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Income cap limits first home loans

Getting into a first home in Perth is about to become even harder, with the State's low-income mortgage provider expected to make eligibility requirements more stringent.

Keystart, which caters for West Australians looking for a low- deposit entry to home ownership, will tighten metropolitan income caps to avoid exceeding its $5 billion debt limit.

Citing rising housing approvals and a healthy market, Keystart will lower the caps by $20,000 from Friday.

Annual income for singles, couples and families will be restricted to $75,000, $95,000 and $115,000 respectively.

Income caps for regional WA will remain unchanged, but maximum house prices will fall to $700,000 in the Pilbara and $600,000 in the Kimberley.

Keystart chief executive John Coles said the planned changes in the Pilbara and the Kimberley came on the back of falling property prices.

He said the metropolitan income caps would be adjusted so Keystart stayed within its debt limit and retained the capacity to help in the event of a downturn.

"Over the last four financial years, Keystart has increased the percentage of first-homebuyers it services from 3 per cent to 17 per cent," Mr Coles said.