First Home Loan – How To Apply For The FHLDS

First home loan on the horizon? Congratulations! Did you know you may be eligible for the First Home Loan Deposit Scheme (FHLDS)? Not sure what the FHLDS is? We’ll explain everything.

Please note, certain ideas and products presented in this article may not be offered by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

What is the First Home Loan Deposit Scheme?

The First Home Loan Deposit Scheme is a government initiative established to help more people buy their first homes. Specifically, select first home buyers are able to get their first home with a deposit of as little as 5%.

With this scheme, the government acts as a guarantor for up to 10,000 low-deposit loans each year.

What is the First Home Loan Deposit Scheme application process?

Put simply, positions for the scheme are reserved by select banks. Moreover, to secure a position, you will first need to apply at a participating bank and you will be put on the waiting list.

Therefore, get in contact with your bank or a mortgage broker. They will, in short, be able to explore the options available to you.

Furthermore, here’s a step-by-step guide of how to apply for the FHLDS.

  • Visit a bank or broker. Simply get in touch with a participating bank or their broker and let them know you’d like to be considered for a place.
  • Reservation. The lender will assess your eligibility for the scheme and whether there is a free position available. Your lender will reserve you a place in the scheme if everything goes to plan.
  • Budget. Lenders will offer conditional approval within 10 days. In short, this pre-approval determines your borrowing power. As a result, you will know how much you can spend on your first home.
  • Find your first home. You have 90 days to find and sign a contract on a property.
  • Purchase. If everything goes through, the bank will finalise the loan. You must move into your house within 6 months.

First Home Loan Deposit Scheme eligibility

Confirm your eligibility before you begin applying. After all, there is a number of eligibility criteria you will need to first meet. Moreover, while a full list of eligibility criteria is available on the National Housing Finance and Investment Corporation website, we will list a few here:

  • All applicants must be an Australian Citizen
  • In addition, you must pass an income test
  • Any applicant who has owned a property before is, put simply, ineligible
  • Finally, must be at least 18 years of age.

How much can I spend under the First Home Loan Deposit Scheme?

The value of the property you’re eligible to buy is capped, depending on what part of Australia it’s located in. Moreover, prices vary between states:

StateCity/large regional centreRest of state
New South Wales$700,000$450,000
Victoria$600,000$400,000
Queensland$475,000$400,000
Western Australia$400,000$300,000
South Australia$400,000$250,000
Tasmania$400,000$300,000
ACT$500,000$500,000
Northern Territory$375,000$375,000

Can I get a home loan with a 5% deposit?

You may be able to get a mortgage loan with a 5% deposit if you qualify for the First Home Loan Deposit scheme.

Historically, Aussie first-home buyers would have to save a near 20% deposit for a new home loan. If you qualify for the FHLDS, however, you may not need to save up to that much.

First Home Loan Deposit Scheme FAQs

Q: Will I have to pay a higher interest rate if I get the FHLDS?

A: According to the National Housing Finance and Investments Corporation (NHFIC), participating lenders will not charge higher rates to borrowers within the scheme. In other words, equivalent customers will be charged the same – regardless of whether they are in our out of the scheme.

Q: Will all first home buyers get the scheme?

A: No; the scheme is estimated to support around 10,000 first home buyers each year. Now, compare that with Domain.com.au’s estimation of around 108,000 first home buyers last year. Moreover, crunch some quick numbers and your chances of being admitted into the scheme are more like 1 in 10.

Q: Do I have to buy a new-build under the First Home Loan Deposit Scheme?

No; you’re potentially able to borrow a variety of property types, including existing houses, townhouses or apartments.

What credit score do I need to buy a house for the first time?

It is difficult to provide a specific credit score threshold you need to pass to be eligible for a home loan. After all, most Australian lenders do not publish their lending criteria. Moreover, your credit score is only one piece of the puzzle.

Depending on which credit reporting bureau you use, your score may be between zero and 1,200. Moreover, your score can be sorted into one of five credit bands:

  • Excellent: 833 to 1,200
  • Very good: 726 to 832
  • Good: 622 to 725
  • Average: 510 to 621
  • Below average: Below 509.

As we mentioned earlier, your credit score is only one piece of the puzzle. In short, lenders will consider a wide range of factors and use their own evaluation process when assessing your application.

Where should I start for my first home loan?

Getting your finances in order is the first step any prospective buyers should take. Specifically, you need to save enough of your own money as a deposit.

Bear in mind, if you do not qualify for the FHLDS, you may need a deposit of up to 20% of the purchase price.

For most Aussies, saving up for a deposit will take some time. During this period, it may be worth exploring the kind of properties you would like to purchase. Moreover, not only will you get a feel for the market, but your savings goal should become clearer.

Finally, make sure that you’re across all the terms and features you might encounter. As a guide, this may include loan to value ratios, offset accounts and home loan pre-approval, as well as a range of other concepts.

Additional resources

Head to the National Housing Finance and Investment Corporation website for more information on the FHLDS.

Alternatively, jump over to the MoneySmart website for extra information on buying your first home.

First home loan small key chain shaped as house

Should I refinance my first home loan?

So, since taking out your first home loan, the market has shifted. With this, the interest rate that you’re charged is no longer competitive and is instead higher than it should be. In these situations, one option could be to refinance your home loan.

In short, refinancing involves taking out a new home loan, typically at a lower rate, to replace your existing loan. With this, you may either remain with your initial lender or make the switch. In addition to this, you may refinance to consolidate debt into your home loan or to access additional features (e.g. offset accounts).

What can Monzi do?

Monzi is a lender-finder service, specialising in matching consumers with a potential lender. Our panel of lenders may, in particular, be able to offer personal finance from $300 to $10,000.

Moreover, these loans can be sorted into three categories:

  • Small loans are valued under $2,000. These loans are unsecured and may have repayment terms of up to 12 months.
  • Medium loans range between $2,001 and $4,600; security is often required and repayment terms may range between 13 and 24 months.
  • Large secured loans are available from $5,000 to $10,000. Security is required and you may be afforded 13 to 24 months to repay your loan.

Ultimately, the lender will determine your repayment terms. Moreover, we cannot speak on behalf of the lenders in our network. Therefore, lenders may offer repayment terms that vary from what is presented above.

Can Monzi offer me my first home loan?

No, Monzi cannot offer you any kind of home loan. That includes online, low deposit or no deposit mortgages. Instead, we may be able to match you with a lender offering personal finance. Moreover, all applications take place online; scroll up to begin.

Monzi, in short, may be able to match you with a potential credit provider. In other words, apply with us and we’ll try to do the rest. After all, we’re the lender-finder experts.

Want more Monzi Loans? Put simply, you can stay in touch on Facebook, Instagram, Twitter and Pinterest.

Factor In

Costs

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You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000

Terms

12 months

Costs

20% upfront establishment fee

+ 4% monthly fee

Example

Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The maximum comparison rate on loans between $300 and $2000 is 199.43%. This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate

Loan amount

$2,001 - $4,600

Terms

13 months

24 months

Costs

48% annual percantage rate

67.41% comparison rate p.a.

Example

Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principle Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

The Interest Rate for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.

Loan amount

$5,000 - $10,000

Terms

13 months

24 months

Costs

21.24% annual percantage rate

48% comparison rate p.a.

Example

Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principle Amount) + $5,577.12 (Interest) = $15,577.12 total repayable over 24 months with weekly installments of $149.78.

The Interest Rate for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.