The first home buyer incentive scheme kicked off on 1 January allowing first home buyers to secure a loan with just a 5% deposit (the government will guarantee the remaining 15%). Although it is possible to get a mortgage with a 5% deposit today, you currently need to pay Loan Mortgage Insurance when borrowing with less than a 20% deposit and LMI is an expensive additional cost.
Things to know about the scheme
• You still need to borrow 95%, but you can avoid LMI
• Your mortgage needs to be an owner-occupied loan with principal-and-interest repayments
• Eligible first home buyers can’t be earning more than $125,000 a year ($200,000 combined for couples)
• The value of the purchase must be below $700,000 in Sydney (varies state by state)
• Access to the scheme is limited to 10,000 borrowers