One of our main concerns when entering into a purchase of a new home whether it’s our first or not is the financing. Our choices are somewhat dependent on how much we can afford as initial deposit and how much we can pay for mortgage in the coming years.
It’s a good thing that there are options for payment terms in the market. One of them is the First Home Loan Deposit Scheme. This program allows eligible first home buyers to choose a property and purchase it with as low as five percent deposit. It is because of this low deposit rate that allows the buyers not to take out an LMI or a lender’s mortgage insurance.
The First Home Loan Deposit Scheme, also known as the First Home Guarantee is a program that lets the government become the guarantor of your loan as instead of family members. This can somehow make you feel more at ease because qualifying for the First Home Loan Deposit Scheme more or less gets you a few steps closer to your dream home.
What qualifies for a first home?
Before one can apply for a first home loan deposit scheme, you must make sure that the property is eligible to be funded by the program. So, what qualifies for a first home?
It has to be newly constructed. It could be a detached house, apartment, or townhouse. An off-the-plan property also counts as a first home. This means that you will purchase it directly from the developer and can be pre-sold while still being constructed.
A first home can also be a house and land package; lastly, it could be in two separate contracts: one for the land and one for the construction of the home.
How do you qualify for a first home loan deposit scheme?
They take into consideration your salary threshold and your savings for a downpayment which should be equal to at least 5% of the total contract price.
You also have to take into account whether you’ll apply for the loan as a couple or as an individual. Some first home buyers do it with their partner or spouse. If this is the case, make sure that you are either married or in a de facto relationship, meaning you are living together as partners but are not married.
How to apply for a first home loan deposit scheme?
The following makes you eligible for a first home loan deposit scheme.
- You should be eligible First Home Buyers and must not have shown interest or have owned any residential property. You won’t qualify whether it’s owner occupied or you’ve bought it as a part of your investment portfolio.
- Income earned should be $125,000 for individuals and $200,000 for couples for the financial year.
- Again, as mentioned above, in case you’re a couple applying for the scheme, you have to either be married or in a de facto relationship.
- Applicants should be Australian citizens who possess a valid Australian passport or any proof of being a citizen of Australia.
- There is a minimum of at least 18 years of age and must have a valid Medicare card.
- Deposits should be between 5% and 20% of the property’s total value to fully qualify for the scheme.
- The property price must be within the threshold for property price for the suburb and postcode.
The First Home Loan Deposit Scheme is very helpful especially to families with low and middle incomes so that they can purchase a home sooner.