The First Home Loan Deposit Scheme

cairns mortgage broker jason thomson


Wow! There’s nothing like an election to draw out a new policy promise. On Sunday – just six days out from the federal election – the Coalition announced a new $500 million scheme that will make it easier to buy your first home.*

The First Home Loan Deposit Scheme will allow first home buyers (FHBs) to access a home loan with a deposit of just five per cent of the value of the property – without needing Lenders Mortgage Insurance (LMI). The government would guarantee the rest, and cover mortgage insurance with a special loan. Labor says it will match this commitment.

The scheme, which is slated to start from 1 January next year, would be available to FHBs earning up to $125,000, or couples with a combined income up to $200,000. It hasn’t yet been specified the value of the homes that will be able to be purchased under the scheme.*

According to Prime Minister Morrison, the idea is to shave years off the time it takes for FHBs to save for a deposit. He says it currently takes FHBs an average of nine or 10 years to save the requisite 20 per cent deposit to avoid paying LMI (which can be up to $10,000).*

Industry response to the announcement has been mixed:

  1. Real Estate Institute of Australia (REIA) President Adrian Kelly and Master Builders Australia CEO Denita Wawn support the scheme, saying it would address the two main hurdles for FHBs: saving for a deposit and avoiding the sting of LMI. They believe it will have a more direct effect on FHBs than Labor’s housing tax changes, and will push up FHB loan approvals, boost the building sector and bolster the economy.
  2. The Property Council of Australia has also welcomed the proposal.
  3. There has been some concern that only 10,000 buyers will be eligible for the scheme, which is only around 10 per cent of FHBs.
  4. Nerida Conisbee, chief economist at, was among several experts who warned the scheme could pull forward demand and push prices up around the FHB price point. However, given current sluggish property market conditions, and the fact that we are only looking at 10,000 FHBs, the effect is unlikely to be significant.
  5. Overall, Conisbee agreed with the proposal, saying it would have a positive effect on FHBs without affecting rental levels like Labor’s housing tax reforms could.
  6. Independent MP Kerryn Phelps voiced her concerns about young borrowers taking out a huge loan, struggling to make repayments, and then facing property price declines and ending up owing more than they own.
  7. Overall, however, industry response to the scheme has been largely positive.

Have fun at the polls on Saturday! It certainly seems like housing is a key election issue for Australians.


cairns mortgage broker jason thomson



Cairns Mortgage Broker – Jason Thomson is a Mortgage Adviser and Finance Broker based in Cairns with clients all around Australia. Client reviews featured on his website prove that Jason is a trusted industry professional, facilitating great outcomes for his clients. Using his wealth of experience in financial services, he thrives on delivering superior service. Jason is very approachable and is always looking for new clients to help in the often confusing world of finance and property. Offering a no fee service, you’ve got nothing to lose by having an obligation free chat with Jason today.