an investment or owner-occupied property and whether it was ever lived in.
  • Applicants must intend to move into and live in the property as their principal place of residence (they must be owner-occupiers).

The maximum value of homes that can be purchased under the scheme has been set (price caps) on a regional basis, reflecting the different property markets.

Apart from the 5% deposit required, first home buyers must also provide evidence of funds to cover stamp duty, legal fees, bank fees etc., where the Loan-to-Value ratio is above 95% of the property value.

What types of properties can be bought under the First Home Guarantee?

Eligible first-home buyers can buy the following types of properties:

Once you’ve been pre-approved for a home loan by one of the participating lenders, you’ll have 90 days to find and sign a contract of sale for an eligible property that you want to buy.

Finally, once you’ve signed a contract of sale, you’ll have an additional 30 days from the signing date to finalise the paperwork and checks for your home loan.

What will I need to provide to apply for the First Home Guarantee?

Initially, under the first home buyers scheme, you’ll need to submit the following information to your mortgage broker or to a participating bank for the Scheme Place Reservation process.

First home buyers will need to provide the following:

  • Your full name and date of birth;
  • Your Medicare number (including your position on the card);
  • Your Notice of Assessment for your taxable income for the 2019-2020 financial year; and
  • Other standard home loan documents.

Additional resources for the First Home Guarantee

Additional resources the NHFIC has released for the scheme:

NOTE: The government made many changes to the scheme that take effect during financial year 2022-23. For the latest updates, see our coverage, here.

30,000 new FHLDS places available from 1 July 2021

Starting from 1 July 2021, for the 2021-22 financial year:

While the number of places available may seem high, there has been strong demand for the schemes each year. We expect prospective first home buyers to snap up these places quickly.

If you want to buy or build your first home with the FHLDS, you can now book a place in the scheme for yourself by applying for pre-approval with a couple of our lenders. If you qualify, you’ll be notified of your FHLDS Place ID number once a place is reserved for you.

Thinking of applying? Get your tax returns done soon

In order to apply for the FHLDS scheme, you’ll need to provide your Notice of Assessment (NOA) from the Australian Taxation Office for the financial year 2020-21. While you do not need to provide your tax return for 2020-21 when applying for pre-approval, the tax return will be required to achieve formal or unconditional approval.

Most people don’t lodge their tax returns right away, so if you are quick to lodge yours, then you can get in before everyone else and secure one of the limited spots in the scheme.

To get pre-approved and reserve your place, speak with a Home Loan Experts mortgage broker by giving us a call on 1300 889 743 or fill in our online enquiry form.

What Are The Price Caps For The Home Guarantee Scheme?

The government has announced higher price caps for 2022-23 for its expanded Home Guarantee Scheme, which includes the First Home Guarantee (formerly the First Home Loan Deposit Scheme), the Family Home Guarantee and the new Regional Home Guarantee.

Under the Home Guarantee Scheme, the value of a residential property must not exceed the government’s price cap for the area in which the property is located.

The caps vary depending on the state or territory and whether you’re looking to buy in a city, large regional centre or other regional area.

Here are the new Home Guarantee Scheme price caps for the upcoming financial year, along with the caps for the previous two years.

Region FY 2020-21 FY 2021-22 FY 2022-23
NSW – Sydney & regional centres
(Newcastle, Lake Macquarie & Illawarra)
$700,000 $800,000 $900,000
NSW – rest of state $450,000 $600,000 $750,000
VIC – Melbourne & regional centre
$600,000 $700,000 $800,000
VIC – rest of state $375,000 $500,000 $650,000
QLD – Brisbane & regional centres
(Gold Coast & Sunshine Coast)
$475,000 $600,000 $700,000
QLD – rest of state $400,000 $450,000 $550,000
WA – Perth $400,000 $500,000 $600,000
WA – rest of state $300,000 $400,000 $450,000
SA – Adelaide $400,000 $500,000 $600,000
SA – rest of state $250,000 $350,000 $450,000
TAS – Hobart $400,000 $500,000 $600,000
TAS – rest of state $300,000 $400,000 $450,000
ACT $500,000 $500,000 $750,000
Northern Territory $375,000 $500,000 $600,000
Jervis Bay Territory & NorfolkIsland $450,000 $550,000 $550,000

Source: NHFIC

Please not that the price cap for eligible properties under the FHLDS for New Homes is higher. So, you may be able to apply to build or purchase a new home under the FHLDS (New Home Guarantee) .

What are areas considered large regional centres?

The capital city price caps will apply to large regional centres with a population over 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.

Why is there a property price threshold under the Scheme?

To ensure the Scheme meets the Australian government’s objective that the Scheme only be available for the purchase of a modest home, or the purchase of land and construction of a modest home, they have set different maximum property thresholds that apply in the capital cities, large regional areas and regional areas.

FHLDS lenders: Which lenders are contracted under the FHLDS Scheme

Commonwealth Bank (CBA) joined National Australia Bank (NAB) as the second major participating bank in the government Scheme along with 25 other smaller lenders.

Interestingly, Westpac was going to be the second lender as part of the panel of lenders contracted by the NHFIC. However, in light of the recent money laundering allegations, they’ve been axed from the scheme.

Besides, to ensure that smaller lenders play a significant role in the Scheme, the government has revealed that the two major banks (including their subsidiaries) will not be permitted to facilitate more than 5,000 loan guarantees each financial year.

Moreover, not more than two major banks will be approved as eligible lenders for a financial year.

The 27 lenders participating in the First Home Loan Deposit Scheme are:

  • Commonwealth Bank (CBA)
  • National Australia Bank (NAB)
  • Australian Military Bank
  • Auswide Bank
  • Bank Australia
  • Bank First (formerly known as Victoria Teachers Mutual Bank)
  • Bank of us (Tasmanian customer-owned bank)
  • Bendigo Bank
  • Beyond Bank Australia
  • Community First Credit Union
  • Credit Union Australia (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
  • Queensland Country Credit Union
  • Regional Australia Bank
  • Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank Ltd)
  • Teachers Mutual Bank Limited (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank)
  • The Mutual Bank
  • WAW Credit Union

Additional lenders may be periodically added to the panel.

How to apply for the First Home Loan Deposit Scheme?

To implement the Scheme, the National Housing Finance and Investment Corporation (NHFIC) has contracted a panel of 27 lenders listed above instead of dealing directly with borrowers.

The NHFIC will not be accepting direct applications.

As such, lenders or mortgage brokers will assess scheme eligibility alongside other standard home loan considerations such as serviceability, credit checks etc.

We’re now able to reserve a slot in the Scheme for our customers subject to availability for up to 14 calendar days (cannot be extended).

The application needs to be submitted within 14 days and assessed as conditionally eligible to progress to a certified guarantee.

Once the loan is pre-approved, you’ll have 90 days to return a signed and dated contract (an extension on the 90 days to find a property can be considered).

To apply and reserve a slot in the First Home Loan Deposit Scheme, please give us a call on 1300 889 743 or fill in our online assessment form today.

What is the process to apply for a guarantee under the First Home Loan Deposit Scheme?

The process to apply for a guarantee under the First Home Loan Deposit Scheme is as follows:

  • An eligible first home buyer or their broker will need to enquire with one of the 27 participating lenders under the Scheme.
  • The lender will then log onto the Scheme portal to ascertain if a Scheme place is available.
  • If a slot is available, the lender can then reserve a place for the customer by providing their first name, last name, surname, DOB (date of birth) and medicare number.
  • A first home buyer applicant can apply for a Scheme place with multiple participating lenders. It’s important to note that the Portal will automatically de-duplicate applications to ensure only one place is reserved per applicant at any given time.
  • The slot can be reserved for fourteen days. During this period, a participating lender will have fourteen days to provide the applicant with a home loan pre-approval and return to the Scheme Portal to obtain a pre-approved place under the Scheme.
  • To obtain a pre-approved place under the Scheme, the participating lender must provide the applicant’s details including, the taxable income of each borrower, the date of finance pre-approval, intended purchase location, and the origination channel for the loan.
  • A pre-approved place under the Scheme lasts for 90 days from the date of issuance to enable the applicant to search for a property knowing that they have a loan pre-approval in hand as well as a pre-approval under the Scheme.
  • Upon signing a Contract of sale, the participating lender and the applicant will then have an additional 30 days to finalise all the documentation to apply to the NHFIC for a Guarantee Certificate under the Scheme.
  • Upon a Guarantee Certificate being issued, the participating lender will have 100 days to return to the Portal to update NHFIC with the loan settlement details.

How to request a first home buyer Scheme place reservation?

Request for a slot on the first home buyer Scheme place can only be made by participating lenders or via your mortgage broker.

Before you request a Scheme place reservation, ensure that you’ve checked your eligibility carefully.

When requesting a Scheme place reservation, initially you’ll need to provide the following information:

  • Your full legal name;
  • Date of birth (DOB);
  • Occupation;
  • Medicare Number and IRN (IRN appears on the left of the cardholders’ name on the Medicare card and distinguishes the individuals named on the card).

You’ll also need to sign any lender specific declaration forms and consent pack as advised by your lender or broker.

What if the first home buyers Scheme places are exhausted?

If first home buyers Scheme places have been exhausted, but you’re eligible, you can still submit a reservation request, and you’ll be added to the waitlist.

When and if a Scheme place becomes available, you will be advised.

Remember, if you miss out because of the limited number of slots, another 10,000 Scheme places will be made available from 1 July 2020 for the 2020-2021 financial year.

What are the criteria for selection of lenders who can offer the guarantee?

The government has set the eligibility criteria for the selection of lenders who can offer the guarantee. Lenders will be selected based on:

  • their standard of customer care, including their treatment of borrowers in financial hardship;
  • the competitiveness of loan products offered by them for the FHLDS, including interest rates and other fees;
  • their quality of the loan origination processes and the associated level of financial risk to the Commonwealth;
  • their reputation;
  • the extent to which the decision to approve a lender will promote competition in lending markets and related markets; and
  • the extent to which all the lenders approved for the financial year when considered together can undertake credit activities (including through other entities providing credit services) across Australia.

Which lender should I apply with for the First Home Loan Deposit Scheme?

Once you’re fairly sure that you’re eligible for the Scheme, the next crucial step is deciding which participating lender to apply with.

Since even if you’re eligible for the first home buyer scheme, the lenders will still apply their own lending criteria before approving you for the home loan.

As each first home buyers’ financial situation is different, each borrower will be more suited to a different lender.

For example, the major lenders’ credit scoring system is highly selective, that is to say, they’ll automatically decline applications with low credit scores; whereas, smaller lenders tend to be more flexible with credit scores, but then again the latter is not as flexible with unusual property/securities.

Some of the things where lender policies differ are:

  • Genuine savings,
  • Borrowing power including living expenses and income assessment,
  • Credit score,
  • Security etc. as any of them could see your application get knocked back!

Fitting into all the neat little boxes of lender policies is hard, so the key as always is to apply with the right lender from among the panel of participating lenders under the First Home Loan Deposit Scheme.

And this is exactly where an experienced brokers’ credit knowledge will be invaluable.

Speak with one of our award-winning specialist mortgage brokers by giving us a call on 1300 889 743 or by filling in our online assessment form.

What if I’ve already applied with CBA or NAB?

Interestingly, other participating lenders can take over a Scheme spot from another lender.

For example, if you’ve been pre-approved with CBA or NAB already, another participating lender like Auswide Bank or Gateway can use the same Scheme place to offer a loan through them.

However, please note that the Scheme deadlines are based on the initial application date, i.e. if you’ve been pre-approved on 15 January by NAB, you still need to find a property by 14 April (90 days later), even if you applied for a loan from another bank in February.

Do I only need a 5% deposit under the Scheme?

Separate to the minimum required deposit of 5% under the Scheme, first home buyers must have funds to cover stamp duty, bank fees, legal fees and government transfer fees, where the loan to value ratio (LVR) is greater than 95%.

For example, a first home buyer in NSW will need a $25,000 (5%) deposit for a $500,000 purchase plus extra funds to complete the purchase.

Generally, for the example above, the extra funds required will be:

  • Stamp duty – $0 (stamp duty is waived for first home buyers up to a certain threshold depending on the state)
  • Titles Office – Mortgage: $143.50
  • Titles Office – Transfer of Land: $143.50
  • Loan fees (establishment fees, application fees or valuation fees) – $900 (These fees vary from $0 to $900)
  • Legal/conveyancing costs – $1,500
  • Lenders Mortgage Insurance (LMI) fees – $0 (waived under the first home buyer scheme).

So, your total funds to complete will be $25,000 plus $2,687 (approx.) as extra funds.

It would be best if you also accounted for sundry costs for inspections/reports such as building inspection costs, pest inspection etc.

Does my deposit have to be genuine savings?

Currently, under the Scheme, both the major lenders require your deposit to be genuine savings, i.e. deposit that you’ve saved yourself over time.

So, yes, the deposit needs to be “genuine savings” with most lenders to qualify for the First Home Loan Deposit Scheme.

However, there are some exceptions to this with some lenders, i.e. using paid rent or rental history as proof of genuine savings.

Moreover, since February 2020, 25 smaller participating lenders with flexible genuine savings policy have started accepting applications. Applying with the right lender is key to approval.

Should you wait for the Scheme to come into effect?

If you are likely to qualify for the Scheme and are going to apply when it becomes available, i.e. January 2020, then we recommend that you wait.

We are expecting that due to the high demand for a limited number of places, 90% of first home buyers will miss out.

The government may yet make changes to the qualifying criteria as such so you may find out that you are not eligible at a later date.

Moreover, some property markets, such as Sydney and Melbourne, have shown signs of high growth in the last few months.

In conclusion, if you are in a high growth market, it may be cheaper to pay LMI and buy now rather than to wait and risk paying a higher price for your home.

You can use our Buy Now Or Save More Calculator to figure out which option better suits your needs.

How much am I saving in LMI with this Scheme?

Your actual savings in LMI will be based on your deposit, the loan to value ratio (LVR) and your home loan amount.

Think of it this way; the lower your deposit is, the higher the risk is to the bank leading to higher LMI premiums.

For example, a first home buyer taking advantage of the First Home Loan Deposit Scheme in NSW, Sydney with a 5% deposit and purchasing a $700,000 property can save anywhere between $27,265 and $30,657 in LMI fees depending on the lender’s mortgage insurer.

However, if you were to put up a 10% deposit, the LMI range goes down significantly between $14,301 and $15,687.

Similarly, a first home buyer availing the First Home Loan Deposit Scheme in Victoria, Melbourne purchasing a $600,000 with a 5% deposit can save anywhere between $19,073 and $28,591 in LMI fees.

You can use our LMI calculator to work out exactly how much you’re saving.

The guarantee is not a cash payment.

What are the pros and cons of the First home Loan Deposit Scheme?

What are the pros?

  • The government guarantee saves first home buyers with low deposits tens of thousands in LMI.
  • First home buyers can buy their first home sooner and enter the property market due to the required deposit of only 5%.
  • Your mortgage repayments will go towards paying off your home loan instead of on rent.
  • Along with other first home benefits such as the first home owners grant (FHOG) and the stamp duty exemption/concessions, the deposit scheme may incentivise first home buyers at the fringes to finally buy their own home.

What are the cons?

  • Buyers with low deposits will pay extra in interest over the life of the loan term than buyers with a 20% house deposit.
  • The 5% home deposit Scheme is limited to only 10,000 borrowers a year or roughly 10% of first home buyers from 2018.
  • There is a risk of borrowers ending up in negative equity, which is where the outstanding balance on a mortgage is greater than the property value. That’s because the Scheme is essentially encouraging people to borrow at a high Loan to Value Ratio (LVR) because the government guarantee allows you to avoid the cost of LMI.
  • Some economists have also argued that this new incentive will further drive up demand for real estate, which will lock out first home buyers who don’t qualify for the scheme.

FAQs – First Home Loan Deposit Scheme

We’ve listed some of the frequently asked questions (FAQs) here. However, if there’s something you’d like answered that is not listed on the page, please put your question in the comment section at the bottom of the page.

Yes, the first home loan deposit scheme will be available for both new and established owner-occupied residential properties.

You’re also able to buy a house and land package and vacant land with a separate acceptable contract to build.

Yes, the 5% home deposit scheme can be used in conjunction with the First Home Owners Grant (FHOG) and duty concessions as well as the First Home Super Saver Scheme (FHSSS).

No. Participating lenders will not charge a higher interest rate to eligible first home buyers under this Scheme, that means if you are successful, you will receive the same interest rates as equivalent mortgages outside of this Scheme.

The mortgage deposit scheme is only available to couples who are married or in a de facto relationship and are purchasing a residential property.

Unfortunately, no, you can’t buy a property with a sibling or any other family member under the Scheme. However, you may still be eligible for the Scheme as a single solo applicant.

Unfortunately, the First Home Loan Deposit Scheme is only available to Australian citizens.

When purchasing as a couple, both you and your spouse need to be Australian citizens. So, you would not be eligible for the Scheme.

No, both borrowers must never have had ever owned or had an interest* in a residential property anywhere in Australia either individually, together or with another person.

This includes any residential property including residential strata and company title properties regardless of whether it was an investment or owner-occupied property and whether you have ever lived in it or not.

*To meet these eligibility criteria, you must never have held an interest in a:

  • Freehold interest in a property in Australia; or
  • Long term lease (with a term of at least 50 years) over real property in Australian including a renewal or extension of such a lease; or
  • Company title interest in land in Australia.

Yes. When you’re making an off-the-plan purchase:

  • You must have signed the contract of sale before the settlement date for your home loan; and
  • The settlement date for your home loan must be within 90 days that your home loan becomes guaranteed under the Scheme.

Yes, you can; however, each type of property has its own set of requirements which are listed below.

You can use the guarantee to build your home either under:

  • A house and land package; or
  • Vacant land and a separate contract to build

For a house and land package, prior to settlement date for your home loan, you’ll need to have entered into a contract of sale for the land; and an eligible building contract to build your home on that land.

These can be in the same contract or two separate contracts; either contract can be dated before 1 January 2020.

For vacant land and a separate contract to build, you must have:

  • Purchased the land under a contract of sale dated no earlier than settlement date of your home loan;
  • Entered into an eligible building contract to build your home on that land no later than the settlement date of your home loan.

To be considered an eligible building contract under the Scheme, your building contract must:

  • With a licensed builder (owner-builders are not accepted);
  • Specify a contract sum (fixed price) in respect of the construction of your home; and
  • Require the builder to commence construction within 26 weeks of the settlement date for your home loan, and complete construction and procure the issuance of an occupancy certificate within 24 months of the settlement date for your home loan.

The First Home Loan Deposit Scheme is only available to borrowers who enter into a contract of sale in their own individual capacity as a natural person under their own name.

As such, you can’t purchase a property as a trust or a company under the Scheme.

Under the Scheme, borrowers can only buy a residential property for the purposes of living in it as your principal place of residence, i.e. an owner-occupier.

Properties to be used for commercial, investment or other purposes are not eligible.

Your home loan becomes officially guaranteed under the Scheme once you receive a Guarantee Certificate.

The first step is to reserve a place under the Scheme (valid for 14 days), during which period if you are successfully pre-approved for finance, you’ll have 90 days to find a property, and after which you’ll have 30 days to sign a contract of sale.

It depends on the type of residential property you’re purchasing.

When purchasing an existing dwelling, the property must be purchased under a contract of sale that you sign on or after 1 January 2020.

For an off the plan purchase, you must have entered into the contract of sale before the settlement date of your home loan, and that the settlement date for your home loan must occur within 90 days that your home loan becomes guaranteed under the Scheme.

You may be able to reapply for the first home loan scheme provided that you meet the Scheme eligibility, lender policies and the availability of guarantees.

The federal government may also review the property price thresholds in the future.

Yes, you can use a mortgage broker to apply for a guaranteed home loan provided that the broker has a relationship with the participating lenders.

You can sell your home anytime that you want to.

However, your home loan will cease to be guaranteed under the Scheme.

If and when you move out of your property, your home loan will no longer be covered by the guarantee under the Scheme.

Besides, under the terms and conditions of your home loan, you may have to pay lenders mortgage insurance (LMI) fees (if LVR is greater than 80%) or you may need to pay certain fees and charges that would otherwise not be applicable.

The guarantee will expire when you sell your property.

The purchase of a second property will mean that you’re no longer eligible for the Scheme.

The guaranteed home loans under the Scheme are subject to usual lending arrangements (standard terms and conditions) and relevant consumer laws.

If you’re not able to meet your repayments, please contact your participating lender/ bank as soon as possible. Do not wait until you’ve defaulted on your mortgage. Usually, there are some options if you get in touch early.

The decision to set the property price threshold was made to ensure that only modest homes were purchased or built under the Scheme.

Property price thresholds have been raised for most states for the 2021-2022 financial year. There will be a periodic review of the First Home Loan Scheme.

No, the 5% home deposit Scheme can only be used to purchase a residential property in Australia.

Do all participating lenders have the same criteria for the First Home Loan Deposit Scheme?

Yes, all participating lenders follow the same criteria for the Scheme; however, each lender has its own lending criteria that borrowers must meet to qualify.

To be clear, you’ll require two pre-approvals; one for the Scheme and one for the home loan.

The guarantee will last until:

  • You sell your place; or
  • You move out; or
  • You refinance your home loan; or
  • Your principal loan to value ratio falls below 80% of the purchase price.

Ideally, you should only refinance when you have less than 80% owing on your home loan to avoid paying LMI fees.

You’ll only be able to keep the guarantee if you were to move your guaranteed loan between two participating lenders provided that in doing so, you’re not increasing the loan amount or term of the loan and that it remains an eligible loan as defined in the Scheme rules.

The decision to increase the number of places available under the FHLDS Scheme lies with the Australian federal government. NHFIC does not set the number of available guarantees.

Currently, the Scheme is only available to 10,000 borrowers, however an additional 20,000 places have been made available under the FHLDS New Home Guarantee and the Family Home Guarantee Scheme.

No, only participating lenders can offer guaranteed home loans under the Scheme.

Additional banks and lenders may be periodically added to the list of participating lenders.

Currently, the 27 participating lenders include two major lenders and 25 smaller lenders.

No, the Scheme is not a cash payment; rather, it is simply a guarantee.

Borrowers are now able to reserve a slot in the 5% home deposit scheme through a participating lender or their mortgage brokers.

NHFIC does not accept direct applications.

Eligible borrowers will have to pass the credit scoring and standard lending criteria of the participating lenders.

Both the two major participating lenders, CBA and NAB, have a credit scoring system which will automatically knock back your application if your credit score is too low.

However, that is not the case with smaller lenders, who take a more common-sense approach.

Putting your application through one of the 25 participating smaller lenders is key to availing the mortgage deposit scheme with a poor credit score.

The Scheme places only progress to the next stage if a customer:

  • Still has an active Scheme place reserved (i.e. within the initial 14 days);
  • Has been pre-approved (conditionally) for a home loan; and
  • Has read the Scheme Information Guide and completed their First Home Buyer Declaration form (one for each borrower).

No, loans guaranteed under the Scheme cannot change their loan term. If you wish to change/alter your loan terms, you’ll have to refinance the home loan.

However, certain limited changes are available to the borrower during the guarantee period. E.g. splitting the loan, fixing the loan. Rate changes are available as long as the eligibility criteria are met. E.g. you’re not switching to investment or interest only.

For the Scheme, income eligibility is based on last year’s Notice of Assessment only and does not look at the income you’re earning at the time of application.

So yes, you’re still eligible provided you meet all other criteria.

Unfortunately, if a first home buyer does not have a Notice of Assessment (NOA) to verify the previous year’s income, they’re not eligible for the Scheme.

First home buyers will need to submit their tax return for the previous financial year, and wait for the NOA to be issued to see if they’re eligible to apply for the Scheme.

I’m afraid not. If an applicant does not have an NOA to verify the previous financial year’s income, they’re not eligible for the Scheme.

Couples are only eligible for the FHLDS Scheme if they are married or are in a de facto relationship. A de facto relationship is defined as:

  • Not legally married to each other;
  • Not related by family; and
  • Have a relationship as a couple living together on a genuine domestic basis.

There’s no requirement to show proof of a de facto relationship outside of the First Home Buyer Statutory Declaration form that you need to sign.

Yes, lenders have their own postcode restrictions on the location of properties they’re willing to accept. Or they may limit the loan to value ratio in some areas to less than 80% LVR in which case, LMI is not applicable as such the property will not be eligible under the Scheme.

Not all participating lenders have postcode restrictions. If your property location is unacceptable to a particular lender, some other participating lenders may accept your property under the Scheme.

The FHLDS uses the higher of the two values to determine FHLDS eligibility.

If either the bank valuation or the contract of sale value is above the property threshold, the customer will not be eligible.

Eligible home loans under the FHLDS Scheme are treated similarly to guarantor home loans, so they can be priced as if they were 80% LVR.

A mortgage broker can help you negotiate for a competitive rate on your home loan under the Scheme via a pricing request.

Customer success story: First Home Loan Deposit Scheme 2020


A married couple was looking to purchase their first home under the federal government’s First Home Loan Deposit Scheme.


We got the couple pre-approved for a $700,000 purchase under the FHLDS.


However, they found a place that they loved, but the price was $710,000 (over the price threshold of the Scheme), so they were happy to go over the limit and pay LMI.

They signed a contract at $710,000, and we ordered the valuation for formal approval.

The valuation came back low at $690,000. Since the couple had enough funds to contribute towards the shortfall, they asked us to just proceed as they were willing to cover the difference.


Our mortgage broker spoke to the selling agent and sent him a copy of the report and asked to speak to the vendor.

Our broker argued that since the couple would have to contribute the last of their savings and would really struggle if they proceeded and requested that the price be brought down to $700,000 (within the limit of the FHLDS).

Soon after, we recieved a call from the real estate agent saying that the vendors have agreed to $700,000.

The couple were absolutely thrilled as they are now saving $25,000 approximately on LMI fees because they were back within the limit of the FHLDS, as well as saving $10,000 on the purchase price.

What other options are available if you miss out on the Scheme?

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