First Home Loan Deposit Scheme and what it means for you


According to the National Housing Finance and Investment Corporation (NHFIC),15% of Aussie households are prospective homeowners, and if you fall into this category, you may be in for a (financial) treat.

When the Federal Budget 2022 was announced last night, so too were 50,000 new places within the First Home Loan Deposit Scheme (FLHDS). This is great news for those of you looking to buy for the first time!

Hayden Groves, President of Real Estate Institute of Australia (REIA) is in high favour of this important investment, as he believes it shows confidence that the FHLDS is backing our longing for the ‘Great Australian Dream’, whilst supporting the $9.9 trillion-dollar Aussie private property markets along the way.


How the numbers have shifted

The past two years have been a curious time for many industries – none more so than real estate. Though 15% of Australian households are predicted to be future homeowners, the number of first home buyers is decreasing year upon year – and COVID hasn’t helped one bit.

According to Groves, there has been a decrease of 18.3% first home buyers over the past year, with just 37,620 people buying a home for the first time in the quarter.

But while the number of buyers may be decreasing, the average loan size is climbing in the opposite direction- with the average reaching $470,548 in the same period, a 12.9% increase in loan size huge. But are salaries and wages rising with these loan escalations? Unfortunately not.


What is included in the First Home Loan Deposit Scheme?

In a nutshell, from 1 July 2021 to 30 June 2022, there will be 10,000 First Home Loan Deposit Scheme places made available to eligible first home buyers. Hurrah!

To expand, when the Federal Budget 2022 announced the scheme, it was detailed as having 35,000 places available for first home buyers, with an additional 5000 in targeted measures for the Family Home Guarantee. On top of this, 10,000 places were welcomed for a newly created tranche – the Regional Home Guarantee.

Promising stuff for those of you looking to buy your very first home in the coming months! And it isn’t bad for the property market overall, either.

Considering the median home loan is $470,548, the scheme will equate to a combined equivalent of approximately $24 billion in guarantees, and roughly $30 billion in sales to first home buyers. That will certainly keep the property engine chugging along for a while.


What are the benefits?

Considering that in many cases, first home buyers with less than a 20% deposit are required to pay lenders mortgage insurance, it comes as a huge financial relief that this will not be the case to those who take part in the scheme.

With the FLHDS, part of an eligible first home buyer’s home loan from a Participating Lender will be guaranteed by NHFIC. What does this mean for you? In brief, this allows you to secure your dream home with as little as a 5% deposit!

Eligible home buyers with a home loan covered by the scheme will also find there is an abundance of support available, and advice to help you save money throughout your property journey. Australian Government programs such as the First Home Super Saver Scheme, Home Builder Grant or First Homeowner Grant may be offered to you by State and Territory governments, so it is good to know there may be even more opportunities for you to get ahead in the property game.


What type of property can I purchase?

The scheme must be a residential property. So if you were thinking of purchasing a property for business purposes, you’re out of luck.

By definition, residential properties include an:

  • existing house, townhouse or apartment
  • house and land package
  • land and a separate contract to build a home
  • off-the-plan apartment or townhouse

Keep in mind that there are specific dates and requirements in place to apply for the different property types if you’re looking to take part in the First Home Loan Deposit Scheme. If you’re unsure of how to find the dates relevant to your application, let our team at Kitty & Miles know, and we’ll guide you through the process.

Like Groves, we are all for this initiative and are grateful to the Federal Minister for Housing, the Hon Michael Sukkar MP for championing it, to begin with.

With long term provision and inevitable expansion of the FHLDS, the scheme and others like it form the necessary supportive measures our Australian first home buyers need to find their feet in an otherwise uncertain market.