Home Loan Deposit

Most home loans can fund up to 85-95% of the value of your property, which means you’ll need a minimum of up to 5-15% as a deposit. However, there may be benefits in saving a larger deposit. For example, if you borrow more than a certain level (commonly 80% of the value of the property you’re using the loan.

• Low Deposit Home Loans. Are you thinking about getting a home loan but a small deposit is holding you back? You may want to consider one of these low deposit home loans. 10% Deposit Home Loan. With just a 10% deposit, you may qualify for a home loan.
• An earnest money deposit is a deposit of good faith on a home loan from a buyer to a seller that serves to protect VA buyers and sellers in a real estate transaction. Skip to Content A VA approved lender.

The First Home Loan Deposit Scheme (FHLDS) has been designed to help eligible first home buyers get into the property market sooner. But how exactly does it work? What requirements do you need to meet to qualify? And, if you are eligible, how can you apply? We explore everything you need to know.

What is the First Home Loan Deposit Scheme?

The First Home Loan Deposit Scheme began on 1 January 2020. It allows eligible first home buyers to purchase a property with as little as a five per cent deposit and without the need to take out lenders mortgage insurance (LMI). The government says this could save eligible first home buyers as much as $10,000.

The Commonwealth Government guarantees the difference between what the eligible first home buyer has saved and the 20% deposit threshold lenders usually require before they’ll provide a loan without LMI.

For instance, if you have $45,000 to put towards a $500,000 home, the government would step in and guarantee the first $55,000 of your loan so that it brings your security up to $100,000, or 20% of the total value of the property, excluding government fees like stamp duty. In this sense, the First Home Loan Deposit Scheme has a similar effect to a Family Guarantee but with the government playing the role of guarantor over the loan instead of a family member.

While the scheme doesn’t offer a cash payment, the good news is that you can use it in conjunction with any other government grants, schemes, concessions and waivers you qualify for. For instance, any First Home Owner Grant or stamp duty concessions you qualify for in your State or Territory will still apply.

FHLDS New Home Guarantee

As part of the 2020-21 Federal Budget, the Australian Government has committed an additional 10,000 First Home Loan Deposit Scheme (FHLDS) places for the 2020-21 financial year, specifically for eligible first home buyers purchasing new homes.

The ‘New Home Guarantee’ (NHG) has been established to support the Government’s economic stimulus measures and create jobs in the residential construction sector.

The additional 10,000 guarantees will be made available in 2020-21 for eligible first home buyers to build a new dwelling or purchase a newly built dwelling with a deposit of between 5 and 20 per cent of the property’s value (lenders criteria applies). A revised set of property price caps will apply specifically for eligible properties under the NHG.

What is a ‘new home’?

Eligible NHG properties include:

• newly constructed dwellings (e.g. whether a freestanding house, townhouse or apartment)
• off-the-plan dwellings (e.g. whether a freestanding house, townhouse or apartment)
• house and land packages
• land and a separate contract to build a new home.

To be eligible, the borrower purchasing the newly built dwelling must be an eligible first home buyer. Owner builder constructions are ineligible under the New Home Guarantee.

Am I eligible for the First Home Loan Deposit Scheme?

To be eligible for the scheme you must be an Australian citizen who’s over 18 years old. If you’re buying as a couple, it must be with your spouse or partner. You must also never have owned residential property previously in Australia, whether as an owner-occupier or investor. The eligibility criteria for the NHG is the same as the criteria for the FHLDS.

There are other requirements you’ll need to meet, when it comes to your salary, your home loan and the property itself. We’ve set these out in more detail below.

1. Property requirements

For the original First Home Loan Deposit Scheme, there are few restrictions on the type of property you can purchase – both newly-built and established properties qualify. For the ‘New Home Guarantee’ (NHG) eligible first home buyers need to build a new dwelling or purchase a newly built dwelling as opposed to an established property.

However, for both schemes, there are thresholds on the value of the property. These vary depending on which State or Territory you’re located in and whether you’re in a metropolitan or regional area.

First Home Loan Deposit Scheme (FHLDS)

First Home Loan Deposit Scheme (FHLDS): New Home Guarantee

For the purposes of the scheme, a regional centre includes any centre with a population greater than 250,000. This includes the Gold Coast, the Sunshine Coast, Newcastle and Lake Macquarie, the Illawarra and Geelong. Some other regions have different thresholds.

2. Buying as a single or couple

100% Stated Income Mortgage Lenders

You can qualify for the scheme as an individual buyer or as a couple. To be eligible as a couple, you need to be married or in a de facto relationship. Unfortunately, you’re not eligible if you’re buying with people you have a different relationship with, such as a parent or grandparent, sibling or friend

3. Salary threshold

If you’re purchasing a home on your own, you need to have earned $125,000 or less in the last financial year (as declared in your ATO Notice of Assessment) to qualify for the First Home Loan Deposit Scheme. If you’re purchasing as a couple, you must have had a combined taxable income of less than $200,000 in the last financial year.

4. How much deposit do you need to have saved?

Home Loan Deposit Options

To be eligible, you’ll need to have saved at least a five per cent deposit. The government says these need to be ‘demonstrated savings’, which means you won’t be able to count any First Home Owner Grant money towards this amount.

5. Principal and interest loan

Your loan usually needs to be a principal and interest home loan for the entire period of the guarantee. The exception to this is if you’re taking out a loan over both vacant land and to construct a new home. In these circumstances, interest-only loans are eligible while your home is in construction.

Owner/occupiers only

Finally, the scheme is only open to owner-occupiers, so you’ll need to be purchasing the home to live in it.

How to apply for the First Home Loan Deposit Scheme?

New scheme places are released at the start of each financial year, with the latest release on 1 July 2020. For the newly announced FHLDS New Home Guarantee, NHFIC is currently working with the FHLDS participating panel lenders on the implementation of the NHG. Further information and updates will be provided on the NHFIC website in the near future.

NAB and CBA are the two major lenders selected to participate with a total allocation of 5,000 grants shared between them both. This means you can jump in line and apply for a place in the scheme with realestate.com.au Home Loans through our partnership with NAB.

Here is a list of the other lenders allocated the final 5,000 places:

• Australian Military Bank
• Auswide Bank
• Bank Australia
• Bank First
• Bank of us
• Bendigo Bank
• Beyond Bank Australia
• Community First Credit Union
• CUA
• Defence Bank
• Gateway Bank
• G&C Mutual Bank
• Indigenous Business Australia
• Mortgageport
• MyState Bank
• People’s Choice Credit Union
• Police Bank (including the Border Bank and Bank of Heritage Isle)
• P&N Bank
• QBANK
• Queensland Country Credit Union
• Regional Australia Bank
• Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank Ltd)
• Teachers Mutual Bank Limited (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank)
• The Mutual Bank
• WAW Credit Union

Although the scheme is administered by the Commonwealth Government’s National Housing Finance and Investment Corporation (NHFIC) you can’t apply through them. Instead, you can find out more about how to apply for a Scheme place by contacting a participating lender directly or through a Mortgage Broker. You can also enquire directly with NAB by completing this request a callback form.

To apply to the Scheme, you’ll be subject to the following eligibility criteria. You need to be able to provide documentation of your eligibility to secure your position.

Eligibility criteria includes:

• All applicants must be eligible First Home Buyers and must not have owned or had an interest in residential property (whether as an investment or owner occupied).
• Individual applicants must have earned less than $125,000 or $200,000 for couples in the last financial year (as evidenced on your ATO Notice of Assessment).
• Couples must be married or in a de facto relationship. Other persons buying together, including friends, siblings or a parent/child are not eligible.
• All applicants must be at least 18 years of age and have a valid Medicare card (or Defence ID).
• All applicants must be Australian citizens with either a valid Australian passport or proof of Australian citizenship. Permanent residents are not eligible.
• Applicants must have a deposit of between 5% and 20% of the property’s value.
• Your purchased property price must be within the property price threshold for the suburb and postcode. You can check the property price cap for your area using NHFIC’s online tool.

On top of this, you should also bring any documents you would usually expect to take to your first home loan meeting. This includes proof of your current income and expenses, details of your employment status and information on any debts or credit cards.

Other things to look out for before applying for the First Home Loan Deposit Scheme

While the First Home Loan Deposit Scheme promises to help many eligible first home buyers onto the property ladder sooner, you still need to consider whether it’s right for you. This includes asking yourself the following questions.

• Are you currently employed? If you are not currently employed, you are not eligible for the scheme.
• Do you meet the lender’s credit requirements? Your home loan application will still be assessed like any other, which means you need to be able to meet the lender’s income and expenses requirements and have a sound credit history.
• Can you meet the repayments throughout the whole period? A smaller deposit usually means a larger home loan. And, remember, you won’t be able to switch to interest-only while you’re covered by the scheme. If your circumstances change you’ll still need to keep making the same repayments.
• Do you have genuine savings? If you can’t demonstrate you’ve saved at least five per cent of the value of the home, you may not qualify under the scheme at all, even though some lenders may still allow you to borrow.
• Can you afford stamp duty and other upfront costs? You may still need to pay these amounts, even though some state and territory governments offer generous discounts for eligible first home buyers.
• Are there better alternatives? For instance, would you be better off saving towards a larger deposit and reducing the size of your home loan?

What if you don’t qualify?

If you don’t qualify for the First Home Loan Deposit Scheme you may still have the opportunity to get onto the property ladder sooner rather than later – even without paying lenders mortgage insurance. For instance, you may be able to have a family member act as guarantor over all or part of the loan.

Alternatively, you may be able to turbocharge your savings so that you meet the 20% deposit threshold through the First Home Super Saver Scheme. And you may well also be entitled to a First Home Owner Grant to help you get to that point sooner.

Want to know more?

realestate.com.au Home Loans is helping eligible first home buyers to get into the property market. We’re excited to be partners with NAB and to be able to provide the opportunity to get in line for one of the first 5,000 first home buyer guarantee scheme loans available.

If you’re interested you can enquire in two ways:

• Request a callback from NAB who can talk you through eligibility and next steps. It is recommended you do this as soon as possible given there are only 10,000 loans available for this financial year, ending 30^th June 2020.
• Book an appointment with one of our mortgage brokers who can help with a selection of appointed lenders.

FAQs about this loan

• Q What the impact is coronavirus (COVID-19) having at Keystart?
  A
• Q Can I get a loan if my sole source of income is Centrelink payments?
  A

  You may qualify for a loan based solely on Centrelink income however the loan amount will be based on your income level and may not be enough to buy a property.

• Q Do you do interest only loans?
  A

  No. As we are focused on helping more people start their home ownership journey, we do not offer interest only loans or loans for an investment property. All of our loans are principal and interest home loans.

• Q Can I buy an investment property?
  A

  No. As we are focused on helping more people start their home ownership journey, we do not offer interest only loans or loans for an investment property. All of our loans are principal and interest home loans and are for owner-occupiers. You are required to occupy the property as your principal place of residence.

• Q Other than the deposit, what other costs are there?
  A

  Some of the other upfront costs you may incur when buying a home include application fees, legal/conveyancing fees, transfer fees, government stamp duty, inspection fees (building/termite), settlement agent fees, building insurance and water/shire rates.

  You may also need to consider your moving costs if you need to hire a truck or removalists. Maybe friends and family can help?

• Q Can I buy an established house?
  A

  Absolutely. Once you have conditional approval you can start house-hunting for your home. There are some advantages in buying an established house. Read more in our Build or buy guide.

• Q Can I build a new home?
  A

  Absolutely. Once you have pre-approval you will know how much you will be able to borrow, and therefore how much you can spend. You might like to to weigh up your options of building vs buying a new home - read our guide for some helpful tips.

• Q Can I buy anywhere?
  A

  Yes, anywhere within Western Australia. Once you have conditional approval you will be able to start looking for your new home. You can use the finance to buy an established home or to build. Remember to take into consideration the distance to your work and other facilities you want nearby.

• Q Am I eligible?
  A

  Keystart has some set eligibility criteria. You can find out more about your loan requirements or you can find out if you would be eligible by completing pre-qualification. This takes about five minutes.

• Q Do I have to be employed to get a loan?
  A

  Yes, you do need to have a stable income or regular employment for at least six months.

  Keystart accepts some Centrelink benefits as income, but your total income affects the amount you will be able to borrow.

• Q Can I only use Keystart if I go with a builder?
  A

  No. Once you have pre-approval you are able to go home-hunting for whatever you like. An apartment, an existing home in an established area or a new house and land package. The choice is yours.

  We support you all the way through the loan application process too with a dedicated home loan specialist working with you from your first enquiry through to settlement.

• Q Do I need to show savings history?
  A

  No. We do not require savings history but will request statements for any bank accounts you have as well as statements for any existing loans, credit/store cards and rental history. This is so we can establish your ability to manage your finances.

• Q What type of home can I buy?
  A

  With Keystart's Low Deposit Home Loan you either can purchase an established property, build a new home through a registered builder or buy a newly constructed property. You can build an apartment, a townhouse, a stand-alone home or a unit - the choice is yours!

• Q I already own a home but want to apply for a Keystart loan as well. Is that possible?
  A

  Unfortunately you cannot be considered for any Keystart products if you already own a property. Keystart assists people to get started on their home ownership journey. We require you to owner occupy the home for the life of the Keystart loan.

  If you are in a situation where you will not own a home at the time of settlement, for example if you are in the process of selling your existing home, you may still be eligible. Get in touch to find out more.

• Q Why have the income limits been set at specific caps for each region?
  A

  Keystart has undertaken a great deal of research to determine the income levels that assist the greatest number of Western Australians into a reasonable standard of housing. These limits are continually reviewed and will be amended if necessary.

• Q I have owned a property before. Can I apply?
  A

  Yes you can. Subsequent home buyers are eligible to apply as long as you don't currently own or part own any other home or land.

• Q Can I rent out my property?
  A

  No. We aim to help more people on the journey to home ownership. In line with this vision, we do not offer loans for investment properties. Under the terms and conditions of the Offer to Borrow and the Keystart mortgage, you are required to occupy the property as your principal place of residence. This means you are not able to rent the property out.