“First in, best dressed!” The Morrison government’s First Home Loan Deposit Scheme starts on the 1 January 2020. The government’s finance minister says the scheme will operate on a “first in, best dressed basis,” so let’s get on top of what this new assistance package for home buyers is all about. First Home Loan Deposit Scheme explained The $500 million scheme was a central promise of the prime minister’s re-election campaign and is designed to assist first home buyers to get into the property market and buy a home with just a small five per cent deposit. The scheme could potentially save first home buyers tens of thousands of dollars and help them get into the market years earlier than they might have anticipated. When he announced the scheme in May, Scott Morrison said it is not “free money” for first home buyers. The prime minister said the scheme will “make a big difference, cutting the time taken to save for a deposit by at least half.” How does the First Home Loan Deposit Scheme work? The First Home Loan Deposit Scheme will guarantee up to 15 per cent of the total amount of a first home loan. That will enable the homebuyer to get a loan without Lenders Mortgage Insurance and just a 5 per cent deposit. The government will provide 10,000 home loan deposit guarantees per year, meaning most first home buyers will not qualify or receive a guarantee. Last year there were about 110,000 first home buyers in Australia. The government is still designing some of the details of the scheme and a consultation period for feedback on a draft framework has just closed (on 4th November). Price limits on the value of the properties to be mortgaged vary from state to state and between capital cities and regional areas. “There’s no specific number of guarantees per jurisdiction,” the finance minister, Mathias Cormann, told Sky News TV. “It will be on a first in, best dressed basis.” Because there are only 10,000 guarantees available, there are income caps for applicants and price limits on the homes they are looking to purchase. The scheme is designed to assist low and middle-income earners to get into a reasonably priced first home. The income limits for first home buyers applying for assistance under the federal government’s First Home Loan Deposit Scheme are: Singles: $125,000 per year. Couples: $200,000 per year (combined). Applicants will be required to show their income was less than these limits in the previous completed financial year (2018 – 2019). What are the price limits for the First Home Loan Deposit Scheme? House and unit prices in Australia vary greatly between cities and regions, and between the different state capitals. Sydney house prices are substantially higher than Adelaide prices, for example. So the government has set different price caps for different property markets in Australia. First Home Loan Deposit Scheme property price caps NSW– City or large regional centre: $700,000– Other areas: $450,000 Victoria– City or large regional centre: $600,000– Other areas: $375,000 Queensland– City or large regional centre: $475,000– Other areas: $400,000 Western Australia– City or large regional centre: $400,000– Other areas: $300,000 South Australia– City or large regional centre: $400,000– Other areas: $250,000 Tasmania– City or large regional centre: $400,000– Other areas: $300,000 Australian Capital Territory (ACT)– $500,000 Northern Territory (NT)– $375,000 The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.