New FHLDS applications need Notice of Assessment

While participating lenders had been allowed to process applications up to the pre-approval stage without a Notice of Assessment (NOA) until 31 August 2021, applications will now require the Australian Taxation Office statement for FY20-21 before they can be approved.

For brokers applying for the FHLDS for clients via ApplyOnline, for example, the NOA must be uploaded to the “Supporting Docs” tab within the system.

For qualifying couples (those earning less than $200,000 of taxable income a year buying a property under the relevant price caps) WHO only have one person earning taxable income (e.g. above the tax-free threshold), only the tax-paying borrower will need to provide an NOA.

However, the person earning less than the tax-free threshold of $18,200 will still be required to provide proof of income to the participating lender. This is to prove that the combined income is under the taxable income threshold of $200,000. They will also be required to declare they are not required to submit a tax return via the Home Buyer Declaration provided by the lender.

Borrowers who cannot produce a Notice of Assessment for legitimate reasons (for example, those who have been working overseas), may be able to provide the lender with alternative proof of income on a case-by-case basis.

About the FHLDS

The First Home Loan Deposit Scheme is open to single applicants with a taxable income of up to $125,000 per annum for the previous financial year, and couples with a taxable income of up to $200,000 per annum for the previous financial year.

Under the FHLDS, eligible first home buyers can access a mortgage from a participating lender with a deposit of as little as 5 per cent without having to pay Lenders Mortgage Insurance (LMI).

The National Housing Finance and Investment Corporation (NHFIC) guarantees the remaining 15 per cent of the value of the property purchased with an eligible first home buyer’s home loan.

The FHLDS supports up to 10,000 guaranteed loans per financial year. Eligible borrowers can use the guarantee in conjunction with other government programs like the First Home Super Saver Scheme, HomeBuilder grant or state and territory first home owner grants and stamp duty concessions. 

Eligible residential properties include: 

• An existing house, town house or apartment
• A house and land package
• Land and a separate contract to build a home
• An off-the-plan apartment or town house.

New property price caps were brought in this financial year, following criticism that the original caps were too low in some cities, particularly given that the average house price in NSW has now surpassed $1 million for the first time.

The capital city price thresholds apply to regional centres with a population over 250,000, “recognising that dwellings in regional centres can be more expensive than other regional areas”.

Regional centres include Newcastle and Lake Macquarie; Illawarra (Wollongong); Geelong; Gold Coast and Sunshine Coast. 

[Related: Government expands FHLDS property price caps]