The First Home Loan Deposit Scheme allows first home buyers to enter the market sooner by purchasing with a deposit as little as 5% by guaranteeing up to 15% the value of the home, saving them from paying Lenders Mortgage Insurance (LMI).
The scheme, which has already helped close to 20,000 first home buyers, is currently limited to 10,000 places each financial year on a first in, best dressed basis.
But the Federal Government will now allow an additional 10,000 first home buyers to enter the scheme from October 6 until June 30, 2021.
But there's a catch - this time around, applicants will only be able to apply for the scheme on the condition they are purchasing new builds.
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Treasurer Josh Frydenberg said this is to help support the residential construction industry.
"Helping another 10,000 first home buyers to buy a new home through our First Home Loan Deposit Scheme will help to support all our tradies right through the supply chain including painters, builders, plumbers and electricians," Frydenberg said.
"In addition to the Government’s HomeBuilder program, these measures will support residential construction activity and jobs across the industry at a time when the economy and the sector needs it most."
New property price caps will also apply under the extended scheme.
First home buyers will be able to purchase new homes worth up to $950,000 in Sydney, $850,000 in Melbourne, $650,000 in Brisbane, $550,000 in Perth, Adelaide, Hobart, Canberra and Darwin.
First home buyers must apply for the scheme through one of the 27 lenders taking part in the scheme to be eligible.
Housing Industry Association Managing Director, Graham Wolfe welcomed the news, saying the scheme has helped thousands of first home buyers realise their dream of home ownership sooner.
“The fact that demand from first home buyers is so great that the Government has decided to expand the Scheme, shows what HIA’s research has suggested all along – Australians still cling to the dream of home ownership and the security it brings," Wolfe said.
“The extra 10,000 places for new homes and apartments that the Government has put into this Scheme will ensure more first home buyers achieve their goal of owning a home sooner."
The announcement comes ahead of Tuesday's Federal Budget which is expected to show a deficit of over $200 billion.
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