As part of the latest federal budget, the Australian Government has made an extra 10,000 spaces available under the First Home Loan Deposit Scheme (FHLDS), specifically for eligible first home buyers purchasing new homes.
So what exactly is the New Home Guarantee, and what are the eligibility criteria? We break down everything you need to know below.
What is the First Home Loan Deposit Scheme (FHLDS)?
In January 2020, the Government introduced the First Home Loan Deposit Scheme (FHLDS), a special program that operates through the National Housing Finance and Investment Corporation (NHFIC).
The Scheme enables buyers to apply for a home loan with a deposit as little as 5 per cent, without needing to pay Lenders’ Mortgage Insurance (LMI).
Originally the Government had committed an additional 10,000 places for the program from 1 July 2020 to 30 June 2021. Due to the program’s popularity, the places for 2020-21 were fully reserved at the end of September.
Update: The Federal Government has announced it will roll out another 10,000 places for the FHLDS New Home Guarantee in 2021-22. Read more about the Federal Budget 2021-22 here.
What is the New Home Guarantee (NHG)?
The New Home Guarantee is part of the First Home Loan Deposit Scheme, and is designed to support the Government’s economic stimulus measures, while also creating jobs in the residential construction sector.
The Guarantee grants an additional 10,000 places in 2020-21 for eligible first home buyers to purchase a newly built dwelling or build a new dwelling with a deposit of as low as 5 per cent of the property value. A set of revised property price caps will apply to the New Home Guarantee.
Who is eligible for the New Home Guarantee?
To be eligible for the New Home Guarantee, the borrower must be a first home buyer and plan to build a new home or purchase a newly built property.
Under the NHG, eligible properties include:
- Newly constructed dwellings. This includes freestanding houses, townhouses and apartments.
- Off-the-plan properties. This includes freestanding houses, townhouses and apartments.
- House and land packages
- Land with a separate contract for the construction of a new property.
Aside from this, the eligibility criteria are the same as the First Home Loan Deposit Scheme. Applicants must:
- Be a current Australian citizens aged 18 years or older
- Be a first home buyer. This means they have not previously owned or had interest in a property in Australia. This includes separate and joint ownership, and includes residential strata and company title properties.
- Be an individual or a couple that is married or in a de facto relationship,
- Have a deposit between 5 per cent and 20 per cent of the total value of the eligible property.
- Have a taxable income of up to $125,000 per annum for FY20 for a single applicant, or a combined taxable income of up to $200,000 per annum for FY20 if applying as a couple.
- Intend to be an owner-occupiers of the property. This means investment properties are not covered as part of the NHG.
Revised property price caps for the New Home Guarantee
The property price caps for the NHG are different from those for the First Home Loan Deposit Scheme — and the cap is typically higher.
In the table below, we’ve outlined the price caps for the NHG compared to the FHLDS for capital cities and regional centres.
| State | NHG Price Cap | FHLDS Price Cap |
| NSW – Capital City/Regional Centre | $950,000 | $700,000 |
| VIC – Capital City/Regional Centre | $850,000 | $600,000 |
| QLD – Capital City/Regional Centre | $650,000 | $475,000 |
| WA – Capital City | $550,000 | $400,000 |
| SA – Capital City | $550,000 | $400,000 |
| TAS – Capital City | $550,000 | $400,000 |
| ACT | $600,000 | $500,000 |
| NT | $550,000 | $375,000 |
Which lenders are part of the New Home Guarantee?
The NHFIC is currently working with the 27 participating FHLDS lenders to implement the New Home Guarantee. These lenders include two major lenders, Commonwealth Bank and NAB, as well as a number of non-major lenders such as Bank Australia, Bendigo Bank and Unibank.
How do I apply for the New Home Guarantee?
To apply for the New Home Guarantee, borrowers need to first meet all of the eligibility requirements outlined on the FDHLS New Home Guarantee website.
The application process is the same as the FDHLS. Applications need to be made directly through a participating lender or through an authorised representative or mortgage broker, such as Rateseeker.
Before applying for the New Home Guarantee, it’s best to consult with a participating lender or mortgage broker to get legal and financial advice and identify the best arrangement for your situation. A broker can help you review if you are eligible for the Guarantee, advise on whether the program is right for you, and assist you with the application process.
Ready to get started? Get in touch with the Rateseeker team for an obligation-free consultation today.