What is First Home Loan Deposit Scheme ( FHLDS )

The first home loan deposit scheme is a relatively new initiative taken by the Government of Australia and is designed to support people with low and middle incomes in buying their first home.

It is a government guarantee that is specifically designed to keep the low earning class in mind and allows the eligible buyers to purchase their first home with a deposit between 5% and 20%.

Even though home buying options with low deposits exist, people still don’t choose them because of the LMI.

LMI or lender mortgage insurance is a one-off fee that has to be paid while people are buying homes. However, with FHLDS new home buyers don’t have to worry about paying LMI.

It is important to keep in mind that FHLDS is not a grant or in the form of cash, rather it is a guarantee on the loan.

How Many FHLDS Vacancies are Available?

FHLDS, a government home loan deposit scheme, was started on 1st January 2020 and an annual quota of 10,000 places was set for the year 2020-2021. 

The Government of Australia has extended this program for the year 2021-2022 after its immense popularity in the last year.

It is advisable to apply for this government home loan deposit scheme as soon as possible because the spaces are filled in a matter of months.

What is the Eligibility Criteria for First Home Loan Deposit Scheme ( FHLDS )

The eligibility criteria for FHLDS has been determined by the Government of Australia and anyone who doesn’t fulfil it won’t be able to apply for it.

The eligibility criteria set forth for the first home scheme 2021 is:

1. Be an Australian citizen of legal age (18). This is a must. Even permanent residents are not eligible for FHLDS.
2. A minimum annual taxable income of up to $125,000 is mandatory to meet the eligibility criteria of the first home loan deposit scheme for singles. For couples, the required taxable income is $200,000 per annum.
3. Only married couples or couples in a relationship can qualify for the FHLDS.
4. No other duo is eligible for this scheme even if they are siblings, friends or even parents and children.
5. Applicants must be able to pay a deposit ranging between 5% and 20% of the property’s value which they wish to buy.
6. If the loan is for both the acquisition of unoccupied land and the construction of a dwelling on the property, the loan may be eligible even if the loan agreement allows for interest-only repayments for a set length of time.
7. Applicants must meet the lender’s borrowing requirements.
8. Follow the FHLDS borrowing limitations.
9. The applicants must shift into the property as soon as possible and should reside in it for as long as the FHLDS guarantee applies.
10. The home should be the first residential property that the applicants have a monetary interest in. If you have investments in residential property or have a joint venture, then you will not be eligible for the Government home loan deposit scheme.

What kind of property is purchasable under the FHLDS?

• Options to choose between a house or a land.

• Pre-existing apartment, house and townhouse.

• Apartments or townhouses which are off-the-plan.

• A plot of land with a separate contract for the construction of a house.

What are the loan limits for the FHLDS?

For qualifying homes acquired under the first home loan deposit scheme, maximum purchase price restrictions apply. These restrictions are basically property price caps.

The price restraints differ depending on the fiscal year in which your Scheme spot was reserved and the location of your home (in a capital city, large regional centre or regional area).

These restraints are applied because the purpose of the first home scheme is after all to acquire a modest dwelling. You can’t just get approvals to attain a lavish property as that would beat the whole purpose of this generous scheme. 

The price cap is as follows:

The capital city pricing criteria applies to certain regional areas with populations of more than 250,000. These include

Newcastle and Lake Macquarie, Gold Coast, Sunshine Coast, Geelong and Illawarra.

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How do you apply for the First Home Loan Deposit Scheme?

The process for the application of FHLDS is fairly simple. The applications and questions of expecting buyers are sorted out and answered via the participating banks and lenders. This is the standard mortgaging application process because the National Housing Finance and Investment Corporation (NHFIC) does not accept applications directly.

Currently, some 34 banks and lenders are participating in the FHLDS program.

If you want to use the FHLDS when building a house, or if you have any questions concerning the scheme’s criteria, Agile Accounting Plus is here to assist!