In great news for first home buyers, the Federal Government’s First Home Loan Deposit Scheme is expected to launch on 1 January 2020.

What is it?

This Scheme aims to support eligible first home buyers to enter the property market and purchase their first home faster.

How does it work?

At the time of writing (November 2019), some details are still a little sketchy, but here is what we know so far:

  • Most lenders require first home buyers to come up with a 20% deposit in order to be considered for a home loan
  • Qualifying first home buyers taking out their first home loan will be able to gain finance with a deposit as little as 5%, with the government acting as the guarantor for the remaining 15%
  • Although the government is being the guarantor for the remaining 15% of the loan, first home buyers still have to eventually pay that money back
  • Lenders will still do their normal checks on a borrower's financial situation, but the Scheme makes it easier for first home buyers to get a loan without having saved for a full 20% deposit
  • The number of applicants under the Scheme will be capped at 10,000 each year on a first-in best-dressed basis
  • The Scheme is expected to apply to owner-occupied loans on a principal and interest basis over no more than 30 years
  • The Scheme is expected to commence on 1 January 2020 and will be administered by the National Housing Finance and Investment Corporation (NHFIC)
  • There are price thresholds on the value of the property involved of $700,000 in the wider Sydney metropolitan area and some major regional centres and $450,000 in other areas in NSW (see below)
  • First home buyers will need to meet a number of eligibility criteria in order to have access to this scheme

So, who is eligible?

People who are:

  • 18 years of age
  • Australian Citizens only
  • Never owned a home before in Australia
  • Singles must earn a taxable income of $125,000 or less per year
  • Couples who have a combined income of $200,000 or less per year will be able to access the scheme.

What are the price thresholds?

There are price thresholds on the value of property involved. At present:

  • There is an upper limit of $700,000 in the wider Sydney metropolitan area, Illawarra (Wollongong), Newcastle (Lake Macquarie and parts of Central Coast)
  • Other areas in New South Wales have an upper price threshold of $450,000
  • The boundaries are still under review, but at the moment the higher limit of $700,000 extends to areas such as Bargo, Mount Victoria, Gerringong and Beresfield

There is a website where you can enter the area where you are thinking about building and it advises the likely threshold level as well as other information about the Scheme

What next?

Applications for the Scheme are not yet open.NHFIC is currently conducting a procurement process to establish a panel of residential mortgage lenders to participate in the Scheme.

Whatever you are looking for in a new home, make sure you speak to Beechwood about your options.

Beechwood specialises in helping first home buyers to get into their first home. Beechwood will be there to help every step of the way and aims to provide peace of mind during the entire building process with our Pulse Information Portal.

We have display homes throughout greater Sydney, Newcastle, Central Coast and South Coast.

Beechwood builds along the New South Wales coast from Port Macquarie to past Narooma and inland to areas such as Scone, Lithgow and Goulburn. As Beechwood offers flexibility and value, first home buyers can make their first home, their dream home.