5 minute read.

Help To Buy Scheme: A Comprehensive Guide For First Home Buyers

How the help to buy scheme can help you buy a home with just a 2% deposit

Calculate how your deposit translates to your home price and monthly payment.

Did you know that the average time it takes to save for a house deposit in Australia is now more than 10 years? But why wait that long when you can buy a home with just a 2% deposit using the Help To Buy Scheme?

Yes, you read right – you can buy a home with just a 2% deposit! 

The Help To Buy Scheme, also known as the Shared Equity Scheme, is where the government loans home buyers 30% of the purchase price for an existing home or 40% for a new build. 

In this comprehensive guide, we cover everything you need to know about the scheme, including its benefits, eligibility criteria and why it is the best thing for first-home buyers.

Let’s dive in!

Table of Contents

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?

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?

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

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.

Help To Buy Scheme Australia - When Does It Start?

Since the scheme still requires legislation to pass parliament, it will most likely start in the first half of 2024. The Help To Buy Scheme is set to run for just 4 years. It is not yet clear whether it will be extended beyond those 4 years.

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.

Before you start searching for million-dollar homes online. Check out these property price caps…


Price Caps

NSW – Capital city and regional areas


NSW – Rest of state


QLD – Capital city and regional areas


QLD – Rest of state


VIC – Capital city and regional areas


VIC – Rest of state


WA – Capital City


WA – Rest of state


SA – Capital city


SA – Rest of state


TAS – Capital City


TAS – Rest of the state


ACT – Capital city and regional areas


ACT – Rest of the territory


NT – Capital city and regional areas


NT – Rest of the territory


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.

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.

More Resources For Homebuyers:

Why Choose Hunter Galloway As Your Mortgage Broker?

Mortgage Broker of the Year
in 2017, 2018 and 2019
The highest rated and most reviewed
Mortgage Broker in Brisbane on Google
One of the lowest rejection rates

across Mortgage Brokers in Australia

Approximately 40% of home loan applications were rejected in December 2018 based on a survey of 52,000 households completed by 'DigitalFinance Analytics DFA'. In 2017 to 2018 Hunter Galloway submitted 342 home loan applications and had 8 applications rejected, giving a 2.33% rejection rate.
We have direct access to 30+ banks
and lenders across Australia