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FHB deposit scheme officially launches

by Hannah Dowling13 minute read
FHB deposit scheme officially launches

On 1 January, the federal government’s First Home Loan Deposit Scheme officially launched to the public and the NHFIC has now released a broker information for the third-party channel.

The FHLDS, administered by the National Housing Finance and Investment Corporation (NHFIC), aims to provide up to 10,000 first home buyers (FHBs) per year with access to housing finance with a deposit of at least 5 per cent, allowing FHBs to enter the property market earlier.

The government has agreed to guarantee the difference between the borrower’s 5 per cent deposit and the standard 20 per cent deposit required to take out a home loan without paying lender’s mortgage insurance (LMI).

A total of 27 lenders are on the FHLDS lender panel, including two major banks.


The Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) will reportedly finance up to 5,000 of the 10,000 loans guaranteed each year, with the other 25 non-major lenders set to write the other 5,000.

CBA and NAB began offering loans to FHBs at the beginning of this month, whereas the non-major lenders will begin writing loans under the scheme from 1 February. 

Broker information and scheme details released

The NHFIC has produced a range of materials to support brokers and FHBs to understand and engage with the scheme, which can be accessed via the NHFIC website.

The corporation had previously revealed that it had been working with the broker associations on developing such materials.

The newly-released materials include a fact sheet providing an overview of the scheme and how it works, as well as an FAQ document, and eligibility checklists for clients.

The NHFIC has also compiled a document specifically informing brokers on how to get involved with the scheme, and clarifying the processes of the scheme for applicants.

According to the document, applicants are required to enquire with a participating lender in order to reserve a place in the scheme, which can be done on their behalf by a broker.

Once an enquiry has been made, the participating lender will be required to log onto the scheme portal to check whether or not there is a place available for the applicant, and, if so, can reserve the applicant a place in the scheme by providing the name, date of birth and medicare number of each borrower.

Multiple enquiries can be made with different participating lenders, however only one place in the scheme will be reserved per applicant.

A place in the scheme can be reserved for 10 days, in which the lender will provide the application with finance pre-approval. In order to provide finance pre-approval, the lender will be required to provide details including the taxable income of each borrower, the date of finance pre-approval, the intended purchase location, and the origination channel for the loan.

The pre-approved place in the scheme lasts for 90 days from the issuance, to enable the applicant to search for a property, knowing they have both finance pre-approval and a pre-approval under the scheme.

Upon signing a contract of sale, the lender and the applicant will then have an additional 30 days to finalise all documentation in order to apply to the NHFIC for a guarantee certificate under the scheme.

Upon the issuance of the guarantee certificate, the lender will have 100 days to return to the portal to update NHFIC with the loan settlement details.

The managing director of the Finance Brokers Association of Australia (FBAA), Peter White, urged brokers to "become familiar with the details of the government’s First Home Loan Deposit Scheme", emphasising that "there are hurdles and limitations that brokers must be aware of before providing assistance to borrowers".

Mr White said: "It is important to note that the scheme will not be available to everyone and is limited to 10,000 people per financial year, so brokers need to do some research before walking potential borrowers down this path.

“There are two major banks involved being the NAB and CBA, plus 25 non-major banks of who Government advises they will receive not less than 50 per cent of the allocations for places in the scheme. 

“Brokers should also be aware that the price cap varies according to postcode; for example in Sydney and Newcastle the maximum amount someone can borrow is $700K whereas in many regional NSW centres it decreases to $450K.”

Participating lenders comment on the launch

Angus Sullivan, Commonwealth Bank’s group executive, retail banking services, said the bank was “excited” to be accepting applications for the FHLDS, adding that CBA had already received “thousands of enquiries from customers in both metropolitan and regional areas and have booked in hundreds of appointments with interested customers”.

He continued: “We understand that saving a deposit for a home can be challenging, and we support initiatives like the FHLDS that could potentially save customers thousands and help them into their first home sooner.”

Mike Baird, NAB’s chief customer officer, consumer banking, also noted the launch of the scheme. The bank has been accepting expressions of interest in the FHLDS since mid-December 2019.

“We are proud to be chosen to partner with the federal government and NHFIC on the First Home Loan Deposit Scheme,” he said.

“This scheme is a fantastic way of helping even more customers, allowing them to potentially save thousands of dollars on their mortgage."

The NHFIC has welcomed the official launch of the scheme, adding that the initial lending panel “achieves the Australian government’s objective of promoting competition between the big and small lenders, and also ensuring the scheme has broad geographic reach, including in regional and remote communities”.

In a statement announcing the launch of the scheme, the NHFIC said that the panel “should enable strong activation of the mortgage broker channels and promote choice for first home buyers”. However, this claim has since been criticised by the industry.

All participating lenders have agreed not to charge borrowers utilising the scheme a higher interest rate than those outside of the scheme, and, as confirmed by APRA, borrowers in the scheme will have serviceability assessed on the basis of an 80 per cent loan-to-value ratio (LVR), rather than a 95 per cent LVR.

These factors should allow FHBs access to more competitive rates, according to Minister for Housing Michael Sukkar.

Speaking following the launch of the scheme on 1 January, Mr Sukkar highlighted that the panel composition serves to achieve the government’s objective of encouraging competition in the market.

“From today (1 January), eligible first home buyers will be able to apply for a guaranteed loan as part of the Morrison Coalition government’s First Home Loan Deposit Scheme,” he said.

The Housing Minister continued: “The scheme has been warmly welcomed by major industry peak bodies, and the composition of the initial panel of participating lenders reflects the industry’s confidence in the Morrison Coalition government’s plan to assist first home buyers.”

Mr Sukkar added that the lender panel had been deliberately designed to ensure “strong representation of smaller lenders”.

[Related: CBA, NAB clarify start date for FHLDS]

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Hannah Dowling


Hannah Dowling is a journalist for The Adviser and Mortgage Business.

Prior to joining Momentum Media, Hannah worked as a content producer for a podcast catering to property investors. She also spent six years working in the real estate sector at a local agency. 

Email Hannah at: [email protected]