How Does the Scheme Work?

When you apply under the FHLDS:

• You only need a deposit of at least 5%.
• The government guarantees a portion of your loan, typically 15%, so you don’t pay LMI.
• You can borrow up to the property price cap applicable to your location.

Example:
If you're buying a home in Sydney for $700,000:

• Your deposit could be as low as $35,000 (5%).
• The government guarantees the remaining $105,000 (15%).
• You pay LMI only if your deposit is below 5%, but with the scheme, LMI is waived.

This scheme makes entering the property market more affordable for many Australians.

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Who Is Eligible?

Eligibility involves several criteria. Here are the key requirements:

1. First Home Buyer Status

• You must be a first-time buyer or not have owned property in Australia before.
• Certain situations, like divorce or vacant land purchase, may qualify.

2. Income Limits

• Individual income must be below $125,000 annually.
• Couples combined income must be below $200,000 per year.
• Income includes salaries, wages, and reported overseas income, converted to AUD.

3. Property Price Caps

• Limits vary by location:
  • Sydney: up to $900,000
  • Melbourne: up to $850,000
  • Other regions: check specific caps on government websites.

4. Residency and Visa Status

• You must be an Australian citizen or a permanent resident.
• Some temporary visa holders with eligible visas may qualify, but rules vary.

5. Property Type

• New or established residential property.
• Located in Australia.
• Not for investments or holiday homes.

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How to Apply

Applying for the FHLDS involves several steps:

1. Check Your Eligibility
   Use the official government tools or consult a mortgage broker.

2. Choose a Participating Lender
   Not all lenders participate in the scheme. Many major banks do, but confirm first.

3. Gather Documentation
   Prepare:

• Proof of identity (passport, visa, driver’s license).
• Evidence of income (pay slips, bank statements).
• Savings history.
• Details of the property you want to buy.

4. Pre-Approval and Application
   Apply for pre-approval through your chosen lender. They will assess your financial situation and confirm if you qualify for the scheme.

5. Property Valuation and Contract
   Once approved, your lender will arrange a valuation. You then proceed to sign the contract of sale.

6. Final Loan Approval
   Complete all paperwork. The lender and government will coordinate the guarantee.

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Common Questions and Concerns

Can I use overseas savings for the deposit?

Yes, but the funds must usually be legally sourced and documented. If you’ve transferred savings from overseas, you'll need to show evidence of the transfer and that funds are genuine and available.

What about Lenders Mortgage Insurance (LMI)?

The government guarantees part of your loan, so you don’t pay LMI if your deposit is between 5-20%. If your deposit is less than 5%, you’ll have to pay LMI, but the scheme aims to help borrowers with deposits as low as 5%.

Will I get a lower interest rate?

Interest rates are set by lenders and depend on your credit profile. Having government support might make lenders more willing, potentially securing you a better rate, but always compare options.

Can I buy any property?

Not quite. Only properties that meet the location and price cap criteria. Also, the property must be your primary residence.

What happens if property prices rise?

Your maximum purchase price is limited to the cap for your location. If property prices increase, you can still buy within the cap. However, exceeding the cap disqualifies you.

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Tips for International Buyers and Migrants

• Convert your overseas earnings carefully. Banks want to see a clear trail of income and funds.
• Understand visa restrictions. Some temporary visas may limit eligibility.
• Use reputable sources. The Foreign Investment Review Board (FIRB) oversees property purchases by foreigners and temporary residents. Ensure your situation complies with these rules.
• Build your credit profile. Establishing a good Australian credit history can improve your chances.

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Benefits of the Scheme

• Smaller deposits reduce saving time.
• No LMI saves thousands of dollars.
• Faster entry to the market for first-time buyers.
• Support from the government gives lenders confidence.

Remember:

"The scheme isn't a free pass. You still need to meet all eligibility, demonstrate ability to repay, and pass lender checks."

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Final Thoughts

The First Home Loan Deposit Scheme can be a game-changer for those aspiring to buy their first home in Australia. With careful planning, proper documentation, and a clear understanding of the rules, you can take advantage of this support.

As someone with over 20 years of helping international clients navigate Australian financial systems, I can assure you: patience and preparation are key. If you’re eligible, this scheme could significantly shorten your path to homeownership.

For tailored advice, consider consulting a mortgage broker experienced with international clients or speak directly with your lender about your circumstances.

Embark on your property journey with confidence — your new home could be closer than you think!