If not...listen up!
You might not think it, but the Australian Government is actively committed to helping younger generations to achieve the great Australian dream of home ownership. And this commitment means constantly thinking of new ways to make it happen.
We call one of these schemes “The 5% Deposit Scheme.” Formally known as: The First Home Guarantee (FHBG). It exists for this very reason.
The Capital Properties team have over 20 years of property investment experience and are ex-Defence personnel, so we get where you’re coming from. It’s our mission to help you secure your future financial security.
On the go? Here’s 30 seconds of take outs:
- The ‘5% Deposit Scheme’ or First Home Guarantee helps first home buyers purchase their first property sooner.
- Under the scheme, eligible first home buyers can purchase a modest home with a deposit with as little as 5%.
- Applications for the First Home Guarantee need to be made directly with one of the 38 participating lenders.
- A Capital Properties Mortgage Broker can walk you through the process.
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Can I use the 5% Deposit Scheme in combination with ADF incentives?
The 5% Deposit Scheme may also be used in conjunction with some Defence Force Home Buyer entitlements. Cha ching! Additional ADF property investment incentives come in two categories, i.e. assistance to purchase (HPAS/HPSEA) and assistance to repay the loan (DHOAS).You can read more about these in the blog post: Buying a house while in the Defence Force. The Capital Properties team can help you figure out what incentives apply to your individual situation.
The 5% Deposit Scheme
The 5% Deposit Scheme/First Home Guarantee was specifically designed to help first home buyers get into the property market sooner. Typically, first home buyers with less than a 20% deposit need to pay Lenders Mortgage Insurance*. And this can be costly for small deposit home loans. Enter the 5% Deposit Scheme!
How exactly does the First Home Guarantee work?
Under the First Home Guarantee, eligible first home buyers can purchase a modest home with a deposit with as little as 5% (lenders criteria also apply).
This is because the National Housing and Finance Investment Corporation will guarantee up to 15% of the value of the property to the participating lender that’s financing an eligible first home buyer’s home loan.
What requirements does a Defence Force First Home Buyer need to qualify?
A lender (e.g. bank or credit union) will check eligibility for the 5% Deposit Scheme by looking at personal circumstances.
These checks include:
- An income assessment – you can only earn up to $125,000 for individuals or $200,000 for couples.
- A prior property ownership test – you cannot have owned property in Australia previously.
- A minimum age requirement – must be at least 18 years old.
- A deposit prerequisite
- Owner-occupier requirement
- Proof of citizenship
You can check your eligibility here.
How can a Defence Force First Home Buyer apply for the 5% Deposit Scheme?
To find out more, book in to our free Discovery Session today.
We’ll help you explore your investment/home buying options based on your current Defence pay rate and lifestyle.
*Lenders mortgage insurance: Lenders mortgage insurance (LMI) is one of the most popular ways to achieve the dream of home ownership sooner for borrowers that don’t have a large deposit. LMI can either be paid upfront or capitalised into the loan.
LMI is insurance that protects the lender if the borrower defaults on their home or investment loan. If the security property is required to be sold because of the default, the net proceeds of the sale may not always cover the full balance outstanding on the loan. Should this be the case, the lender is entitled to make an insurance claim to Genworth for the reimbursement of any shortfall. Where a claim for loss is paid to a lender, Genworth may seek recovery from the borrower, or any guarantor, for any shortfall amount.