In the 2020-2021 Federal Budget, the Australian Government announced a further 10,000 places for the First Home Loan Deposit Scheme (FHLDS).
The new places are a huge win for first home buyers who are seeking to build or buy a new home. The scheme allows eligible first home buyers to purchase with a deposit of as little as five per cent, and takes out the burden of paying mortgage insurance to lenders.
The FHLDS is an Australian Government initiative, which supports first home buyers to get into the market sooner. It is run by the National Housing Finance and Investment Corporation.
There are new requirements and selection criteria as announced in this year’s Federal Budget. A key difference in the revised FHLDS is that established properties do not qualify. Therefore, only new homes, off-the-plan purchases or homes undergoing construction are accepted.
In addition, the price caps for purchasing a property has also increased across all Australian jurisdictions. This allows younger buyers to cash in early and enter the housing market. However, the price gaps vary depending on geography.
The initiative is open to both singles and couples:
- Singles: you may apply for the scheme if you are the only person listed as a borrower on your home loan and earn less than $125,000 per annum
- Couples: if you have a partner, like a de facto or a spouse, and you are both listed on your home loan, then you can sign up to the scheme as a couple. However your combined taxable income should not exceed $200,000.
Unfortunately, families or friends who have more than two borrowers listed on the home loan arrangement, or a scenario where the borrowers are not partners, are ineligible for the FHLDS.
In addition, there are a range of other selection criteria for the scheme, including:
- An income test
- Property ownership test
- Minimum age test
- Deposit requirement
- Owner-occupier requirement.
Kristin Brookfield is the Chief Executive of the Housing Industry Association, who said there has never been a better time for Australians to enter the housing market.
“The emphasis on new builds and an increase on the price caps for new homes means that it has never been a better time for Australians to think about building or buying a newly built home.”
Ms Brookfield added that the new package is a welcome relief for first home buyers.
“The Scheme provides critical support for first home buyers to overcome the deposit savings trap and achieve home ownership sooner,” she said.
The Federal Government’s 2020-2021 Budget added a suite of benefits and changes for first home buyers and builders, including tax cuts and the FHLDS.
The new places will only be available until 30 June 2021, as the Federal Government hopes to encourage spending and building activity.
First home buyers will need to contact one of the 27 lenders for further information about how to access the FHLDS.
For more information about the FHLDS, please visit the National Housing Finance and Investment Corporation.