February 6, 2026
Help to Buy Scheme – Federal Government’s shared equity scheme
First-time homebuyers in Australia face major challenges. A key obstacle for many is saving the
20% deposit. Which, becomes harder as property values continues to rise. As a result, homeownership can feel like a distant dream. To address this, the government is introducing the
Help to Buy scheme. This initiative allows a homebuyer to purchase a home with a significantly smaller deposit. Learning how this scheme works can help you determine if it is a suitable option for you.
What is the Help to Buy Scheme?
The Help to Buy scheme is a shared equity scheme that will allow eligible home buyers to purchase a property with a smaller deposit.
While the Help to Buy scheme passed through parliament in November 2024, an official start date has yet to be announced. It is expected to open for applications in late 2025.
Key Points
- The government covers a part of the home’s price.
- You pay a smaller deposit.
- You also avoid paying Lenders Mortgage Insurance (LMI).
- This makes owning a home easier and more affordable.
- You still live in the property and remain listed as the legal owner on the title.
How does the Help to Buy scheme work?
The Help to Buy scheme is based on
shared equity. Here’s how it works simply:
- Government’s Share: The government contributes up to 40% for a new home, or up to 30% for an existing one.
- Your Deposit: You only need a minimum deposit of 2% of the property’s value. This is a huge drop from the normal 20% deposit.
- No Mortgage Insurance: You don’t need to pay Lenders Mortgage Insurance (LMI) because of the government’s equity share.
- Repaying the Government: The government becomes a part-owner. You live in the house and take care of it. You don’t pay any fees or interest on the government’s share. Furthermore, you can buy back the government’s share in parts of at least 5% over time. You must pay it all back when you sell the property.
Help to Buy scheme eligibility criteria
In order to be eligible for the Help to Buy scheme, the following criteria apply:
- You must be an Australian citizen.
- You must be at least 18 years of age.
- You must have a yearly income of $100,000 or less, or $160,000 or less for a couple.
- You must live in the purchased home.
- You must not currently own any other land or property either in Australia or overseas.
- You must have saved the required minimum 2% deposit of the home price and be able to finance the remainder through a participating lender.
- You must be able to manage all associated costs up front including stamp duty, legal fees and bank fees.
Latest State-by-State Price Caps
While the scheme is national, the rules and price caps vary by state and territory. Recently, both income and price caps were increased to allow more people to qualify.
source
| Area |
Cap |
| New South Wales – capital city and regional centre |
$1,300,000 |
| New South Wales – other |
$800,000 |
| Victoria – capital city and regional |
$950,000 |
| Victoria – other |
$650,000 |
| Queensland – capital city and regional centre |
$1,000,000 |
| Queensland – other |
$700,000 |
| Western Australia – capital city |
$850,000 |
| Western Australia – other |
$600,000 |
| South Australia – capital city |
$900,000 |
| South Australia – other |
$500,000 |
| Tasmania – capital city |
$700,000 |
| Tasmania – other |
$550,000 |
| Australian Capital Territory |
$1,000,000 |
| Northern Territory |
$600,000 |
| Jervis Bay and Norfolk Island |
$550,000 |
| Christmas Island and Cocos (Keeling) Islands |
$400,000 |
Benefits and drawbacks
Before applying, it’s important to consider both the advantages and disadvantages.
Benefits
- Smaller Deposit: A 2% minimum deposit allows you to purchase a home much sooner.
- No LMI: You do not have to pay for LMI, which can be thousands of dollars in savings.
- Reduced repayments: The government’s help means a smaller home loan, which results in lower repayments.
Drawbacks
- Shared ownership: The government holds a share of the property until you buy it back.
- Value-Based Repayment: The amount you owe the government upon sale or refinancing is based on the property’s value at that time, not the original contribution amount.
- Income reassessment: You may be required to repay the government’s share, if your income exceeds the cap for two consecutive years.
- Limited availability: The program has a limited number of spots, and demand is expected to be high.
Help to Buy vs. Other First Home Buyer Schemes
The Help to Buy scheme is different from other popular programs.
- The First Home Guarantee (FHG) lets you buy a home with a 5% deposit. The government guarantees the loan to the bank.
- The First Home Super Saver (FHSS) scheme allows you to save for a deposit within your super fund which might offer tax benefits Unlike Help to Buy, FHSS is a savings tool, not a direct government contribution.
You might be able to use these schemes together, depending on the rules.
Frequently Asked Questions (FAQs)
Q. Can I use the scheme for an investment property?
No, the home must be your primary residence.
Q. Do I pay rent on the government’s share?
No, you do not pay any rent or interest on the government’s share.
Q. What happens if the property value falls?
If the property value decreases, the amount you owe the government also decreases by the same proportion.
By understanding the scheme’s rules, eligibility, and application process, you can make a smart, informed decision. This is about more than just buying a place; it’s about building your future and securing a place to truly call your own.
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