Help To Buy Scheme — How to Buy a Home With Just 2% Deposit

The Help to Buy Scheme is an Australian Government shared equity initiative designed to help eligible first-home buyers enter the market with a smaller deposit and reduced mortgage size. While the scheme can significantly improve affordability, it also introduces ongoing obligations, income monitoring, and long-term trade-offs as the government shares in your property’s future value. Understanding how these factors affect your financial position is essential before deciding if Help to Buy is the right pathway to home ownership.

In this expert-written guide, we walk you through everything you need to know about the Help To Buy Scheme

What Is The Help To Buy Scheme?

Help To Buy Scheme - What is it? — What is the Help To Buy Scheme -and who does it help?

The Australian Labour Party introduced the Help To Buy Scheme to help with the housing affordability crisis. The main aim is to make homeownership available for buyers who have been locked out of the housing market. So, if you have a low deposit, are on a low income and want lower loan repayments, then the scheme is for you…

Under this scheme, the government will own 30-40% of your home equity because they would have loaned you that amount to buy your home. You will then repay the government over time or when you sell your property.

The Help To Buy Scheme is available to both first homeowners and those who have owned a home before. However, at the time of application, you should not own a home. So, you cannot use the scheme to purchase an investment property.

How Does It Work?

Help to buy scheme - one of the grants to buy first home

The Help To Buy Scheme is pretty straightforward. Here is how it works:

The government will loan you 30-40% of the purchase price, reducing the amount you borrow from the bank. This will lead to faster home loan approvals because you will borrow less from the bank. But you will still owe the government part of the purchase price.
The government requires proof that you can secure financing for the remaining 60-70% of the purchase price.
You can purchase a home with as little as a 2% deposit without paying lenders mortgage insurance.
Help To Buy Scheme repayments are focused on increasing your equity as a homeowner rather than repaying the exact amount to the government. This means that the amount you owe the government could increase or decrease depending on how the value of your home changes.
Places for the Help To Buy Scheme are limited to 10,000 applicants per year for 4 years. However, the government has distributed the places across all the states, so everyone has a fair chance of getting the scheme.
The scheme has income thresholds. You must not be earning more than $90,000 a year if you are single. For couples, the threshold is $120,000 combined income. (Note that If your income increases above the threshold for 2 years in a row, you may be required to pay the government back.)
In addition to your 2% deposit, you will need to demonstrate that you will be able to pay stamp duty costs and other expenses associated with buying a home.

How Will I Pay The Government Back?

help to buy scheme for first home buyers 3 — You can repay the government in many different ways.

The finer details of how you will repay the loan are still being worked out. But from what we know so far, you can repay the government in any of the following ways:

Voluntary contributions to the government to buy back some of your equity.
If your income increases above the threshold, you may have to pay the government back. However, the Help To Buy Scheme is meant to keep you in your home, so the government probably won’t throw you out of your home if your income increases.
If you sell the house, the government will recoup their property share.

It is important to note that the government is recouping their property share rather than the exact dollar amount they loaned you. What does this mean? Let’s do some calculations.

Purchase price of house = 700,000

Government share is 40% of $700,000 = $280,000

Let’s say the value of your property increases to $800,000.

Government share is 40% of $800,000 = $320,000

So even though the government initially lent you $280,000, when your property value increases, you will have to pay them back $320,000.

Benefits Of The Help To Buy Scheme

help to buy scheme for first home buyers 4 — The Help To Buy scheme has many benefits - especially for first home buyers.

If you are a first home buyer, here are some of the benefits of the scheme:

The main benefit of the Help To Buy scheme is that it allows you to get into the property market faster. This is because you only need to save a 2% deposit instead of waiting years to save 20%.
The scheme is also designed to help those who are struggling to cover upfront costs. Instead of using all your savings for a deposit, you can use some of it to cover costs like stamp duty,
You won’t have to pay lenders mortgage insurance, which can cost tens of thousands of dollars.
Lower interest rates. Usually, if you have a lower deposit, the banks will charge you a higher interest rate. But with the Help to Buy scheme, banks look at you as if you have a higher deposit and will, therefore, charge you regular interest rates.
Since you are only paying back the bank 60% of the purchase price, your home loan repayments will be less.
When interest rates rise, your repayments won’t go up as much as they would if you had borrowed the whole purchase price from the bank. So, in a way, you get a layer of protection from interest rate rises.
You can buy back your share of the property at any time you want, allowing you to build equity faster.

Check to see if you are eligible for a home loan

Drawbacks Of The Help To Buy Scheme

Rising Property Values Increase Buy-Back Costs – As property values grow, the cost of buying back the government’s share also increases. This can significantly raise the amount you must repay, reducing long-term equity and potential profit when you refinance or sell.
Property Price Caps Limit Choice – Each state and territory has a maximum property value you can purchase. This can make it hard to find suitable homes, especially in high-demand or metropolitan areas.
Income Limits Restrict Eligibility – Individuals earning more than $100,000/year and couples earning over $160,000/year cannot access the scheme. This excludes some first-time buyers who may still struggle with deposits.
Shared Equity Means Less Home Ownership – The government contributes 30–40% of the purchase price, so buyers don’t fully own the property upfront. The government’s share must be repaid on sale or after 25 years, and its value changes with the property market.
Not a Solution for Market Affordability – While the scheme helps with the deposit, it does not lower the total cost of housing. Buyers still face high monthly repayments and living costs in expensive markets.
State-by-State Rollout Creates Uncertainty – The program can only operate once each state passes enabling legislation. This means buyers in some states or territories may have to wait longer to participate.
Complexity and Administration – Shared equity arrangements are more complicated than standard mortgages. Buyers may need professional advice from brokers or financial advisors to navigate the rules and repayment obligations.

Help To Buy Scheme Australia - When Does It Start?

Legislative Foundation is in Place

The Help to Buy Act has been passed, giving Housing Australia the authority to enter shared-equity arrangements on behalf of the Commonwealth. The Program Directions were also officially registered on 13 June 2025, marking a key step towards implementation.

State-by-State Rollout Matters

Although federal legislation is now in place, each participating state must pass its own enabling legislation before the scheme can operate locally.

As of June 2025, Queensland, Victoria, and NSW had completed this step, but other states and territories may still be behind, meaning rollout timing could vary by location.

Expected Opening for Applications

The Australian Treasury has indicated that applications are expected to open “later this year” in 2025. Industry sources such as Canstar are also forecasting a late-2025 start, although no specific application date has been publicly confirmed.

Uncertainty Remains

The Mortgage & Finance Association of Australia (MFAA) has noted that while the Program Directions are published, the official program start date is still undetermined. Housing Australia has also stated it is continuing to work on operational readiness and will open the scheme once full implementation is achieved.

What This Means For Prospective Homebuyers

Be Prepared, But Flexible: If you’re considering using the scheme, it’s wise to get ready (e.g., prepare documentation) — but don’t assume applications will open exactly on a fixed date yet.
Monitor Updates: Sign up for email updates from Housing Australia. Their website has a sign-up option.
Talk to a Broker: A mortgage broker can help you track potential lenders who will support the scheme and help you line up your finances.
Check Your State’s Status: Because states must enact their own enabling legislation, check whether your state is “participating” yet — that could affect when you’re eligible.

How Do I Apply?

Applications for the Help To Buy Scheme are not open because the scheme has not started yet. Right now, there is no way to apply for it. But we are keeping a close eye on the developments, and we will let you know as soon as applications open.

What Is The Eligibility Criteria?

Help To Buy Scheme - Eligibility — You must be an Australian citizen to qualify for the Help To Buy Scheme.

Just like the other government schemes, the Help To Buy scheme has its own eligibility criteria. In order to qualify for the scheme, you need to meet the following criteria.

You need to be an Australian citizen. Sorry, permanent residents, you do not qualify for this scheme unless you are applying with an Australian Citizen.
You must be 18 years or older.
You must meet the income thresholds ($90,000 for a single person and $120,000 for couples).
The 2% deposit should be in the form of genuine savings – meaning money you have held in your account for 3 months or more. You can use money that has been gifted to you or from the sale of a car as long as you have held it in your bank for 3 months or more.
You must live in the property for at least 12 months after buying it with the Help To Buy Scheme.
The scheme is open to those who have owned a home before but do not own any property at the time of applying.
The property you want to buy must meet the price caps. We cover those in detail below.

Property Price Caps

Thinking of buying your dream home with the Help To Buy Scheme? Not so fast, there are property price caps. Here is the complete breakdown of the maximum property value you can buy – state by state.

help to buy scheme for first home buyers 8 — Before you start searching for million-dollar homes online. Check out these property price caps…

State / Territory	Area	Maximum Property Price (Cap)
New South Wales (NSW)	Capital city & regional centres	$1,300,000
	Rest of NSW	$800,000
Victoria (VIC)	Capital city & regional centres	$950,000
	Rest of VIC	$650,000
Queensland (QLD)	Capital city & regional centres	$1,000,000
	Rest of QLD	$700,000
Western Australia (WA)	Capital city	$850,000
	Rest of WA	$600,000
South Australia (SA)	Capital city	$900,000
	Rest of SA	$500,000
Tasmania (TAS)	Capital city	$700,000
	Rest of TAS	$550,000
Australian Capital Territory (ACT)	Capital / all areas	$1,000,000
Northern Territory (NT)	All areas (or capital / regional)	$600,000

Why These Caps Are Higher Than Before

In March 2025, the government raised the property price caps to make the program more accessible.
The Explanatory Statement for the Program Directions says the caps were “set at the median of all house prices in relevant areas … consistent with the Government’s policy direction to make the scheme available to low- and medium‑income earners.”
The shared equity contribution differs depending on whether a home is new (up to 40% from government) or existing (up to 30%).

Ongoing Responsibilities After You Buy

ongoing responsibility- Help to buy scheme

Once you’re in the Help to Buy scheme, your duties don’t stop at settlement. You must keep meeting certain obligations — not just to stay eligible, but to protect your shared-equity arrangement with the Commonwealth.

Principal Place of Residence Requirement

You are required to live in the property as your principal place of residence. The Help to Buy Program Directions make it clear that participants must treat the home as their main dwelling.
You cannot use the property as an investment or let it out permanently.
This aligns with the scheme’s goal: shared-equity help is for owner-occupiers, not landlords.

Insurance and Property Maintenance

You must maintain adequate building insurance. The legislation explicitly requires you to keep the property insured for its full reinstatement or replacement value.
You must also keep the home in good condition, covering repairs, upkeep, and maintenance costs. Neglecting this could violate your shared-equity agreement.
These measures protect both you and the Commonwealth’s financial stake in the property.

Income Reviews and Exceeding the Cap

Your income will be reviewed regularly (at least every five years under the Program Directions).
If your taxable income exceeds the threshold, Housing Australia may reassess your eligibility.
When you exceed the cap, you might need to repay the Commonwealth’s share, depending on your assessed capacity to pay.
That repayment is based on the current market value of the property, not just the original amount contributed.

Rental and Investment Restrictions

You are prohibited from leasing the property for business or as an investment.
The scheme is strictly for owner-occupied homes, reinforcing its purpose to support genuine homebuyers.
In other words: no subletting or turning the house into an income-generating rental while under the Help to Buy arrangement.

Consequences of Non-Compliance

If you break the rules (for example, stop living in the home or don’t maintain insurance), you risk mandatory repayment of the Commonwealth’s equity.
Housing Australia has discretion: if repayment would be unfair given your circumstances, they may postpone enforcing repayment.
If required to repay, you typically have 90 days to do so after the assessment.
Ultimately, exiting the scheme may mean buying back the government’s share (if you have capacity) or paying it out when you sell.

Would you like to learn about your situation?

Is The Help To Buy Scheme Right For You?

Whether or not the Help To Buy scheme is right for you depends on your personal circumstances and financial goals. However, the scheme offers a way out for home buyers who are struggling to raise a 20% deposit. Your home loan will get approved faster with just a 2% deposit, and you won’t have to pay LMI or high interest rates.

The scheme may sound too good to be true, but it is true! Therefore, it is worth exploring whether or not you are eligible and applying when the time comes.

Help To Buy Scheme Frequently Asked Questions

Will I pay rent or interest on the government’s share?

No. You do not pay rent or interest on the government’s equity contribution. You only pay your mortgage repayments to your lender.

Can I buy back the government’s share? When and how?

Yes. You can progressively buy back the government’s share at market value through voluntary payments. You must also repay it when you sell or exit the scheme.

What are my ongoing obligations while in the scheme?

You must live in the home as your principal residence and keep it insured and well maintained. Regular income reviews also apply to ensure continued eligibility.

What types of properties are eligible?

Eligible properties include new builds, off-the-plan homes, and existing residential properties. All homes must fall within the scheme’s property price caps.

Which lenders are participating?

Housing Australia partners with approved participating lenders. These include major and selected specialist mortgage lenders supporting the Help to Buy Scheme.

How many places are available and how is demand managed?

The scheme offers 10,000 places per financial year. Applications are managed through Housing Australia and allocated based on eligibility and availability.

Can I combine with other first-home buyer assistance or grants?

Yes. You can use Help to Buy alongside grants like the First Home Owner Grant. However, you cannot combine it with the First Home Guarantee or Regional First Home Buyer Guarantee.

What happens if I sell the house for a profit?

When you sell, the government receives its percentage share of the sale price. This means your repayment increases if the property has risen in value.

When do I have to pay the government back?

You must repay the government when you sell, refinance, or reach the 25-year limit. Early voluntary repayments are also allowed.

Who pays for maintenance and rates?

You are fully responsible for council rates, maintenance, and repairs. The government does not contribute to ongoing property costs.

Can I rent out my Help to Buy property?

No. The property must remain owner-occupied at all times. Renting it out breaches the scheme conditions.

Is the Help to Buy Scheme better than the First Home Guarantee?

It depends on your situation. Help to Buy reduces your loan size with shared equity, while the First Home Guarantee avoids LMI but keeps full ownership with you.

Is Shared Equity Right For Long-Term Wealth?

Shared equity can limit long-term wealth because the government shares in your property’s capital growth. While it reduces upfront costs and borrowing, it may deliver less profit compared to full ownership over time. The right choice depends on your income growth, market conditions, and financial goals.

Next Steps And Getting Your Home Loan

Our team at Hunter Galloway is here to help you buy a home in Brisbane. Unlike other mortgage brokers who are just one-person operations, we have an entire team of experts dedicated to helping make your home loan journey as simple as possible.

If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.

Hunter Galloway - Our Dedicated Team — Our team of home loan experts is here to help you buy a home in Australia.