The First Home Buyer Deposit Scheme Explained

Following the introduction of draft laws, lenders will be consulting with the Federal Government regarding their participation in the recently announced First Home Loan Deposit Scheme.

Early September, 2019, Housing Minister Michael Sukkar introduced draft laws to set up the scheme, citing the difficulty first home buyers face entering the market.

At the time of the announcement, Mr Sukkar said “The scheme will help first home buyers enter the property market sooner by providing a guarantee that will allow eligible first home buyers on low and middle incomes to purchase a home with a deposit of as little as 5%.”

“The Scheme will support 10,000 first home buyers each financial year. The Government recognises that saving a deposit has become a more significant barrier to entering the housing market than the ability to service a home loan. It can take 10 years for the average first home buyer to save a 20% deposit.”

“The Morrison government’s plan to build a stronger economy will continue to help first home buyers own their first home sooner.”

The introduction of the bill has been warmly welcomed by The Housing Industry Association (HIA).

HIA Managing Director Graham Wolfe said;

First Home Buyers Scheme 2020

“The First Home Loan Deposit Scheme, scheduled to commence in January, addresses one of the greatest hurdles facing those enthusiastically saving to purchase their first home. Saving for a home deposit can take up to ten years or more.”

“The introduction of legislation by the Treasurer, the Hon. Josh Frydenberg, to support the home ownership aspirations for 10,000 first home buyers is a key milestone in delivering this important election commitment,”

“The First Home Loan Deposit Scheme will save an average first home buyer in Sydney, with less than 20 per cent deposit, tens of thousands of dollars over the life of their loan.”

First Home Buyer Deposit Scheme explained.


  • If a first home buyer has saved 5% of the purchase price of their property the government will guarantee the remaining 15% of the deposit.
  • The first home buyer will still need to borrow 95%, but can save up to $10,000 by not having to pay lenders mortgage insurance (LMI).
  • Eligible first home buyers can’t be earning more than $125,000 a year ($200,000 for couples).
  • Access to the scheme will be capped to a maximum of 10,000 loans every year on a first-come, first saved basis.
  • The value of eligible homes under the scheme will vary by region.
  • The scheme starts on 1 January 2020.


Who is eligible for the First Home Buyer Deposit Scheme?

An income threshold of $125,000 will apply to singles and $200,000 to couples. Support will remain for the lifetime of the loan however, the guarantee will end if the loan is refinanced to a new loan or lender.

The First Home Loan Deposit Scheme can be used concurrently with the First Home Super Saver Scheme and state based first home buyer grants.


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