Get the Government to go Guarantor on your Child’s First Home Loan

Posted on 22nd November 2019 by Kelsi Keep

The First Home Loan Deposit Scheme is designed to assist eligible first home buyers to access the housing market sooner. The Scheme received royal assent on 18 October 2019, however, applications for the scheme are not yet open, as the government has just completed consultation with lenders, the public and APRA as to potential participation and capital requirement for First Home Loan Deposit Scheme mortgages.

The Scheme will enable the National Housing Finance and Investment Corporation (NHFIC) to provide a limited guarantee to allow first home buyers to purchase a home with a minimum deposit of 5 per cent of the property purchase price. The guarantee on eligible loans will be equal to the difference between the deposit (of at least 5 per cent) and 20 per cent of the property purchase price, with coverage broadly consistent with a parental guarantee.

The Deposit Scheme is proposed to commence from 1 January 2020.

The Scheme will include income tests for first home buyer eligibility, modest dwelling price limits and an annual cap of 10,000 guarantees issued.

An individual will be eligible if:

  1. the applicant is a first home buyer; and
  2. the applicant satisfies an income test

Where there are multiple applicants for a single loan, each applicant must satisfy all eligibility criteria

A loan is eligible if:

  1. it is for the purchase of residential property or the construction of a dwelling on vacant land that forms part of the borrower’s residential property;
  2. the residential property or dwelling will be owner-occupied;
  3. the purchase price of the property is less than the price cap that applies in the area where the property is located;
  4. the loan-to-value ratio of the loan at origination is between 80 and 95 per cent; and
  5. it requires regular repayments of the principal

If you would like you would like more information on the scheme please contact one of our accountants or go to the National Housing Finance and Investment Corporation (NHFIC) website at

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