The federal government’s First Home Loan Deposit Scheme is expected to commence on New Year’s Day 2020.  It is a Scheme available to the first 10,000 eligible first home buyers each financial year. Over 100,000 first homes were purchased in 2018.

How does it work?

The general gist of the Scheme is, if you:

  • are a first home buyer;
  • earn less than $125,000 p.a. (or $200,000 for a borrowing couple);
  • purchasing an “eligible property” as an owner occupier,

then subject to the lender’s requirements you may:

  • only require a deposit of 5% of the purchase price, and
  • not have to take out (or pay for) Lenders Mortgage Insurance.

“eligible property”

The scheme will only underwrite loans for properties which fall within the price cap as follows:

State/territoryCapital city and regional centresRest 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 Treasurer’s media release states:

“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.”

“the lender’s requirements”

Ultimately, the decision as to whether a lender will lend you money is at the discretion of the lender.  Just because you tick all the boxes above, does not mean the lender has to lend to you.

“Lenders Mortgage Insurance” or “LMI”

LMI protects your lender if you default on your home loan and there is a shortfall.   A shortfall will exist if the proceeds from the sale of your home are not enough to cover the amount outstanding on your loan.

More information

Please contact the Property Law Team at Turnbull Hill Lawyers about the scheme and other existing first home buyer incentives.


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