The Australian Government’s First Home Loan Deposit scheme is due to come into effect from Jan 1, 2020. Yesterday, the National Housing Finance and Investment Corporation (NHFIC) announced one of the two major banks to be appointed to the lending panel for the scheme – National Australia Bank (NAB). The second major bank and other lenders joining NAB on the panel are yet to be announced.
The First Home Loan Deposit Scheme Explained
The Australian Government introduced the scheme to help eligible first home buyers purchase a home sooner. The initiative will allow eligible first home buyers on low to middle incomes to purchase a home with a deposit of as little as 5 per cent without having to pay Lenders Mortgage Insurance (LMI), which currently applies with a deposit of this amount. The scheme is only available to 10,000 applicants each financial year.
Application Process and Eligibility Criteria
Applications are not yet open for the scheme, with the open date set for 1 January 2020. The NHFIC is currently in the process of establishing a panel of residential mortgage lenders to participate in the scheme, with NAB being named as the first one.
Not all first home buyers will be eligible to apply for this initiative. The following eligibility criteria applies:
- An income threshold of up to $125,000 per annum for singles and up to $200,000 per annum combined for couples (assessed in the financial year preceding the financial year in which the loan is entered into);
- The home being purchased will be lived in by yourself (owner-occupied); and
- The property meets the price threshold relevant to the suburb you are purchasing in.
Property Price Thresholds
The property price threshold for the Cairns Region is $400,000. This means that you will not be eligible if the purchase price exceeds this amount.
To find out more about the Australian Government’s First Home Loan Deposit Scheme, speak to a mortgage broker at Preston Finance and Insurance in Cairns.