How the new First Home Loan Deposit Scheme works

By Scott Durrant
Last updated: November 12, 2019

First home buyers will soon be able to apply for the Federal Government’s new First Home Loan Deposit Scheme (FHLDS) with legislation passing earlier in October. The scheme will help many first-time buyers from January 2020.

What is the First Home Loan Deposit Scheme?

The FHLDS is a new government scheme to assist first home buyers in purchasing a property with a deposit as low as five per cent.

Most home buyers will aim to save 20 per cent to avoid the major expense of lenders mortgage insurance (LMI). With the new scheme, the government will act as the guarantor for the remaining amount.

The main benefit of the scheme is first home buyers can get into the market sooner while avoiding thousands of dollars in insurance premiums.

Who is eligible?

New buyers will need to meet an income test based on their previous year’s taxable income. To be eligible for the scheme, you must meet one of these criteria:
Single first home buyers with a taxable income up to $125,000.
Couples with a combined taxable income up to $200,000.

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