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/Territory Capital city and regional centres Rest of state
NSW $700,000 $450,000
VIC $600,000 $375,000
QLD $475,000 $400,000
WA $400,000 $300,000
SA $400,000 $250,000
TAS $400,000 $300,000
ACT $500,000 -
NT $375,000 -

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.

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