The Federal Government’s 2020 First Home Loan Deposit Scheme
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The Federal Government’s 2020 First Home Loan Deposit Scheme

The federal government has launched an initiative to assist first home buyers entering the housing market by underwriting home loans for first home buyers. The new government scheme for first time buyers allows approved applicants to take out a mortgage with just a 5% deposit and avoid paying lenders mortgage insurance (LMI).

Essential Points

Start Date: 1 January, 2020

Eligibility: Singles earning less than $125,000, couples less than $200,000

Minimum Deposit Required: 5%

Property Price Cap: Dependent on region (see below)

The government has also capped the number of homebuyers it will support at 10,000 p.a., which means a relatively small number of people will benefit (more than 110,000 first homes were bought in 2018).

What is the First Home Loan Deposit Scheme?

The government’s scheme is designed to allow easier and faster access to the property market for first home buyers.  The scheme will do this by allowing first time buyers to pay a deposit as little as 5%, while avoiding lenders mortgage insurance (LMI).  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.

How does it 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.


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 $29,991, (based on a purchase price of $700,000 in NSW).

The Government’s deposit scheme can also be used alongside other first home buyer schemes that waive the normal stamp duty cost.


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.