10,000 First Home Loan Deposit Scheme places available in 2021 Federal Budget

The Treasurer Josh Frydenberg has confirmed another 10,000 places will be added to the First Home Loan Deposit Scheme on budget night.

10,000 First Home Loan Deposit Scheme places available in 2021 Federal Budget
10,000 First Home Loan Deposit Scheme places available in 2021 Federal Budget

The Treasurer Josh Frydenberg has confirmed another 10,000 places will be added to the First Home Loan Deposit Scheme (FHLDS) on budget night. 

The incentive allows first home buyers to build a new, or buy a newly built, home with a deposit as little as 5 per cent.

The FHLDS which consists of 10,000 spots in each wave was an 2019 election promise of the Morrison government to provide first home buyers the opportunity to purchase a home with a 5% deposit without paying lenders mortgage insurance (LMI), with the government guaranteeing the remaining 15%.

The insurance is normally payable with a deposit of less than 20 per cent and can cost tens of thousands of dollars.

More than 25 lenders have participate in the scheme over the past two years.

It is means tested, with eligibility capped at income of $125,000 for singles and $200,000 for couples.

The last wave of the scheme was just for new home builds and new apartments.

There has been no detail on any changes to the scheme but the last wave saw the caps on the value of eligible new homes lifted to $950,000 in Sydney ($600,000 in regional NSW) and $850,000 in Melbourne ($550,000 in the rest of Victoria). 

In the other capital cities participants could purchase new property worth $550,000.

Some 1,800 recipients in the last round failed to proceed with their purchases so Housing Minister Michael Sukkar announced in February government had reissued the unused guarantees from the 2019/20 financial year.

As well, the government's federal budget is increasing the maximum amount of superannuation contributions that can be released under the First Home Super Saver Scheme to be used to save for a first home deposit. It is rising from $30,000 to $50,000.

"It is about giving people the opportunity to get into the market," the Treasurer told The Canberra Times.

Frydenberg has been also in contact with the Reserve Bank and lending regulators about taking the heat from the hot property market.

"They are watching it closely. But to date, the new loan commitments have been largely owner occupiers. And as I say, first time buyers are coming to the market in greater numbers," Mr Fydenberg said.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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