Being a first home buyer can be one of the most exciting and rewarding times in your life. But, as many first home buyers know, it can also be stressful. There are many things that you need to consider – most of which you've never had to think about before. Loans, stamp duty, mortgage insurance, deposits! The list goes on.
However, buying your first home doesn't need to be a headache. A new scheme from the Australian Government promises to make owning a home easier than ever before for many. So, to help you on your way to home buying success, we have put together this handy guide of just what you need to know about the first home buyer deposit scheme.
First Home Loan Deposit Scheme - What is it?
Recently, the Australian Government released a draft for the First Home Loan Deposit Scheme, aimed to help eligible first home buyers purchase their first property sooner. The goal of the scheme is to allow eligible low and middle income first home buyers purchase a property with a deposit as low as 5%. Usually, deposits are set at a minimum of 10-20% or are subject to pricey mortgage insurance, so the scheme will make owning property a reality for many who couldn't have entered the market previously. The scheme, commencing from the 1st of January 2020, will support up to 10,000 loans each financial year.
10,000 new places released from 1 July 2020
Last financial year, all of the 10,000 spaces were taken in just six months of the scheme being announced. Now another 10,000 spaces have been released from 1 July 2020 – so don’t miss out.
We already have clients on the wait list, so if you’ve got 5% deposit, give us a call on 02 4340 4847 and we’ll let you know if you are eligible.
First Home Loan Deposit Scheme - Will you be eligible?
All applicants will need to meet certain eligibility criteria to benefit from the scheme. They will need to have a taxable income of less than $125,000 per year for singles or $200,000 per year for couples. Further, the scheme will only apply to owner-occupied loans (i.e. you can't buy your property and rent it out straight away) on a principal and interest basis.
First Home Loan Deposit Scheme locations and price thresholds
The scheme won't apply equally to all areas. Instead, there will be price thresholds set for capital cities and larger regional hubs with populations greater than 250,000. This recognises that dwelling in cities, and some heavily populated regional areas (like the Gold Coast, Geelong, Newcastle and others), is more expensive.
The thresholds will be:
New South Wales
Capital city and regional centres $700,000
Rest of state $450,000
Victoria
Capital city and regional centres $600,000
Rest of state $375,000
Queensland
Capital city and regional centres $475,000
Rest of state $400,000
Western Australia
Capital city and regional centres $400,000
Rest of state $300,000
South Australia
Capital city and regional centres $400,000
Rest of state $250,000
Tasmania
Capital city and regional centres $400,000
Rest of state $300,000
Australian Capital Territory
Capital city and regional centres $500,000
Northern Territory
Capital city and regional centres $375,000
So, for example, if you are looking to buy in Sydney or another hub in NSW, you can spend up to $700,000 and be eligible for the scheme.
Tips and tricks for applying
As you can see, this is a very exciting opportunity for first home buyers. With the scheme set to commence in January 2020, that leaves you the rest of the year to start preparing your application.
We recommend preparing all your identification and income documents now. You can have these certified by a justice of the peace to save time when you go to apply. Speak to a Sydney mortgage broker like Mint Equity to find out how much you’ll be able to borrow and how the First Home Buyer Deposit Scheme can help you reduce your costs.
You can also start researching the property prices in the areas you are interested in to see where you can afford to purchase under the scheme.
We wish you all the best with your home buying endeavours and hope that the scheme brings you one step closer to your dream first home.