Things You Need to Know about FHLDS and Your Eligibility

After months of property hunting and you finally found your dream house, next, what’s on your list? To get your home loan approved? To talk to a bank or a mortgage broker that you trust? Or to complete the necessary legal paperwork to secure your dream property? 

The answer is all three. 

Buying a house, undoubtedly, especially for first-timers, can be a daunting task as here are so many things to keep on track. In this article, we will talk about the: 

• First Home Loan Deposit Scheme (FHLDS) in Australia 
• Eligibility for FHLDS’s application 
• General requirements to get home loans 
• Documents needed for verification 

First Home Loan Deposit Scheme (FHLDS): 

As suggested by its name, the FHLDS is a financial initiative, designed to help eligible first home buyers in Australia to get their first home quicker. This scheme is regulated by the National Housing Finance and Investment Corporation (NHFIC). For the 2021/22 financial year, 10,000 openings are available. 

Typically, a lenders mortgage insurance applies for buyers who do not meet the 20% deposit threshold because these buyers are considered as high-risk buyers. However, with the FHLDS in place, the NHFIC will guarantee the participating banks and lenders up to 15% of the value of the property purchased through this scheme. In short, if you are eligible for this scheme, then you can purchase your first home with as low as a 5% deposit (lenders criteria apply).

Read this article here to learn more about LMI.

Am I eligible for the FHLDS?:  

Yes! You can put in your application, either as an individual or a couple, if you: 

• Are 18 years old and above 
• Are Australian citizen(s) at the time you commit to the loan 
• Have an individual annual income up to $125,000 (or a combined annual income up to $200,000) from the previous financial year 
• Intend to be the owner-occupiers of the property 
• Are genuine first home buyer(s)
• Are married or in a de-facto relationship – only applicable for couple applications 

For more information about the FHLDS can be found on the NHFIC website or on this fact sheet. 

Home loan general requirements: 

These are some of the general requirements institutions look for: 

• Personal identity 
• Income, expenses and employment record 
• Savings record 
• The amount saved for a deposit 
• Any debts currently owe 

Applying for a home loan pre-approval – or a conditional approval – is not a must. However, this is helpful in showing your genuinity to the seller, sellers are more likely to sell the property to a genuine buyer.

In fact, home loan requirements vary from bank to bank, and from lender to lender. Hence, it is essential for you to collect as much information as possible to make a decision. 

With a vast amount of players available in the industry, you might want to consider talking to a mortgage broker, who is capable of consolidating financial information for you. 

Alternatively, use our home loan repayment calculator to find out your monthly repayment.

Required documents for verification:

In order to demonstrate that you satisfy the requirements above, you need: 

• 100 points of identification to prove your identity 
• Your recent payslip to prove your income sources, self-employed buyers can submit their individual tax return statement from the previous financial year 
• Your recent utility bills and credit card statements showing your regular expenses; if you are currently renting a property, you will need to provide your formal agreement 
• A credit report or credit score to show your personal assets and liabilities
• Other documents: Property details of the property you intend to purchase, possible insurance coverage 

In summary, this is merely a general list for your reference, please consult someone professional or use our home loan documents checklist to help you.

Ending words:

While getting your dream property secured is worth celebrating, reaching there can be a long and exhausting journey if you are all alone by yourself. At Benevolence Financial Group, we believe that home loan applications shouldn’t trouble you. As so, we strive to make that process as smoothly and painless as possible for you, at zero cost. 

Make an appointment with us today to start your journey in getting your first house. 

The information provided is general in nature and does not constitute financial advice. Please speak to us for recommendations on your individual circumstance and requirements.