What is the First Home Loan Deposit Scheme?
Most banks and lenders require a minimum deposit of 20% of the property’s value for the borrower to be exempt from LMI. The scheme allows first home buyers who can’t reach this threshold to take out a loan if they have saved at least 5% of the value of the property they are buying. The Government will underwrite the loan so that borrowers do not have to pay LMI.
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To apply for the First Home Loan Deposit Scheme, home buyers must be:
- applying as an individual or 2 joint applicants
- an Australian citizen(s) or permanent resident(s) at the time they enter the loan
- at least 18 years of age
- earning up to $125,000 for individuals or $200,000 for joint applicants, as shown on the Notice of Assessment (issued by the Australian Taxation Office)
- intending to be owner-occupiers of the purchased property
- First home buyers or previous homeowners who haven’t owned a property in Australia in the past ten years.
Access the Eligibility Tool – a short questionnaire to help home buyers identify which Guarantee/s they may be eligible for.
How does the First Home Loan Deposit Scheme Work?
Talk to us first so that we can help you to determine whether you will be eligible for the scheme. We can then guide you through the process of applying for the scheme and then arrange for the required pre-approval.
What are the benefits of the First Home Loan Deposit Scheme?
The clear benefit of the Government’s scheme is that eligible first-home buyers will avoid the additional cost of lenders’ mortgage insurance (LMI). This could potentially save first-home buyers up to $28,609, (based on a purchase price of $800,000 in NSW).
The Government’s deposit scheme can also be used alongside other first-home buyer schemes that waive the normal stamp duty cost.
What are the risks of the First Home Loan Deposit Scheme?
Lenders usually charge a slightly higher rate of interest for loans at a loan ratio of 95%. This variance will depend with each lender so consult us first.