First Home Buyers

2020 First Home Loan Deposit Scheme: Are You Eligible?

In 2020, the federal government has committed to providing up to 10,000 Australians with support to purchase their first home, sooner.

The First Home Loan Deposit Scheme provides a guarantee that allows eligible applicants classified as ‘low and middle income’ to purchase a home with a deposit of as little as 5%.

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What is the 2020 First Home Loan Deposit Scheme?

The 2020 First Home Loan Deposit Scheme commenced on January 1, 2020.

The scheme encourages first home buyers with just a 5% deposit to take out a mortgage where they can avoid paying lenders mortgage insurance (LMI) fees. Where banks and lenders usually require purchasers to have 20% of the property’s value saved already to be exempt from LMI fees, the government will underwrite the loan as part of the scheme so that LMI no longer applies.

The scheme means that the federal government acts as your guarantor, making it far easier to be approved for a home loan without having saved as much money. The lender, however, will still do their normal checks on your financial situation.


To be eligible for the First Home Owner Scheme there are a few conditions that must be considered.

  • Individuals applying for the scheme can earn a maximum of $125,000 per year, and a couple’s earnings can be a combined total of $200,000.
  • Applicants must also have saved 5% of the value of the property being purchased.
  • The scheme will only serve 10,000 applications per year, on a first come first serve basis.
  • Properties that are being purchased under the scheme must be classed as an ‘entry property’ and will not include high-value properties.
  • Price caps are determined by region. A full list of price caps is outlined below.
Region ID
RegionPrice Cap ($AUD)
NSW – capital city
2NSW – regional centre (Newcastle and Lake Macquarie)
3NSW – regional centre (Illawarra)
4NSW – other
5VIC – capital city
6VIC – regional centre (Geelong)
7VIC – other
8QLD – capital city
9QLD – regional centre (Gold Coast)
10QLD – regional centre (Sunshine Coast)
11QLD – other
12WA – capital city
13WA – other
14SA – capital city
15SA – other
16TAS – capital city
17TAS – other
19Northern Territory
20Jervis Bay Territory & Norfolk Island
21Christmas Island & Cocos (Keeling) Island $300,000


How do I apply?

The scheme opened on January 1st 2020 and applications can be lodged through your chosen lender and their representatives. The scheme does not accept applications directly.

There are 27 lenders who are approved to offer guarantees under the scheme, the full list can be found here.


What is a loan guarantor?

A loan guarantor is a person who agrees to repay the debt if a loanee is having to default on their agreed repayments. In this case, the guarantor in your home loan is the federal government.

How much will I save with this scheme?

The Government says that you could save around $10,000 by not being required to pay for Lender’s Mortgage Insurance. This is a good ballpark figure, but the specifics of how much you would save depends on the particulars of your loan. These factors include loan size, deposit size and lender terms and conditions.

Can I use this scheme alongside the First Home Owners’ Grant?

Yes! You are able to apply for this federal government scheme as well as any other schemes that may be offered by your state or territory. Keep in mind that the eligibility requirements may different between the grant and scheme.

Do I have to buy a new house or apartment?

The properties that are included as part of the scheme do not have to be newly built. While this is an option, you can also utilise this scheme to purchase an existing house, townhouse, or apartment. You can also purchase a house and land package, land with a contract to build or an off-the-plan apartment or townhouse. These are all possible to buy as part of the First Home Loan Deposit Scheme.

Are there risks involved in getting a low deposit home loan?

There are some risks that come with low deposit home loans. Lower deposits mean borrowers may take on more debt and end up paying back more interest. Having lower equity in your home from the start may also cause difficulties when refinancing or switching lenders. Some lenders may also offer less competitively priced loans based on your lower savings.

The information contained in this article is not legal or financial advice and should not be relied upon as a substitute for professional advice. Consumers should make their own independent inquiries and consider the need to obtain any professional advice relevant to their circumstances. Further information is available at and