First home loan deposit scheme update

What is the First Home Loan Deposit Scheme (FHLDS) New Home Guarantee (NHG)

The New Home Guarantee (NHG) is a new initiative by the Australian Government to expand the FHLDS to support first home buyers purchase new homes.

The NHG provides an additional 10,000 FHLDS places for the FY20/21 financial year. CommBank and NAB have been allocated half (up to 5,000) of the new guarantees between them.

The additional places will provide a guarantee for customers 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.

Eligible customers can use the NHG guarantee in conjunction with other government programs, however it cannot be used in conjunction with a regular FHLDS guarantee.

The New Home Guarantee cannot be used in conjunction with HomeBuilder where the HomeBuilder funds are required to complete the build.

Initial Eligibility Requirements for FHLDS and NHG

· Australian citizens who are at least 18 years of age. Permanent residents are not eligible. Note: Both applicants must be Australian Citizens in joint applications and confirmation of Citizenship is required before submitting your application.

o If born In Australia: Customer must provide an Australian Birth Certificate issued by Births Deaths and Marriages or their current Australian Passport

o If born Overseas: Customer must provide their current Australian Passport or Australian Citizenship Certificate

· Singles with a taxable income of up to $125,000 per annum and couples with a combined taxable income in the preceding financial year of up to $200,000 per annum. Incomes will be assessed on the previous financial year's Notice of Assessment (NOA).

o Couples are only eligible for the Scheme if they are married or in a de-facto relationship. Other persons buying together, including siblings, parent / child or friends, are not eligible for the FHLDS. A de-facto relationship is defined as:

o Not legally married to each other; and

o Not related by family; and

o Have a relationship as a couple living together on a genuine domestic basis.

· Customers must have a deposit of between 5% and 20% of the property's value. For land and construction applications, the minimum deposit required is 5% of the as-if complete valuation. For purchases of established or off-the-plan dwellings, the minimum deposit is 5% of the property purchase price. However, where a higher valuation is accepted for assessment, 5% of the valuation will be required as a deposit.

· Applicants must intend to move into and live in the property as their principal place of residence (i.e. they must be owner occupiers) within 6 months of settlement taking place. Note: Active Australian Defence Force member applicants are not required to occupy the property after entering into the loan if they cannot meet this requirement because of their duties and:

o at the date of the loan agreement, the customer intended to live in the property

o If a customer applies as a single under the scheme but has a spouse or de facto partner who is in the ADF, the requirement for the property to remain owner occupied will not be exempted.

o If a spousal or de facto couple apply where only one applicant is in the ADF, the exemption will still apply.

· Applicants must be first home buyers who have not previously owned or had an interest in a residential property either separately or jointly with someone else.