Last Updated: 16th April, 2024


The New Home Guarantee (NHG) is no longer available for new applications from 1 July 2022.

What is the FHLDS New Home Guarantee?

The FHLDS New Home Guarantee also known as the FHLDS (New Homes) is a federal government scheme to help first home buyers purchase or build a new home with a smaller deposit without needing to pay Lenders Mortgage Insurance (LMI).

The federal government announced this scheme as part of its 2020-2021 budget announcement adding an additional 10,000 places on top of the existing FHLDS scheme, specifically for eligible first home buyers wanting to build or purchase new homes.

Generally, you’d require a deposit of 20% of the property value to avoid paying LMI. WIth the FHLDS Scheme (New Homes), you only need a 5% deposit plus purchasing cost. This Scheme can potentially save first home buyers with a low deposit (lower than 20%) tens of thousands of dollars in LMI fees.

First home buyers can also use this Scheme along with other state and federal grants such as the HomeBuilder grant and get stamp duty concessions/exemptions on their purchase.

What are some key features of the New Home Guarantee?

Here’s a quick snapshot of the key features of the New Home Guarantee. The Scheme:

  • provides an additional 10,000 places for new homes only
  • has a higher property price caps compared to the existing scheme
  • provides more support for off the plan property purchases
  • has shorter contract, start and finish build times to help stimulate the residential construction sector.

The Scheme is administered by the National Housing Finance and Investment Corporation (NHFIC).

What properties are eligible for the New Home Guarantee?

Eligible properties under the New Home Guarantee include:

It’s worth noting that some of the participating lenders, like the Teachers Mutual Bank, are not accepting applications for off-the-plan dwellings.

In addition, the standard lending policy of the participating lenders applies. Please see below.

Price cap for new homes under the New Home Guarantee

State/Territory Capital Cities and Regional Centres Rest of State
New South Wales (NSW) $950,000 $600,000
Victoria (VIC) $850,000 $550,000
Queensland (QLD) $650,000 $500,000
Western Australia (WA) $550,000 $400,000
South Australia (SA) $550,000 $400,000
Tasmania (TAS) $550,000 $400,000
Australian Capital Territory (ACT) $600,000 Same price cap throughout the ACT
Northern Territory (NT) $550,000 Same price cap throughout the NT

Am I eligible for the FHLDS Scheme (New Homes)?

The following five key tests can best summarise the eligibility criteria for the New Home Guarantee:

  • Citizenship and minimum age test: You should be an Australian citizen and over the age of 18 to qualify. If you’re applying as part of a couple, both of you should be citizens. Permanent residents are not accepted.
  • Income test: For single applicants, your taxable income should be less than $125,000; for couples, the combined income should be less than $200,000.
  • Prior property ownership test: You must have never owned a property or held an interest in a property before in Australia.
  • Owner-occupier test: The Scheme is provided to enable first home buyers to purchase a property to live in, as such investment properties are not accepted. The property must be an owner-occupied home.
  • Deposit requirement test: At a minimum, you should have at least 5% of the property value as a deposit in genuine savings. E.g. you’ll require a $25,000 deposit for a $500,000 property. You may need a higher deposit based on the lender you’re applying with and the type of property you’re buying. Please speak to your mortgage broker.

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.

Which home loans are eligible for the FHLDS (New Homes)?

To be eligible for the FHLDS (New Homes), the home loan must be made by one of the 27 participating lenders and must be for the purchase of an eligible property that is to be occupied by you as the owner.

The home loan will also need to:

  • be for a term of 30 years or less,
  • have regular repayments of principal (with limited exceptions for interest-only loans, which mainly relate to building loans), and
  • comply with relevant laws and the lender’s credit policies.

What are some common challenges first home buyers face under the New Home Guarantee?

Some common challanges that first home buyers wanting to buy a house under the New Home Guarantee face:

  • Finding a suitable new property that is under the property price threshold.
  • Finding a reputable builder or suitable land to build on within the time frame.
  • Few participating lenders like NAB are coming out saying they will not provide an extension to pre-approvals. So, customers need to be aggressive in their property search to make use of the scheme on time.
  • Construction of any kind usually gets delayed due to a myriad of reasons so completing the contract/completion in the time required will also likely be a challenge.
  • When purchasing a new property, whether it is a land plus construction or off-the-plan, the other possible issue could be a low valuation returned by the lenders. This wasn’t a typical problem with FHLDS before, as they were accepting established properties. Since the government shifted focus to boost employment in the building industry and allow for new properties only, this could be a new dilemma. Sometimes valuation can vary between lender to lender. Choosing an experienced broker that knows which lender is likely to provide an unbiased valuation is vital.

Additional resources released by the NHFIC

How do I reserve a place under the New Home Guarantee?

First, you want to ensure that you’re eligible for the Scheme. Once that’s done, the next crucial step is deciding which participating lender to apply with.

You can apply to reserve your scheme place in the FHLDS (New Homes) through us or by applying directly with one of the 27 participating lenders – subject to availabilty of Scheme places.

Most of the participating lenders are accepting applications now.

What documents do I need to submit to reserve a scheme place?

When reserving a scheme place and applying for pre-approval, in addition to the standard income documents, you’ll need to provide:

  • A signed and dated First Home Loan Deposit Scheme Acknowledgement and Consent Form (this is lender specific, please speak to your mortgage broker).
  • Medicare ID number/position to reserve Scheme Place.
  • ATO Notice of Assessment (NOA) for the 2019-2020 financial year.

Which FHLDS lender should I apply with?

FHLDS lenders

When deciding which participating lender to apply with, you want to keep in mind that 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 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, they are not as flexible with property location.

Also, some lenders are not accepting off-the-plan purchase applications or their construction loan policies might be too conservative.

Will I get approved?

It depends on their lending policy. Some of the areas where lender policies can differ are:

Fitting into all the neat little boxes of lender policies is hard, so the key as always is to apply with the right lender.

This is where an experienced mortgage brokers’ credit knowledge can help you get approved.

We recommend that first home buyers get their applications pre-assessed by our award-winning mortgage brokers.

You’ll only be issued a pre-approval (conditional approval) subject to satisfying all key eligible criteria of both the Scheme and the lender.

To apply and reserve a place in the First Home Loan Deposit Scheme (New Homes), speak with one of our specialist mortgage brokers by giving us a call on 1300 889 743 or fill in our short online assessment form.

Tips for applying to the FHLDS New Home Guarantee

  • Get in as quickly as possible, but be mindful. There are only a limited number of Scheme places available (10,000 each year).
  • Get your tax returns done. Applicants need to provide their Notice Of Assessment from the ATO. Essentially, 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.
  • Understand that this is a long-term commitment! Consider if there is a trade-off between taking advantage of the availability of this program, and living where you want to live (for instance: would you live further away from your friends/family/work to get access to this program, or would you prefer to be close to your friends/family/work in the longer term?).
  • Make sure you are able to borrow enough and consider the long term affordability by looking at your income and expense situation.
  • No genuine savings. Just because you have a 5% deposit does not mean you’ll be eligible, you’ll need a history of at least 3 months of savings, or alternatives like a rental ledger (paid rent as genuine savings) to meet the genuine savings requirement.
  • Check your postcode with the lender/broker.Lenders assess loans differently depending on the location of the property being offered as security. They apply stricter lending policies in high risk locations to limit their risk. In most cases, this means they often reduce the maximum available LVR and the maximum loan amount that you’re able to borrow.
  • If you’re going for land and construction, please get both the contracts finalised at once instead of going for land first and construction later.

What documents do I need to provide for formal approval?

After you’ve found a property and are ready to apply for formal approval, you’ll need to provide:

As part of the First Home Loan Deposit Scheme (FHLDS) New Homes, customers are required to obtain evidence from their vendor or builder that the property is newly-built and satisfies the FHLDS (New Homes) requirements. All FHLDS (New Homes) applications submitted for unconditional approval (final assessment) after your purchase must include one of the new National Housing Finance and Investment Corporation (NHFIC) Vendor/Builder Statements.

The statement required will vary, depending on the property type as follows: