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First Home Loan Deposit Scheme

If you’re a first home buyer looking to snag a property, did you know there’s another Government Scheme to help you enter the market sooner?  

Say hello to the First Home Loan Deposit Scheme (FHLDS). 

Introduced by the Federal Government in 2019, the scheme first became active on 1 January 2020 and since then has assisted tens of thousands of Aussies first home buyers secure their first homes.

As part of the 2022 Federal Budget, another 35,000 places were announced under the New Home Guarantee version of the First Home Deposit Scheme. As a result, the following new spots will be available from the start of the new financial year on July 1, 2022.

  • 35,000 places under the New Home Guarantee: These will only be available to first home buyers purchasing a new home e.g. a newly-constructed home, an off-the-plan dwelling or a house and land package. For existing homes: These must be existing residential properties purchased by first home buyers.

What is the First Home Loan Deposit Scheme?

You’ve likely heard of the First Home Loan Deposit Scheme, at least loosely as something Scott Morrison introduced to help first home buyers. So what is it exactly and how does it work? 

In Australia, if you have less than a 20% deposit saved up, you need to purchase Lenders Mortgage Insurance or LMI, to get a home loan. Under the First Home Loan Deposit Scheme, if you are a first home buyer with at least a 5% deposit, you can avoid paying Lenders Mortgage Insurance (LMI), as the Federal Government will provide a guarantee to the bank for the remaining deposit requirement of the home loan. This scheme is only available for the first 35,000 loans applied via the scheme.

What is Lenders Mortgage Insurance?  

Lenders Mortgage Insurance, also known as LMI, is a type insurance that borrowers have to pay when they have a deposit that is lower than 20% of the value of the property they intend to buy. LMI protects the lender, not you, incase you default on the loan.

Keep in mind, that LMI this is different to Mortgage Protection Insurance which is an insurance that borrowers (like you) can take out to insure themselves in the case they are unable to make repayments due to illness, job loss or even death. 

How much is Lenders Mortgage Insurance? 

The cost of LMI isn’t the same on every home loan. LMI is calculated depending on how much you need to borrow, for how long, and the amount you have saved for the deposit. Depending on your lender, and which mortgage insurance provider they use, LMI cost could be anywhere between 0.5% - 4.5% of your borrowing amount. This cost is usually added to your mortgage. 


Meet Jo and Jessie , and Alex and Ash.  

Both couples are planning to buy properties worth $750,000, each taking out the exact same home loan with the same lender. 

Jo and Jessie have saved up $75,000 between them as a deposit for the house they want to buy, they’d have to borrow $675,000, meaning they have a 10% deposit and a loan-to-value ratio (LVR) of 90%.  

Alex and Ash on the other hand have saved a 20% deposit of $150,000 which would mean they’d end up borrowing $600,000, so their LVR is 80%. 

Do I need to pay LMI

Generally, if you have a LVR of over 80%, you’ll be required to pay Lenders Mortgage Insurance. So in this example, Jo and Jessie have to pay LMI as their deposit is only 10% of the property value, whereas Alex and Ash don’t have to.  

According to one of Australia’s LMI underwriters Genworth’s LMI Premium Estimator, Jo and Jessie  would be up for around $16,470 in LMI, on top of their original borrowing amount of $675,000, bringing their total mortgage amount to $691,470. 

However, if they were to get accepted as one of the first 10,000 borrowers under the First Home Buyers Scheme they wouldn’t be up for the additional $16K cost. 

Am I eligible for the First Home Loan Deposit Scheme? 

As well as being 1 of the first 35,000 applicants for the First Home Loan Deposit Scheme, there are a bunch of other criteria that you need to satisfy to be eligible.

Here’s the basic eligibility requirements for the First Home Deposit Scheme:  

First Home Loan Deposit Scheme eligibility

There are also a few more things to consider… 

  • Income: For singles applying for the scheme they must have a taxable income of up to $125,000 per year, while couples must have a combined taxable income of up to $200,000 per year. Just bear in mind that income is assessed for the financial year before you take out a home loan. 
  • Relationship restrictions: If you are single, there are no requirements on your relationship other than the fact that you are applying for the loan on your own. However if you apply for the scheme as a couple, remember you need to be either married or in a de facto relationship. (A combo of friends, siblings or other family members don’t count as “couple” so they are not eligible).   
  • Repayments: Generally, home loans under the scheme require principal & interest repayments for the entire life of the loan. However, if you decide to buy vacant land on which you intend to build - you may be eligible to take out an interest-only loan for a certain amount of time. So make sure you check with your lender what your repayment options are. 

What are the property requirements? 

Not only do borrowers need to satisfy criteria, but the type and value of the property they intend to buy must also fit within the guidelines of the First Home Loan Deposit Scheme.  

Unlike the First Home Owner Grant, you don’t need to be buying a brand new home to apply for the scheme. The property can be any of the following:  

  • An existing house, townhouse or apartment 
  • A house and land package 
  • Land with a contract to build a home 
  • An off-the-plan townhouse or apartment
  • An eligible building contract (when you have a contract with a licensed or registered builder that says you’ll build a home within a certain timeframe)  

But while there is a wider variety of the types of properties that are eligible under the scheme, there are limitations on how much you are able to spend. Price caps differ from state to state, and between capital cities and rural areas, with the lowest being $400,000 in rural South Australia, Western Australia and Tasmania, and the highest in the NSW capital and regional centres at $950,000.

How much can I spend on my house with the First Home Loan Deposit Scheme? 

Here’s a quick breakdown:

State Capital city / regional centre Other regional & rural areas 
NSW $900,000 $750,000
VIC $800,000 $650,000
QLD $700,000 $550,000
WA $600,000 $450,000
SA $600,000 $450,000
TAS $600,000 $450,000
ACT $750,000 N/A
NT $600,000 N/A

Remember: You must be applying for a loan that is intended to purchase a residential property, meaning one you wish to live in. Generally, applicants must move into and live in the home within six months of settlement, as well as continue to live there for as long as their loan is guaranteed under the scheme. 

Which lenders can I go to? 

NAB and CommBank are the only two of the big banks involved in the scheme, but there are also 25 other smaller lenders, where you may be able to snag a home loan. 

Here’s the full list of participating lenders: 

Major banks 

  • NAB
  • Commonwealth Bank 

Non-major lenders

  • Australian Military Bank
  • Auswide Bank
  • Bank Australia
  • Bank First
  • Bank of Heritage Isle
  • Bank of us 
  • bcu
  • Bendigo Bank
  • Beyond Bank Australia
  • Border Bank
  • Community First Credit Union
  • Credit Union SA
  • Defence Bank
  • Firefighters Mutual Bank
  • Gateway Bank
  • G&C Mutual Bank 
  • Great Southern Bank
  • Health Professionals Bank
  • Indigenous Business Bank
  • Illawarra Credit Union
  • IMD Bank
  • Mortgageport 
  • MyState Bank
  • Newcastle Permanent Building Society
  • People’s Choice Credit Union
  • Police Bank (including the Border Bank and Bank of Heritage Isle)
  • P&N Bank
  • Queensland Country Credit Union
  • Regional Australia Bank
  • Teachers Mutual Bank 
  • The Mutual Bank
  • UniBank
  • Unity Bank
  • WAW Credit Union

How do I apply for the First Home Loan Deposit Scheme? 

There are a few key steps you need to take when applying for the First Home Loan Deposit Scheme, so here’s how you do it.  

Step 1: Contact a participating lender - see list above.  

Step 2: Reserve a place in the scheme -  Whichever lender you choose, they will assess your eligibility for the scheme, and if you are they will reserve a spot for you! 

Step 3: Sort out your budget - After you secure your spot on the scheme, you have 10 days to get pre-approval on the home loan. This determines how much you are able to borrow which will then establish how much you can spend on a property. 

Step 4: Buy a property - You’ll then have 90 days to buy and settle on a home that is under the price cap of your location. 

Step 5: Move in - You need to make sure you start living in the property within six months of settling your home loan. 

Also bear in mind that mortgage products aren’t all built the same - so you may have to front up application or settlement fees straight off the bat. 

What other government initiatives are there for First Home Buyers? 

As a first home buyer, you often hear about a whole bunch of schemes that are in place to help you into the property market. 

But what’s out there? 

So to make things a little easier, here’s a list of a few of the other government schemes for first home buyers. And you may be pleased to know they can also be used in tandem with the First Home Loan Deposit Scheme.  

  • First Home Super Saver Scheme 
  • First Home Owner Grant 
  • First Home Buyers Assistance Scheme (NSW) 
  • First Home Buyer Duty Exemption, Concession or Reduction (VIC) 
  • Home Buyer Concession Scheme (ACT) 
  • First Home Transfer Duty Concession (QLD) 
  • First Home Vacant Land Concession (QLD) 
  • First Home Builder Boost (Tasmania) 
  • BuildBonus Grant (Northern Territory) 
  • Territory Home Owner Discount (Northern Territory) 
  • First Home Owner Rate of Duty (WA) 

Keep in mind, these schemes may differ from state-to-state so ensure you know all the details for the location you intend to buy! 

RELATED GUIDE: First home buyers - what you need to know 

Ready to start exploring the world of home loans? To weigh up providers jump over to our first home loans comparison table or read up on all the info you need with our handy first time buyers guides and home loan tips. 

Polly Fleeting
Polly Fleeting
Money writer

Polly is a personal finance writer specialising in loans and credit cards and general consumer banking. She has a degree in Journalism from the University of Technology, Sydney.

Maria Gil
Maria Gil
Money writer

Maria has five years of journalism experience and is currently a finance journalist covering home loans and property, personal finance and the currency exchange market. She has also completed her ASIC RG146 (Tier 2).