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The First Home Loan Deposit Scheme (FHLDS) Explained

FHLDS Explained - how to apply and eligibility

Read time: 7.2 minutes

As part of the Australian Government’s 2021-22 budget, it was announced the First Home Loan Deposit Scheme would be extended for another year.

Government boosts to the country’s construction and housing industries played a major role in helping Australia fend off the worst of a COVID-19 economic downturn. Thanks to the success of those schemes, the government has renewed several incentives for 2021-22, including extending the First Home Loan Deposit Scheme (FHLDS).

In this article we’ll cover everything you need to know about the FHLDS, its eligibility requirements and how to lodge your application.

What is the First Home Loan Deposit Scheme?

The First Home Loan Deposit Scheme (FHLDS) is a government guarantee that helps first home buyers purchase their own home with a deposit of between 5 and 20%.

A typical mortgage requires the buyer to pay a 20% deposit. Low deposit mortgage options already exist and are a popular choice, but the lending criteria are slightly different, and buyers are required to pay thousands for Lenders Mortgage Insurance (LMI). LMI is a one-off fee which you won’t need to pay when purchasing through the FHLDS.

Unlike some other government housing incentives, the FHLDS is a guarantee on your loan rather than a grant or cash payment. For example, if you purchase a $600,000 home with an $80,000 deposit, the FHLDS guarantees the first $40,000 of your mortgage, effectively giving you the $120,000 needed for a 20% deposit.

How many FHLDS spaces are available?

During 2021-22 the federal government is making 10,000 new spaces available in the FHLDS which will be accessible from July 1, 2021.

When the FHLDS was offered in 2020-21, the scheme proved so popular that all 10,000 spaces were filled within a matter of months. It’s important to work on your application as soon as you’re ready to avoid missing out.

What are the Eligibility Criteria for the FHLDS?

The FHLDS is designed for first home buyers. It is available to both singles and couples, however couples are only eligible if they are spouses or de facto partners. Other couples, such as a pair of siblings or friends, won’t be eligible for the FHLDS.

To qualify for the FHLDS you and your spouse must:

  • Be Australian citizens (permanent residents are not eligible)
  • Be at least 18 years old
  • Be first home buyers who haven’t owned any other properties
  • Have a maximum income of $125,000 for singles, or a maximum combined income of $200,000 for couples
  • Show savings for a deposit of 5-20% of the home’s value
  • Be buying a primary residence and move in within 6 months
  • Stay in your new home for as long as the FHLDS guarantee applies
  • Meet the lender’s borrowing criteria
  • Comply with any FHLDS borrowing limits

What are the FHLDS Borrowing Limits?

If you meet the eligibility criteria for both the FHLDS and your mortgage lender, how much you can borrow will be limited by where you’re looking to buy:

State/TerritoryCapital City/Regional CentreRest of State
QLD$600,000$450,000
NSW$800,000$600,000
VIC$700,000$500,000
WA$500,000400,000
SA$500,000$350,000
TAS$500,000$400,000
ACT$500,000N/A
NT$500,000N/A

What type of property am I allowed to buy?

The FHLDS only allows you and your partner to buy a residential property to live in, and you must move in within 6 months of the settlement date. Investment or commercial properties are not eligible under the scheme.

Eligible property types include:

  • House and land packages
  • Off-the-plan homes
  • Land with a separate building contract
  • Existing homes, townhouses and apartments

How do I apply for the FHLDS?

Participating banks and lenders are handling FHLDS applications as part of their standard mortgage application process. The lender will make sure you meet all requirements and submit an application to the government on your behalf.

FHLDS Participating Banks and Lenders

There are currently 33 major banks and non-major lenders participating in the FHLDS.

As with a regular mortgage, the deals on offer vary from lender to lender, and we recommend customers shop around to find their best option. If you’d like help figuring out which lender is the right fit for you, you can contact Privium Homes and let our friendly team guide the way.

Accessing FHLDS and the First Home Owner Grant

Eligible buyers may be able to access the FHLDS alongside other government schemes, including your state’s First Home Owner Grant:

  • First Home Owner Grant. The FHLDS and the First Home Owner Grant (FHOG) can be accessed together. You will need to meet the eligibility criteria for both schemes and additional buying restrictions may apply. We encourage buyers to contact Privium Homes and speak to our team about their eligibility and whether their FHOG can be used as a deposit.
  • First Home Super Saver. The First Home Super Saver (FHSS) and the FHLDS can be accessed together. The FHSS lets buyers make voluntary super contributions that can later be used as a home deposit, up to $50,000. When you’re ready to make a purchase, the money you saved with the FHSS will be returned to you, along with any income it may have accrued.

We can help with FLHDS

If you’d like to access the FHLDS when building your home, or if you have any questions about the scheme’s requirements, Privium’s friendly team will be happy to help! We can walk you through the process and help you decide if the FHLDS is the right choice for you.


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