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First Home Loan Deposit Scheme Updates


Although the First Home Loan Deposit Scheme was the brainchild of the previous government, Labor has opted to not just keep the scheme – but to expand it.

Originally released on January 1, 2020, the First Home Loan Deposit Scheme (FHLDS) is a federal government initiative designed to support eligible first home buyers to build or purchase a home sooner. 

First home buyers are usually required to spend years saving up for the all important 20% deposit, or otherwise pay Lenders Mortgage Insurance. Under the FHLDS, eligible first home buyers could instead purchase or build a new home with a deposit of as little as 5% deposit, with the government actually guaranteeing the remaining amount.

Although first home buyers have long had a plethora of funding options to navigate, the success of the First Home Loan Deposit Scheme skyrocketed in mid 2021 thanks to the addition of an extra 10,000 places, and its expansion to cover existing homes as well as newly built ones. 

While the First Home Loan Deposit Scheme was set to finish at the end of the current financial year, the newly sworn in Labor Government has opted to take a slightly different approach, with the new Home Guarantee Scheme (HGS) set to be unveiled from July 1, 2022. 

Unpacking The Home Guarantee Scheme 

Thanks to pandemic related shutdowns, weather setbacks, building material shortages and the aftermath of the HomeBuilder scheme, residential construction projects in Australia aren’t as affordable or fast as they once were. 

When the First Home Loan Deposit Scheme was initially expanded to cover existing dwellings as well as new builds, the 10,000 places per year were quickly snapped up. While the FHLDS has been rebranded as the Home Guarantee Scheme, there are a few noteworthy updates to pay attention to. 

Arguably the most noteworthy of the new changes is the expansion on how many people can apply for the new Home Guarantee Scheme. While the previous FHLDS was limited to 10,000 applicants per financial year, Labor has knocked that figure out of the ballpark, and have announced that the new Home Guarantee Scheme will be available to 35,000 first home buyers from July 1 2022. 

Labor has also opted to continue with the Family Home Guarantee. As a low-deposit purchase scheme targeted at single parents with up to 5,000 places per year, the scheme will double its capacity, up from the previous cap of 2,500 places per year. 

Previous research from CoreLogic showed that at the end of March 2022, the previous price caps only allowed buyers to select from around 35% of established dwellings nationally, and as few as 11% in the ACT. In line with skyrocketing property prices, one of the major changes to the Home Guarantee Scheme is the new price caps. Depending on the state, some capital city price caps may also extend to large regional centres. 

2021-2022 FY 2022-2023 FY
NSW $800,000 $600,000 $900,000 $750,000
VIC $700,000 $500,000 $800,000 $650,000
QLD $600,000 $450,000 $700,000 $550,000
WA $500,000 $400,000 $600,000 $450,000
SA $500,000 $350,000 $600,000 $450,000
TAS $500,000 $400,000 $600,000 $450,000
ACT $500,000 $750,000
NT $500,000 $600,000

From national property prices sourced in the last quarter, first home buyers on a middle income could cut the length of time they needed to save for a deposit on a typically priced Australian home from 8.8 to 2.3 years, while still avoiding Lenders Mortgage Insurance (LMI). When faced with paying more interest or more rent, it makes sense why first home buyers have flocked to the scheme in droves. 

For first home buyers looking to take advantage of such initiatives, it’s important to note that not all Australian lending providers are participating in the Home Guarantee Scheme. In addition,  the ones that are still have wildly different loan options in terms of features, fees and interest rates – so the services of a reputable mortgage broker have arguably never been more helpful to determine the right fit for you. 

How To Streamline Your First Property Purchase

To ensure you have a chance of securing a place on the Home Guarantee Scheme, Cherry Lending & Finance highly recommends that you complete your 2021/2022 tax return as soon as you can, so that you have your Notice of Assessment ready to submit with your application.

With a background in banking, finance, business development and project management, there’s no better advocate to have on your team than Nikki Berzin. As a fully qualified mortgage broker and director of Cherry Lending & Finance, Nikki is passionate about all things finance, and empowering her clients with the tools to hit their property goals is what she does best. 

If you’re looking to get into your first home, purchase an investment property or even want to look at your options for refinancing, the first step is starting the conversation. Get in touch with Nikki today, or call her directly on 0427 374 155 to bring your mortgage dreams to life.

Disclaimer: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.  Subject to lenders terms and conditions, fees and charges and eligibility apply.