Understanding the First Home Loan Deposit Scheme


Property Management RecommendationsFor many Australians, entering the property market and purchasing their first home is often challenging due to the large deposit required.

The Australian Government’s First Home Loan Deposit Scheme (FHLDS) is designed to assist eligible first home buyers purchase a home sooner by allowing them to obtain a loan with just a 5% deposit, rather than the standard 20% deposit.  The Government then guarantees the remaining 15%, which effectively enables buyers to avoid lenders mortgage insurance. The scheme commenced on January 1 2020 and already 3000 first-home buyers have reserved a place on the scheme.  There are only 10,000 loans available each financial year. The FHLDS can be used to purchase a new or existing property (and in some cases land), and can be used in conjunction with other government programs.

The significance of Lenders Mortgage Insurance when trying to buy your first home

Lenders Mortgage Insurance is an insurance premium typically paid on loan amounts greater than 80% of the value of the property.  It is a one-off payment, paid upfront by the borrowers to an insurer to protect the Lender for the higher risk loans. Under the FHLDS, the Government provides this protection to the lender, enabling borrowers to purchase a property without the need to save or pay for the insurance premium.  This amount can often be the difference between being able to purchase a home or not.  For example, borrowing 95% of a $500,000 home incurs a Lenders Mortgage insurance premium of approximately $20,000.

 Potential savings for first home buyers

The FHLDS, when combined with other Government and State-based incentives, may offer significant savings and help make buying your first home a reality. For example, the table below shows the potential savings when purchasing a new property with access to the First Home Owner Grant, full stamp duty exemption, and the lenders mortgage insurance waiver. Of course be sure to speak with your lender or broker to understand your individual circumstances and eligibility.

  Purchase price Standard purchase costs       New purchase costs
































Whether you, a family member, or friend are considering your first home, it’s worthwhile investigating the eligibility requirements for the scheme.

Applying for the scheme

First home buyers who are considering purchasing under the FHLDS will need to apply for finance via one of the 27 lenders accredited to service the scheme.  Borrowers can still use their Mortgage Broker to support the application process however your broker will need to be approved for the scheme and meet the credit criteria of the lender.

For more information, please contact the Infocus Lending Advisory or you can read more at https://www.nhfic.gov.au/what-we-do/fhlds/.  We are an approved mortgage broker for the FHLDS and are ready to assist with the complete process.  We also work closely with the Infocus Property Advisory for anyone needing assistance sourcing their first home.


This information and any advice in this website is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, property, tax, credit or personal financial advice and should not be relied on as such. You should obtain advice relevant to your circumstances before making decisions in relation to any matters discussed. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. The case studies are hypothetical, for illustration purposes only and are not based on actual returns. You should seek specialist advice from a tax professional to confirm the impact of any advice on your overall personal tax position. Taxation information is based on our interpretation of the relevant laws as applied at the date of this communication. Nothing in this website represents an offer or solicitation in relation to property, securities, investments, financial services or credit in any jurisdiction. While every care has been taken in the preparation of this information, it may not remain current after the date of publication and Infocus Advisory and its related bodies corporate make no representation as to its accuracy or completeness.