FIRST HOME LOAN DEPOSIT SCHEME (FHLDS)
Overview

Update from the Australian Government

On 8 May 2021, under the 2021- 2022 Budget, the Australian Government announced the extension of the FHLDS (New Homes) and the establishment of a new program called the Family Home Guarantee.

Family Home Guarantee

The Australian Government has announced a new program called the Family Home Guarantee, which provides eligible single parents with dependents the opportunity to build a new home or purchase an existing home with a deposit of 2 per cent, subject to the individual’s ability to service a home loan.

From 1 July 2021, 10,000 Family Home Guarantees will be made available over four financial years.

The Family Home Guarantee is aimed at single parents with dependents, regardless of whether that single parent is a first home buyer or previous owner-occupier. Applicants must be Australian citizens, at least 18 years of age and have an annual taxable income of no more than $125,000. A fact sheet with further information on eligibility criteria will be available on NHFIC’s website next week.

 

FHLDS (New Homes) extended for 2021-22

An additional 10,000 FHLDS (New Homes) places will be available from 1 July 2021 to 30 June 2022. Find out more about the eligibility criteria for the FHLDS (New Homes). An updated fact sheet on the 2021-22 extension will be available on NHFIC’s website next week.

 

About the First Home Loan Deposit Scheme

The First Home Loan Deposit Scheme (FHLDS) is an Australian Government initiative to support eligible first home buyers to build or purchase a first home sooner. The Scheme is administered by the National Housing Finance and Investment Corporation (NHFIC).

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 or build a new home with a deposit of as little as 5 per cent (lenders criteria 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.

10,000 First Home Loan Deposit Scheme places will be available for the 2021-22 financial year from 1 July 2021.

In the 2020-21 Federal Budget, the Australian Government announced an additional 10,000 FHLDS places for the 2020-21 financial year, specifically for eligible first home buyers building or purchasing new homes. These additional places are known as the First Home Loan Deposit Scheme (New Homes) or FHLDS (New Homes).

There are currently 27 participating lenders across Australia offering places under the First Home Loan Deposit Scheme.

New Homes

In the 2020-21 Federal Budget, the Australian Government announced an additional 10,000 FHLDS places for the 2020-21 financial year, specifically for eligible first home buyers building or purchasing new homes. These additional places are known as the First Home Loan Deposit Scheme (New Homes) or FHLDS (New Homes).

Eligible first home buyers can use the FHLDS (New Homes) guarantee 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.

Eligible FHLDS (New Homes) Properties

Under the FHLDS (New Homes), first home buyers can build or purchase a new home, including:

  • newly-constructed dwellings

  • off-the-plan dwellings

  • house and land packages

  • land and a separate contract to build a new home.

 

Specific dates and requirements apply for the different property types.

There are particular requirements and time frames which apply for each type of property.

Important Time Frames

For all types of Eligible Properties, a contract of sale and/or an eligible building contract must be entered into prior to the expiry of the 90 day pre-approval period.

 

Newly-constructed Dwelling

Under FHLDS (New Homes), a newly-constructed dwelling refers to properties that completed construction on or after 1 January 2020 and:

  • has not previously been sold as residential premises or previously been the subject of a long-term lease (i.e. 50 years or more). However, properties which have been substantially renovated by the vendor or built by the vendor to replace a demolished premises (i.e. a knock down and rebuild) are eligible;

  • has not previously been rented or leased, or made available for rent or lease, as commercial residential or residential purposes;

  • has never been lived in; and

  • capable of being lived in from the date you settle.

 

First home buyers looking to purchase a newly-constructed dwelling must:

 

  • enter into a contract of sale by the end of their 90 day pre-approval period and

  • move into the property within six months of the settlement date of the home loan.

 

Note: First home buyers looking to purchase a property to do their own substantial renovations or knock down rebuilds are not eligible for FHLDS (New Homes).

Off-the-plan Dwellings

An ‘off the plan’ purchase is where you enter into a contract of sale for the purchase of a property where, at that time of entering into the contract of sale:

  • the title to the property has not yet been issued, or

  • if title to the property has been issued, it cannot yet be legally occupied, for example the building of the property has not yet finished.

 

First home buyers looking to purchase off-the-plan must:

 

  • have a contract of sale dated on or after 7 October 2020

 

  • move into the property within six months of the occupancy certificate being issued

If you are not sure whether a particular property you plan to buy is an eligible ‘Off-the-Plan’ purchase under FHLDS (New Homes) or whether purchasing a property ‘Off-the-Plan’ suits your particular circumstances, then you should speak to a participating lender and/or seek your own independent financial and legal advice.

House and Land Packages

A house and land package is where you build a new 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 new home.

First home buyers looking to build a new home under a house and land package must (prior to the expiry of the pre-approval period) enter into:

  • a contract of sale for the land; and

  • an eligible building contract dated on or after 7 October 2020 to build a new home on that land.

 

First home buyers looking to build a new home under a house and land package must also:

 

  • start building a new home within 6 months of entering into an eligible building contract;

  • finish building within 24 months of starting; and

  • move into the property within six months of the occupancy certificate being issued.

 

Please note, Lenders will also require your land to be titled prior to any issuance of a Guarantee.

 

Land and Separate Contract to Build a Home

A land and separate contract to build home is where you build a new 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 New Home.

First home buyers looking to build a new home under a land and separate contract to build a home must (prior to the expiry of the pre-approval period) enter into:

  • a contract of sale to acquire the land under a contract of sale or, (in the Australian Capital Territory) a lease instrument; and

  • an eligible building contract dated on or after 7 October 2020 to build a new home on that land.

 

First home buyers looking to build a new home under a land and separate contract to build a home must also:

  • start building a new home within 6 months of entering into the eligible building contract;

  • finish building within 24 months of starting; and

  • move into the property within six months of the occupancy certificate being issued.

 

Please note, Lenders will also require your land to be titled prior to any issuance of a Guarantee.

Building contracts

For a building contract to be eligible under the First Home Loan Deposit Scheme (New Homes), it must:

  • be with a licensed or registered builder

  • specify a fixed price for the construction of the dwelling.

Which Home Loans are Eligible for the FHLDS (New Homes)?

Not all home loans are eligible for the First Home Loan Deposit Scheme (New Homes). The First Home Loan Deposit Scheme (New Homes) is restricted to ‘Eligible Loans’, which are home loans:

  • made by Participating Lenders to singles or couples who are eligible first home buyers, and

  • that are for the purchase of an Eligible Property that is to be occupied by you as the owner.

There are additional requirements that apply in relation to these home loans that rely upon the terms that agreed with a Participating Lender. These include that the home loan will need to:

  • be for a term of 30 years or less

  • have regular repayments of principal (with limited exceptions for interest only loans, which mainly relate to building loans)

  • include a mortgage over the purchased property

  • be in Australian dollars

  • have appropriate lending limits to recognize the Scheme’s deposit requirements

  • comply with relevant laws and the lender’s own policies.

 

The Participating Lender will need to ensure that the terms of any home loan arrangement under FHLDS (New Home) comply with these matters.

For more information, contact a participating lender for further detail.

Not For You?

If you are unable to meet the time frames or requirements for eligible properties under the FHLDS (New Homes), you may be able to apply to build or purchase a new home under the existing First Home Loan Deposit Scheme.

Existing Homes

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.

10,000 First Home Loan Deposit Scheme places will be available for the 2021-22 financial year from 1 July 2021.

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:

 
 
 

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.

Purchase of existing dwelling

If you are purchasing an existing dwelling:

  • you must move into the property within 6 months of the settlement of your home loan, and

  • the property must be purchased under a contract of sale dated on or after 1 January 2020.

 

This category does not include ‘off-the-plan’ purchases, which are described below.

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:

  • a contract of sale for the land; and

  • an eligible building contract to build your home on that land.

 

These can either be in the same contract or two separate contracts. Your home loan will also include a requirement for you to:

  • start building your home within 12 months; and

  • finish building your home within 24 months

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.

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:

  • start building your home within 12 months; and

  • finish building your home within 24 months,

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:

  • enter into an eligible building contract within 6 months;

  • start building your home within 12 months; and

  • finish building your home within 24 months,

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
property. If they do exceed the price cap, then your home loan will not be eligible for the Scheme and your Participating Lender may require you to obtain lenders mortgage insurance or provide a higher deposit to continue with your home loan.

'Off-the-plan' purchases

If you are making an ‘off-the-plan’ purchase:

  • you must have signed the contract of sale before the settlement date for your home loan, and

  • the settlement date for your home loan must occur within 90 days that your home loan becomes guaranteed under the Scheme.

 

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.

Am I eligible?

 

Use the Eligibility Tool below to find out whether you meet the First Home Loan Deposit Scheme eligibility criteria as a first home borrower.

Please note that this tool is provided as a guide only and does not mean that you will receive either a guarantee or a loan from a participating lender.

Check your eligibility

To begin the eligibility tool, choose an option below:

Borrower Eligiblity

The First Home Loan Deposit Scheme is open to singles or couples.

Singles
If you are looking to purchase your first home as the only person named as a borrower in your home loan, then you would apply under the Scheme as a single.

Couples
If you are looking to purchase your first home with your spouse or de facto partner, where you are both named as borrowers in your home loan, then you would both apply under the Scheme as a couple.

These are the only two types of applications that are eligible under the Scheme.

Home loan arrangements made with family or friends, with more than two borrowers, or any instance where the other borrower is not your spouse or de facto partner, are ineligible for the First Home Loan Deposit Scheme.

Your Eligibility Checks

There are several criteria used to determine eligibility as a first home buyer under the Scheme. You should consider whether your personal circumstances satisfy all of the following checks, including:

 

  • an income test

  • a prior property ownership test

  • a minimum age test

  • a deposit requirement, and

  • an owner-occupier requirement.

 

You need to satisfy all these checks to qualify for the Scheme. If you don’t meet the requirements for one or more of these checks, or have questions about any of these matters, you should ask your lender and/or seek appropriate advice.

 

Income Test

The Scheme includes an income test for:

  • singles – your taxable income for the previous financial year must not be more than $125,000.

  • couples – your combined taxable income for the previous financial year must not be more than $200,000.

 

The income test is assessed by your lender.

For Scheme reservations made up to 30 June 2020, the relevant Notice of Assessment (NOA) from the Australian Taxation Office is for the 2018-19 income year. However, if you hold that reservation for too long (e.g. more than 90 days), your relevant NOA may end up being the 2019-20 income year.

For Scheme reservations made from 1 July 2020 to 30 June 2021, the relevant NOA is the 2019-20 income year. 


Prior Ownership Test

The Scheme is in place to assist genuine first home buyers.

The prior ownership test requires you to not have ever owned:

  • a freehold interest in real property in Australia

  • an interest in a lease of land in Australia with a term of 50 years (or more), or

  • a company title interest in land in Australia.

 

These tests apply for property interests in all states and territories of Australia, regardless of whether the property was a commercial property, an investment or owner-occupied, and whether it was ever lived in.

They also apply if any of the interests listed above have been held by you on your own or together with someone else – for example, where you held an interest in property with a former spouse or de facto partner.

Note that if either of you – whether individually or with someone else – have held any of the interests listed above, as a couple you are not eligible first home buyers.

For your home loan to be covered by the Scheme, you will need to make a statutory declaration that confirms you have not held any interests of this kind. This declaration is made under the First Home Buyer Declaration provided to you by your participating lender.

If you are unsure of whether you have held any of the interests listed above you should ask a professional adviser, as you will need to be sure that you are not giving a false declaration.


Citizenship Test

The Scheme is only open to current Australian citizens.

The citizenship test for you being an ‘eligible first home buyer’ for the Scheme is that you will need to be an Australian citizen at the time you enter into a home loan with your participating lender.

If you are applying under the Scheme as part of a couple, you will both need to be Australian citizens.

The Scheme is not open for permanent residents who are not Australian citizens.


Minimum Age

The Scheme is only open to persons that are 18 years of age or over.

The minimum age test requires you to be 18 years of age or over at the time you enter into a home loan with your participating lender.

Deposit Requirement

There is a minimum deposit requirement for the Scheme.

The Scheme is to assist singles and couples (together) who have at least five per cent (5%) of the value of an eligible property saved as a deposit. The 5% must be made up of genuine savings. If you have 20% or more saved, then your home loan will not be covered by the Scheme.

Your Participating Lender will be able to tell you if you satisfy this requirement. You should also confirm with your Participating Lender whether any cash grants under other Australian Government, State or Territory schemes or programs you may receive can be considered as part of genuine savings by that Participating Lender.


Owner Occupier Requirement

The Scheme is provided to assist Australians to purchase their first home.

Investment properties are not supported by the Scheme.

To meet the owner-occupier requirement, you will need to:

  • move into the property within six months from the date of settlement or, if later, the date an occupancy certificate is issued, and

  • continue to live in that property for so long as your home loan has a guarantee under the Scheme.

 

If you don’t live in your property – including where you move out of the property at a later time – your home loan will cease to be guaranteed by the Scheme*. In these circumstances there may be terms and conditions of your home loan that require you to take certain actions – including that you may be need to pay fees and charges and/or take out insurance that would not have otherwise applied if your home loan were participating under the Scheme.

 

Your participating lender will be able to explain these terms and conditions to you.

 

* Members of the Australian Defence Force (ADF) are still required to be owner-occupiers under FHLDS however if they are unable to meet the owner-occupier requirement because of their duties, they can still be eligible if, at the time of entering into their loan agreement, they intend to live in the property.

Property Price Caps

 

Maximum purchase prices (property price caps) are applicable for eligible properties purchased under the First Home Loan Deposit Scheme in capital cities, large regional centres and regional areas.

Note: Higher property price caps apply for eligible properties purchased under the FHLDS (New Homes). If you are unsure of the relevant price cap for the property you are looking to purchase, please contact a participating lender to confirm.

Search property price cap by suburb

Please note that this tool is provided as a guide only and does not mean that you will receive either a guarantee or a loan from a participating lender. Please confirm the relevant property price cap for your circumstances with a participating lender.

To find the property price cap for a suburb click on the link below:

If the suburb or postcode you wish to search does not appear, or if you have a query regarding the results, please contact us at FHLDS@nhfic.gov.au

How To Apply

 

All applications for the First Home Loan Deposit Scheme need to be made directly with one of the Scheme’s participating lenders (or their authorised representatives, i.e. a mortgage broker).

NHFIC does not accept applications directly and we cannot provide personal financial advice.

First home buyers (and those advising a first home buyer) are encouraged to consult with a participating lender and seek their own independent financial and legal advice on how to structure their loan arrangements in a way that suits their own personal circumstances.

Participating Lenders

Following a competitive procurement process in 2019, NHFIC appointed 27 lenders to the panel of residential mortgage lenders able to offer guarantees under the Scheme.

 

Both National Australia Bank and Commonwealth Bank of Australia have offered Scheme-backed loans from 1 January 2020. The 25 non-major lenders have offered guaranteed loans from 1 February 2020.

All participating lenders are supporting the Scheme by not charging eligible customers higher interest rates than equivalent customers outside the Scheme.

 

FHLDS panel update: 5 May 2021

The National Housing Finance and Investment Corporation (NHFIC) Board, which oversees the administration of the First Home Loan Deposit Scheme (FHLDS), has decided that the existing FHLDS lender panel will continue for the 2021-22 financial year.

 

Further information concerning the future arrangements for the FHLDS lender panel will be communicated in due course.

Click below to see a list of participating lenders:

FAQ's