First Home Loan Deposit Scheme
Buying an existing home
The First Home Loan Deposit Scheme is an Australian Government initiative to support eligible first home buyers purchase their first home sooner.
Usually first home buyers with less than a 20 per cent deposit need to pay lenders mortgage insurance. Under the Scheme, eligible first home buyers can purchase a modest home with a deposit with as little as 5 per cent (lenders criteria also apply). This is because NHFIC guarantees to a participating lender up to 15 percent of the value of the property purchased that is financed by an eligible first home buyer’s home loan.
Eligible first home buyers can use the First Home Loan Deposit Scheme (FHLDS or the Scheme) in conjunction with other government programs like the First Home Super Saver Scheme, HomeBuilder grant or state and territory First Home Owner Grants and stamp duty concessions.
The guarantee is not a cash payment or a deposit for your home loan.
Download a fact sheet to learn more.
Eligible FHLDS properties
For a property to be eligible for the Scheme it must:
- be a ‘residential property’ – this term has a particular meaning under the Scheme, and you should ask your lender if there is any doubt
- have a purchase price (and value) under the price cap for its location
- be purchased by an eligible first home buyer under the Scheme
- list you as the sole registered owner/s of the property at the settlement date for your home loan
- be a property which is (1) an established dwelling, or (2) a new-build dwelling that is purchased under a house and land package, a land and separate contract to build a home or an ‘off-the-plan’ arrangement that is financed under an Eligible Loan from a participating lender.
Important timeframes
The relevant dates and requirements for the different property types are set out in the table below.
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Contract and settlement dates |
To be eligible for the Scheme, the contract of sale and (if applicable) eligible building contract may have particular dates when they can be signed by you (all as described further below). There are no exceptions from these required dates. |
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Purchase of existing dwelling |
If you are purchasing an existing dwelling:
This category does not include ‘off-the-plan’ purchases, which are |
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House and land package |
A house and land package is where you build a home by entering into a contract of sale to purchase land from the same person (or persons within the same corporate group) as the person who you enter into a contract with to build your home. For a house and land package, prior to the settlement date for your home loan you will need to have entered into:
These can either be in the same contract or two separate contracts. Your home loan will also include a requirement for you to:
of the settlement date for your home loan. You will also need to move into the property within 6 months of an occupancy certificate being issued. |
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Land and separate contract to build a home |
A land and separate contract to build home is where you build a home by entering into a contract of sale to acquire land from a person who is different to the person you enter into a contract with to build your home. For a land and separate contract to build home, you will need to have entered into a contract of sale to acquire the land under a contract of sale or, (in the Australian Capital Territory) a lease instrument. You will also need to move into the property within 6 months of an occupancy certificate being issued. You may obtain a home loan to buy the land and finance the building of your home. If you do so, then your Participating Lender will require you to enter into an eligible building contract before the settlement of your home loan and:
of the settlement date for your home loan. You may be able to obtain a home loan to buy the land before obtaining a loan to finance the building of your home. If you do so, then your Participating Lender will require you to:
of the settlement date of your home loan to buy the land. If you choose to buy the land before obtaining a loan to finance the building of your home, you will need to ensure that at the time your loan agreement is entered into to finance the building of your home, the purchase price for your land and the cost to build your home does not exceed the price cap that is applicable to your |
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'Off-the-plan' purchases |
If you are making an ‘off-the-plan’ purchase:
You will also need to move into the property within 6 months of the settlement date for your home loan. |
What is an eligible building contract?
For a building contract to be eligible under the First Home Loan Deposit Scheme, it must:
- be with a licensed or registered builder
- specify a fixed price for the construction of the dwelling.
‘Owner builder’ contracts are not eligible building contracts for the Scheme.
Which home loans are eligible for the FHLDS?
Not all home loans are able to take the benefit of the Scheme.
The Scheme is restricted to ‘Eligible Loans’, which are home loans:
- made by a Participating Lender to (1) a single eligible first home buyer, or (2) a couple who are both eligible home buyers, and
- that are for the purchase of an Eligible Property that is to be occupied by you as the owner.
In addition to these overarching eligibility requirements, the loans must:
- be secured by a registered first ranking mortgage over the eligible property
- have no other registered owners at the time of settlement, other than the eligible borrower/s
- have 100% of the loan drawdown proceeds used for the purchase (or towards the purchase and improvement) or construction of the eligible property
- have a loan amount commitment not less than 80% and not more than 95% of the relevant value of the property
- have a loan term of 30 years or less
- require regular principal and interest loan repayments.
Exception to this will be granted during the construction of a new dwelling, whereby lenders will be able to allow borrowers to make interest only repayments for the period in which the dwelling is being constructed until it can be occupied by the borrower.
- allow for no changes to loan terms, such as increased limit.
The loan may comprise more than one tranche, for example fixed and variable loan tranches.
Purchasing vacant land
If you are intending to buy vacant land and construct a dwelling on that land, you will need to enter into a building contract to build a home on the land within six months of the loan settlement date.
If you already own vacant land and intend to take a new home loan to construct a dwelling on that land, your home loan is not eligible for the Scheme. This is because you do not satisfy the prior property ownership test.
You will need to contact your lender to clarify whether your home loan is eligible under the Scheme.
