The First Home Loan Deposit Scheme (FHLDS): Everything You Need to Know
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The First Home Loan Deposit Scheme (FHLDS): Everything You Need to Know

Angelica Silva

Angelica Silva

26/03/2021 • 11 minute read

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A suburban home with a lush front yard, a white picket fence, maybe even a golden retriever behind it? When you hear ‘The Great Australian Dream’ what comes to your mind? A phrase that has been bandied around a lot and has meant different things to different people over time, any reference to the Australian Dream generally refers to buying a home. 

Now in 2020, we’re seeing this definition extend beyond buying a home and referring more to ideals such as achieving a comfortable lifestyle and overall financial wellbeing. A survey by Commonwealth Bank revealed, more than 70% of Aussies consider owning a property to be their ultimate goal. So while the definition of this dream varies from person to person, the concept of homeownership remains a vital milestone amongst our diverse society. 

For most Aussies, a home will be the most expensive purchase they make in their lifetime. Fortunately, the Australian Government has an initiative to support eligible first home buyers purchase their first home sooner, the First Home Loan Deposit Scheme (FHLDS). Read on to find out exactly what this scheme is and how it can help your once-distant dream of owning a home become a reality.

What is the First Home Loan Deposit Scheme? 

The First Home Loan Deposit Scheme is designed to help people enter the property market. Usually, Australian home buyers have to save up a deposit of at least 20% of the property’s value or take out Lender’s Mortgage Insurance, which can often add up to thousands of dollars. 

However, under the Scheme, eligible first home buyers can purchase a modest home with a deposit with as little as 5%. This is because The National Housing Finance and Investment Corporation (NHFIC) guarantees to a participating lender up to 15% of the value of the property purchased, that is financed by an eligible first home buyer’s home loan. 

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

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On October 3, the Australian Government announced, an additional 10,000 First Home Loan Deposit Scheme places will be provided for the 2020-21 financial year.

The scheme has already helped close to 20,000 first home buyers purchase a home this year.

Property Price Caps 

Applicants must meet a set of criteria to be eligible for the extended scheme, such as having to earn a certain amount of money. Conditions also apply to the type of properties that can be bought under the scheme – there are different property price caps for capital cities, larger regional centres and regional areas as well as for new or existing home purchases. The price caps allow applicants to work out how much they might need to save up for a deposit. Don’t worry, we’ve provided tables below that show the maximum property purchase price that would apply in different areas under the extended FHLDS. 

Price caps and deposit requirements for the next extended First Home Loan Deposit Scheme

State/Territory Capital city/regional centre Rest of state
NSW $950,000 $600,000
VIC $850,000 $550,000
QLD $650,000 $500,000
WA $550,000 $400,000
SA $550,000 $400,000
TAS $550,000 $400,000
ACT $600,000 N/A
NT $550,000 N/A

Source: Housing Minister and Assistant Treasurer

Price caps and deposit requirements for the next extended First Home Loan Deposit Scheme (rounds that started 1 January and 1 July, 2020) 

State/Territory Capital city/regional centre Rest of state
NSW $700,000 $450,000
VIC $600,000 $375,000
QLD $475,000 $400,000
WA $400,000 $300,000
SA $400,000 $250,000
TAS $400,000 $300,000
ACT $500,000 N/A
NT $375,000 N/A

Source: Housing Minister and Assistant Treasurer

Want to find out the property price cap for a particular suburb you’re looking to buy in? Use the NHFIC’s handy search bar.


Now that we’ve crunched the numbers, let’s get into whether or not you’re eligible for the FHLDS. As well as the purchase price of the property, there are a number of factors, including your income, that could determine whether or not you would be able to secure a government guarantee on your home loan. According to the NHFIC, to qualify for the First Home Loan Deposit Scheme, you must meet the following criteria:

  • All applicants must be Australian citizens with a valid Australian passport or proof of Australian citizenship. Permanent residents are not eligible. 
  • All applicants must be at least 18 years old and have a valid Medicare card (or Defence ID).
  • Individual applicants must have earned less than $125,000, or $200,000 for couples in the last financial year.
  • Couples must be married or in a de-facto relationship. Other persons buying together, such as siblings, a parent and child or two friends buying together are not eligible. 
  • Applicants must have a deposit of between 5% and 20% of the property’s value. 
  • Loans under the Scheme require scheduled repayments of the principal (excluding interest) of the loan for the full period of the home loan contract.
  • Applicants must intend to be owner-occupiers, so move into and live in the purchased property. Investment properties are not supported by the Scheme. 
  • Applicants must be first home buyers who have not previously owned, or had an interest in a residential property, either on their own or jointly with someone else (this includes body corporate and company-owned properties, regardless of whether it was an investment or owner-occupied property and whether it was ever lived in).

The NHFIC has provided a more comprehensive guide on eligibility on its eligibility checker webpage, which includes additional criteria, relevant dates and requirements for different property types. 

Types of property

According to the Australian Government, an eligible first home buyer can buy the following types of property under the scheme:

An existing house, townhouse or apartment

This refers to your typical stand-alone house, townhouse or apartment complex that has already been built.

A house and land package 

House and land packages involve purchasing a block of land from a developer and selecting a builder to design the home. Builders partner with land developers to offer house and land packages, often sold in a ‘bundle’ deal. They come in fixed price packages which lock in the price for both the block of land and the construction of the house. 

Land with a separate contract to build a home 

Buyers usually sign a contract with the land developer for just the land component, and then a separate contract with the builder for the build component. As such, buyers are required to settle on the land portion and then pay ‘progress payments’ during construction. 

An off the plan apartment or townhouse

In its simplest terms, buying off the plan is when you sign a contract to buy an apartment or townhouse that is yet to be built or is in the process of being built. Without a physical property to inspect, buyers base their decision on plans and artistic renderings of how the apartment might look, in addition to information about the project and developer. 

How to apply

With another 10,000 places now available under the scheme, we have a feeling people will be flocking to their screens to find out if they are in a position to apply for the FHLDS and whether doing so would suit their needs and budget.

For those wanting to take the plunge, we’ve listed the key steps in the FHLDS application process, and what you can do along the way to help secure your spot:    

Step one: Check your eligibility

This one’s a no-brainer. With such an extensive list of criteria that applicants need to meet to be eligible for the FHLDS, reading up on these requirements should be your very first step. While it would ultimately be up to your chosen lender to determine your eligibility for the scheme, it’s crucial that you meet the basic requirements, especially the ones surrounding your income. 

Step two: Work out how much of a deposit you may need 

This is where the property price caps pop back into the picture. These caps vary according to the state and region where you want to buy. If you know what price cap applies to the region you are looking to buy, you may then be able to determine the approximate deposit you will need under the scheme. 

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For example:

The price threshold to buy an existing property in Brisbane is at $475,000. So you would need a minimum deposit of $23,750 for that price (with a 5% deposit), and less than $95,000 (less than a 20% deposit).

Step three: Have your documents ready and lodge your tax return early 

Showing evidence your deposit is made up of a solid amount of savings will be one of your biggest strengths in being approved for the FHLDS. To improve your chances of reserving a place under the scheme, though, you will also need to provide some other forms of vital information to your lender. The NHFIC says this includes:

  • Your full name
  • Your date of birth
  • Your Notice of Assessment (NOA) from the Australian Taxation Office for the previous financial year.

The NHFIC recommend that you collect and have the above information available when you first contact your lender.

Step four: Apply for a loan via a participating lender 

Once you’ve checked your eligibility for the scheme, and have all your paperwork and deposit ready to go, the next step is to apply for the FHLDS through one of the scheme’s participating lenders. To figure out which lender to apply to, compare some of the loans on offer from different participating lenders in the scheme. 

Once you have selected a lender, you then need to make an appointment online or over the phone with the lender in order to apply. Your chosen lender will then assess if you are eligible for a spot in the scheme. If this is the case and there’s a spot available, they will reserve a place on the scheme for your loan. On the other hand, if there is no available spot, you could ask if they have a waiting list, or if you could reapply for the next round of the scheme. 

The NHFIC advises first home buyers to consult with a participating lender. It is also advised to seek your own independent financial and legal advice on how to structure the loan arrangements in a way that suits your own personal circumstances. 

Step five: Get conditional approval 

If you’ve been lucky enough to score a reserved spot in the scheme, you will have to wait 10 days to obtain conditional approval for a loan – also known as pre-approval – from your chosen lender. This will determine how much you can borrow and the most important thing, how much you can spend on a home. 

This is provided you meet the certain requirements, such as paying off existing debt or showing further documentation (e.g. a professional valuation of a property you would like to purchase).  

Step six: Find a home and sign the contract 

Here’s the fun but potentially stressful part. As soon as you have been granted your conditional approval, you will be granted 90 days to find, negotiate and sign a contract on a property. This is ensuring the home is priced below the property price threshold for its location. As the NHFIC advises, keep in regular contact with your lender during this time to keep them updated.

On the occasion that you’re unable to find a property and enter into a contract sale prior to the expiry date of your pre-approval, you may be entitled to an extension of another 90 days. However, you will need to contact your lender for further information on whether you’ll be eligible for this extension.

Step seven: Buy the home and move in!

Now we’re at the best part – signing the contract to buy your chosen home and moving in. You will have up to 30 days for the settlement period to allow time for the bank to finalise the loan, as well as for the legal processes that allow a house contract to settle. From here, you must be living in the house within six months of settlement.

Ready to get the keys to your dream home?

We hope this guide on the First Home Loan Deposit Scheme helped you gain more insight into how the scheme works and whether you’re eligible to have a spot in it. If you want to learn more about home loans or personal finance, make sure to check out other articles on Oiyo.

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Oiyo is a consolidated online resource, we are not financial advisors. We work with a range of industry professionals and compliance check our articles to ensure factual accuracy. However, we do not provide professional financial advice. Consider seeking independent legal, financial, taxation or other advice to check how the information and ideas presented in this article relate to your unique circumstances.

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Angelica Silva

Written by Angelica Silva

Angelica Silva is a contributing writer for Oiyo. Over the years, Angelica has worked as a journalist for a range of publications with her work appearing in SBS, Business Insider, and Brown Girl Magazine. She has a Bachelor of Journalism and Arts from the University of Queensland.

More about Angelica Silva

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