Government unveils details of First Home Loan Deposit Scheme

Emma Duffy By on October 28, 2019
first home loan deposit scheme

Photo by Le Creuset on Unsplash

A government scheme allowing first home buyers to enter the market with a deposit as low as 5% will be served on a ‘first come, first served’ basis for up to 10,000 Australians each year.

The government has released draft legislation confirming details of the First Home Loan Deposit Scheme, set to kick off on 1 January 2020.

The scheme will be limited to those purchasing properties priced up to a maximum threshold which varies depending on the location of the property.

The highest price cap of $700,000 will only apply to properties in Sydney and regional centres of NSW, such as Newcastle and Wollongong.

Scheme’s Property Price Caps:

State/TerritoryCapital city and regional centresRest of state

Finance Minister Mathias Cormann told Sky News last night the price caps were set with reference to the median house prices and stamp duty concessions in the various states and territories.

“There is no specific number of guarantees per jurisdiction, it will be on a first-in, best-dressed basis,” Senator Cormann said.

“Ultimately, the scheme will be driven by demand, up to 10,000 guarantees a year.”

Housing Minister Michael Sukkar said only two of the four big banks will be chosen to take part in the loans scheme, with 50% of guarantees to be issued to smaller lenders.

“These rules are designed to ensure the Government’s expectation that smaller lenders play a significant role in the First Home Loan Deposit Scheme to boost competition is met,” Mr Sukkar said.

The government is yet to announce which banks are involved.

Mr Sukkar said while there’s no set number of deposit guarantees per state, the government will keep an eye on demand to adapt the scheme.

“We’re not adding any layers of bureaucracy,” he told reporters in Melbourne.

“These are guarantees that banks are able to offer to customers. The banks will undertake the same credit checks, the same lending criteria that they would otherwise.”

Opposition Leader Anthony Albanese said with just two months to go before the scheme is set to start, the government needs to announce more details.

“We still don’t know which lenders will be involved and what the interest rates will be, and this is a scheme that is supposed to begin in two months,” Mr Albanese said.

“The government really needs to get on top of the detail so people can benefit from it.”

Earlier this month, the Coalition Government passed new laws through Parliament to implement the scheme.

The scheme was first announced by Prime Minister Scott Morrison during the election campaign in May.

Labor called it a “desperate” attempt to try and relate to struggling first home buyers but quickly vowed to match the scheme if elected.

Looking for a low-rate variable home loan? The table below displays owner-occupier products which may represent the best of the big four banks, best of the top 10 customer-owned banks and the best of the larger non-banks. 

Provider Ad rate
Comp rate*
Purchase or Refi, P&I 80% Smart Home Loan 2.88% 2.90% $1,660 More details
Discount Variable 80% 3.07% 3.09% $1,702 More details
Base Variable Rate Special P&I 3.20% 3.20% $1,730 More details
Ad rate
Comp rate*
Purchase or Refi, P&I 80% Smart Home Loan
2.88% 2.90% $1,660
More details
Discount Variable 80%
3.07% 3.09% $1,702
More details
Base Variable Rate Special P&I
3.20% 3.20% $1,730
More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 18 November 2019. View disclaimer.


The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in 2018. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers’ products may not be available in all states.

In the interests of full disclosure, and are part of the Firstmac Group. To read about how manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.

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Emma Duffy
Emma Duffy joined as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand.
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