Understanding the First Home Buyer Scheme

It takes the average household nine years to save a 20% deposit for their first home, making this one of the biggest barriers to homeownership. We explore the recently announced First Home Loan Deposit Scheme and how it can see you moving into your first home faster.

and how it can see you moving into your first home faster.

Getting on the first rung of the property ladder is a goal for many young Australians. But with
increasing much faster than household incomes, first home ownership has been a fading dream for many. With an entry-level apartment in Sydney starting at around $560,000 and the need for a 20% deposit, saving up $112,000 can feel like a mountain too hard to climb.

More than
(often from the bank of mum and dad) to get their deposit together. With other average households taking nine to ten years to save the required 20%.

But as we head to the polling booths this weekend, the Government has announced a new First Home Loan Deposit Scheme that promises to make it easier to buy your first home by cutting down the time it takes to save a deposit.

What is the First Home Loan Deposit Scheme?

On 12th May, as part of the election campaign, Prime Minister Scott Morrison announced a new scheme to help Australians purchase their first home. Within hours, the Labor Government had vowed to match the policy.

With the banks tightening their lending criteria over the past year, there has been an inability for many to get finance. With this scheme,

How will it work?

started allowing loans based on lower deposits, but you’re still required to pay Lender’s Mortgage Insurance which reduces the funds available to buy your home.

While this is an insurance that you pay, it’s the banks that benefit from the cover. Allowing them to have a level of protection and to reduce the risk of a low deposit
. The introduction of the First Home Loan Deposit Scheme will see the government-backed National Housing Finance and Investment Corporation guarantee the difference between the lower deposit and the 20%. This means you do not have to pay Lender’s Mortgage Insurance, so you will have more money to offer when buying your home.

This would give preference to small banks and non-bank lenders to help boost competition. Buyers would be supported for the life of their home loan, or until they decided to
once the value of their property had risen to a level where they have more than 20% equity in their property.

You will, of course, still need to go through the usual process of applying for a loan and having the income to be able to repay the loan.

Who is eligible?

With the plan set to start on 1 January 2020, the following eligibility criteria have been announced so far.

  • You’ll need to earn $125,000 or less as a single first home buyer, or $200,000 or less as a couple
  • The value of homes eligible under the schemes would be determined on a regional basis, to reflect the different property markets across the country. Greater detail as to what these values would be has not yet been announced.

What’s the catch?

The guarantee is capped to 10,000 loans a year and will be underpinned by $500 million in government money. With more than 100,000 first home buyers entering the market last year only 1 in 10 people in the market will stand to benefit.

There is also a concern that a lower deposit of only 5% will encourage people to take out larger loans. Resulting in higher monthly payments and more interest paid over the life of the loan. So, you need to weigh up the pros and cons of getting into the market sooner or taking the time to save a larger deposit and have a more manageable loan.

We watch with interest

For potential first home buyers who have the income to be able to afford to make repayments on their first home but are being held back due to the time it takes to save a large deposit, the scheme will be welcomed.

Following the weekend’s election, we will be watching with interest as the government provides more details about the scheme. In particular around the value of eligible properties.

If you’re in the market for a first home and getting together a large deposit has been holding you back, it’s now worth revisiting how much you can borrow.

Check out our
calculator and start planning your first step on the property ladder.

, and other product information included in this article, are subject to change at any time at the complete discretion of each lender.

Book Call Now

UNO home loans

Need help with your home loan?

UNO Brokers are available night and day for a quick review or your situation and bring expertise that will support better decision making that will save you time and money. Book in a quick call when it suits your busy schedule

Get Started

Related Articles


What our customers are saying

Sally Mackenzie
February 19, 2024
We chose Uno Home Loans from their impressive web site knowing we were going to find it hard, on many fronts, to qualify for a home loan. We were incredibly fortunate to be assigned Mike Parsons as right from the get-go, despite the complexities, he hit the ground running for us. He was incredibly knowledgeable, with years of experience but what was immediately apparent and impressive was that he was totally invested in getting us over the line, doing absolutely everything possible, including working around the clock. Despite it being a relatively small loan in the order of things, Mike never missed a beat, getting docs ready, following up and answering every request from the proposed funder immediately. He kept us informed on progress the minute anything happened, and again if anything needed to be done, he was right on it. In short, we highly recommend Uno, and Mike, knowing what a remarkable job he did, over many weeks, to get us our loan. He got us a great deal, with far better rates than we expected, so we couldn't be happier. In fact, without doubt, you'd be hard pressed to find a more personable, sharp, hard working, dedicated professional who clearly prides himself on getting his customers standout results.
Read more
February 13, 2024
Scott and his team were just A-mazing. We felt supported through the whole process with the greatest quality and care. Every question answered right in time, or even before we asked. The process was smooth and we got the best outcomes we could have wished for.
Read more
Angela Biddle
February 6, 2024
Our mortgage recently came up for renewal, and with interest rates skyrocketing we were looking for ways to minimise the impact. Michael and his team were proactive and attentive. Michael spent time with us to understand our circumstances. He found mortgage options that worked with our current financial situation and longer investment plans. He presented clear options, providing guidance where needed. He and his team were helpful and responsive - streamlining the process and keeping us updated through the negotiations. In the end, Uno did the heavy lifting and secured a significantly better rate than our current bank offered, all with friendly, personal service. We would highly recommend UNO Home Loans.
Read more
Fotis Bikas
January 15, 2024
I cannot help but congratulate Scott Wilkinson of UNO Home Loans for being an absolute credit to both his company and the entire loans industry. Scott is a truly rare gem of a broker in that he will not only go the extra mile to achieve for each customer the very best deal, but his knowledge of all and sundry within the industry is unsurpassed (you will see what I mean if you speak to him). Additionally, Scott has a clear passion for imparting his wealth of information with each customer, whereas the conversation with most other brokers would simply be over if they could not get you the best deal. For me, Scott Wilkinson of UNO Home Loans stands head and shoulders above the competition and I feel privileged to benefit both from his expertise and professionalism whenever it is time for a refinance or new loan.
Read more
Tomoharu Matsui
January 11, 2024
Michael Parsons helped me a lot when it's difficult to establish my capabilities in loan.
Read more
Gillian Kearon
January 9, 2024
I highly recommend Mike Parsons as a mortgage broker. I couldn't fault the service provided by UNO. Thanks Mike!
Read more
Taner T
December 20, 2023
Thank you Eren Tan for the amazing service and support. Our Loan was a little tricky and complex for other lenders but Eren managed to get it over the line in record time. His professionalism and dedication to our needs was exceptional. If you need a Loan no matter how complex your situation, make sure you contact Eren at UNO Home Loans.
Read more
Karaipu Brown
December 20, 2023
Buying & selling a house at the same time is very stressful but Scott Wilkinson from UNO home loans made sure we knew what was happening & took most of the stress away. He always kept us up to date and if we had a concern or wanted clarification on something we were able to call him, if he didn’t know the answer straight away he will find out and contact us back.. now we are enjoying our new house and turning it into a home :)
Read more
Chris Anderson
December 18, 2023
Just completed my first loan with UNO which was so much easier than with other other brokers I have used in the past. Our broker MIKE PARSONS always had time for me and broke things down for me in the simplest of terms and was very patient with my silly questions and my constant changing of plans. I wish I had used them in the past as I wouldn't be in the situation I'm in now. Can't recommend them highly enough. Thanks UNO and Thanks MIKE 😊
Read more
Stephen Broomfield
December 11, 2023
To be able to recommend Scott Wilkinson for your mortgage broker was a privilege. We had deals fall through but Scott supported, guided and stuck with us, proper partnership. The whole team at UNO helped us and supported us right through to after settlement. Made sure everything was correct and how we are progressing. Communication was amazing and straightforward and easy to understand. Transparent. We can not Recommend Scott and the team as Uno high enough. Use UNO with confidence.
Read more
Tarek Hussain
December 6, 2023
Can't thank Amy enough for her hard work, dedication and determination on getting multiple loans completed for me. I wouldn't hesitate in recommending Amy and the Uno team to any of my associates. Will definitely be back in the near future!
Read more
November 3, 2023
If you’re looking for a trustworthy, thorough, reliable & knowledgeable Mortgage Broker then you must call Anita Callaghan! I can’t even imagine how stressful this process would’ve been without her. Anita went above and beyond to make sure she answered every question, responded to every text (even on weekends/after hours), and followed up on every detail to ensure we had all the info we needed. Anita is a true people person who is warm, empathetic, kind and supportive. You can tell she loves helping people and loves what she does, which is probably why she’s so good at it! Can’t thank you enough Anita, or recommend you more highly! You’re the best!
Read more