Buying a home with a 5% deposit - scheme to offer more spots under 2021 Budget

happy-first-home-buyers-with-house-keys

An additional 10,000 places under the First Home Loan Deposit Scheme (FHLDS) for new builds will become available from July 1 following an announcement made as part of the 2021 Federal Budget.

This is the second allotment of places released under the New Homes Guarantee version of the Federal Government’s FHLDS which will be available to eligible first home buyers specifically looking to build or purchase a new home.

It adds to the previously announced addition of 10,000 places for existing home purchases under the scheme that will also become available from July 1.

The scheme is designed to help first time buyers with low deposits (as low as 5%) purchase property without needing to take out lenders mortgage insurance.

Instead, the government will ‘guarantee’ home loans used for the purchase which can be taken out through 33 participating lenders including major banks like the Commonwealth Bank and NAB as well as a number of customer owned institutions.

“We commend the Government for embedding competition into the successful FHLDS. Ensuring the strong representation and prioritisation of customer owned lenders has led to greater choice and outcomes for consumers,” said COBA chief executive, Michael Lawrence, on the further expansion of the scheme.

Further budget measures for home buyers

In addition to the continuation of the First Home Loan Deposit Scheme, the 2021 Federal Budget will also target home buyers with the rollout of the Family Home Guarantee scheme and a beefed up First Home Super Saver Scheme (FHSSS).

The new Family Home Guarantee initiative is aimed at assisting single parents get into the property market with a home loan deposit as low as 2%.

Like the FHLDS, the Federal Government will play guarantor under the new scheme, allowing eligible applicants to borrow with a deposit under 20% without having to take out lenders mortgage insurance.

An initial 10,000 places will be available under the scheme which will start on July 1, 2021 and run for four years.

Treasurer Josh Frydenberg also announced that voluntary super contributions made under the First Home Super Saver Scheme (FHSSS) would be expanded from the current maximum of $30,000 to $50,000.

The scheme allows prospective first home buyers to save up for a deposit by making voluntary contributions to their superannuation which can then be pulled out later on.

RELATED: Budget 2021: Low and middle income tax breaks expected for another year

For more of a breakdown on the 2021-22 Federal Budget, including the housing measures above, check out the latest episode of The Finance Burrito podcast!

Or if you're on the hunt for your first property then head on over to our first home buyer comparison tables to compare a range of home loan options, or check out some of the hot offers in the table below.

Compare home loans - last updated 21 May 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    6.25% p.a.
    fixed 3 years
    6.20% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

    Compare
    Details
  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.09% p.a.

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).

    Compare
    Details
  • Fixed Rate

    Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    6.54% p.a.
    fixed 2 years
    7.10% p.a.

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

    Compare
    Details
  • Basic Home Loan

    Owner Occupier, LVR<60%, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.16% p.a.

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

    Compare
    Details

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.