HOME LOANS
First home buyer loan guide and rate comparison
By Megan Birot
Help to Buy scheme: Latest updates (May 2025)
The Help to Buy scheme is expected to open for applications sometime in 2025, according to the Federal Government. Recent changes announced in the Budget include higher income and property price caps to expand access.
- Income caps will rise from $90,000 to $100,000 for individuals, and from $120,000 to $160,000 for joint applicants and single parents.
- Property price caps are also rising across most states and territories and will now be linked to average house prices (instead of dwelling prices), to allow more homes to qualify.
- To support the expanded eligibility, the government is boosting its equity investment in the program from $5.5 billion to $6.3 billion.
What is the Help to Buy scheme?
The Help to Buy scheme is a national shared equity initiative designed to help eligible home buyers purchase a property with a deposit as low as 2%. The government will cover 30–40% of the property price, and in return, it will own a portion of the home.
The scheme was first proposed by the Australian Labor Party in 2022 as part of its federal election platform to address housing affordability. It passed through Parliament in November 2024, with applications expected to open in late 2025.
Help to Buy requires legislation from each state and territory, so rollout timelines and specific rules may vary. Queensland was the first to pass enabling legislation, followed by Victoria. Some states and territories already operate their own shared equity schemes.
How does the Help to Buy scheme work?
Here are the nuts and bolts of how the Help to Buy scheme will work:
1
Government contribution
If you qualify, you could purchase a home with just a 2% deposit, and the government will contribute up to 40% of the cost for new homes (or 30% for existing ones), in exchange for a share of the ownership.
2
No lender’s mortgage insurance (LMI)
You avoid paying lender’s mortgage insurance (LMI) on your home loan under the scheme. In practice, this would allow eligible buyers to buy a $600,000 house with a deposit of as little as $12,000, excluding other buying costs.
3
Shared equity ownership
The government owns a proportional share of the property. You won’t pay rent on this share, but will need to repay the government’s contribution when you sell the home or refinance. You can also choose to buy out the government’s share over time.
Suppose the government owns 30% of your home, and your deposit is 2%; your home loan would only need to cover the remaining 68% of your property’s value. In other words, you would have a loan-to-value ratio (LVR) of 68%. On a $600,000 home, for instance, this is a loan of $408,000. Usually, the maximum LVR allowed is 80% if the borrower is to avoid paying for LMI.
Help to Buy scheme eligibility criteria
To be eligible for the Help to Buy scheme, you must:
- Be an Australian citizen and at least 18 years of age
- Have an annual taxable income of $100,000 or less as an individual, and $160,000 for couples and single parents
- Be buying a home valued below the price cap in your area (more on this below)
- Live in the purchased home (i.e. it cannot be used as an investment property)
- Not own any other land or property in Australia or overseas when you apply.
Please note: These are the indicative eligibility criteria announced so far by the government – the final rules for the scheme are still to be announced.
What are the property price caps on Help to Buy?
Here are the maximum property price caps for the Help to Buy scheme, based on the city or region where you're buying. These caps are set to closely reflect the median house prices in each state or territory.
State | New South Wales |
|---|---|
Capital/regional centre | $1,300,000 |
Rest of the state | $800,000 |
State | Victoria |
Capital/regional centre | $950,000 |
Rest of the state | $650,000 |
State | Queensland |
Capital/regional centre | $1,000,000 |
Rest of the state | $700,000 |
State | Western Australia |
Capital/regional centre | $850,000 |
Rest of the state | $600,000 |
State | South Australia |
Capital/regional centre | $900,000 |
Rest of the state | $500,000 |
State | Tasmania |
Capital/regional centre | $700,000 |
Rest of the state | $550,000 |
State | Australia Capital Territory |
Capital/regional centre | $1,000,000 |
Rest of the state | N/A |
State | Northern Territory |
Capital/regional centre | $600,000 |
Rest of the state | N/A |
| State | Capital/regional centre | Rest of the state |
|---|---|---|
New South Wales | $1,300,000 | $800,000 |
Victoria | $950,000 | $650,000 |
Queensland | $1,000,000 | $700,000 |
Western Australia | $850,000 | $600,000 |
South Australia | $900,000 | $500,000 |
Tasmania | $700,000 | $550,000 |
Australia Capital Territory | $1,000,000 | N/A |
Northern Territory | $600,000 | N/A |
Help to Buy scheme pros and cons
Pros
- You only need a 2% deposit, making homeownership more accessible – especially for first home buyers and lower-income households.
- No need to pay LMI, which can save thousands of dollars in costs (plus interest if it’s added to your loan).
- It reduces the amount you need to borrow, which will result in smaller monthly repayments compared to what you would otherwise need.
Cons
- Since the government helps fund part of your home, they retain a share in it, which you’ll need to repay when you sell or refinance.
- Even with the shared equity scheme’s expansion, there will only be 40,000 places available, so not everyone will make the cut.
- There are caps on income and property value, and not all homes or buyers will qualify, plus you still have to pay associated upfront costs (i.e. stamp duty).
Help to Buy vs First Home Guarantee: Which is better?
Our analysis shows that over the life of the loan, buyers would pay more interest under the First Home Guarantee than with the Help to Buy scheme.
However, after 5 years (assuming the property increases), a buyer using the First Home Guarantee would have built up even more equity in their home. Even after five years, the Help to Buy scheme borrower still might not be in a position to refinance their loan as their LVR would still be above 80%.
This example is based on a borrower with a home loan interest rate of 6.00% p.a. over a 30-year term, with mortgage fees excluded.
House price | |
Help to Buy scheme | $600,000 |
First Home Guarantee | $600,000 |
Minimum deposit | |
Help to Buy scheme | $12,000 (2%) |
First Home Guarantee | $30,000 (5%) |
Government support | |
Help to Buy scheme | $180,000 (30% for existing home) |
First Home Guarantee | $90,000 (15% guarantee) |
Loan amount | |
Help to Buy scheme | $408,000 |
First Home Guarantee | $570,000 |
Monthly repayments | |
Help to Buy scheme | $2,446 |
First Home Guarantee | $3,417 |
Total interest payable | |
Help to Buy scheme | $472,620 |
First Home Guarantee | $660,278 |
Borrower equity after 5 years with property value of $750,000 | |
Help to Buy scheme |
|
First Home Guarantee |
|
| Help to Buy scheme | First Home Guarantee | |
|---|---|---|
House price | $600,000 | $600,000 |
Minimum deposit | $12,000 (2%) | $30,000 (5%) |
Government support | $180,000 (30% for existing home) | $90,000 (15% guarantee) |
Loan amount | $408,000 | $570,000 |
Monthly repayments | $2,446 | $3,417 |
Total interest payable | $472,620 | $660,278 |
Borrower equity after 5 years with property value of $750,000 |
|
|
While a buyer using the Help to Buy scheme may pay less interest on their loan, their repayments would only contribute towards them owning 70% of their existing property. There would be an additional $180,000 required to purchase the government’s stake in their home. Meanwhile, a buyer using the First Home Guarantee would own 100% of their property at the end of the loan term.
Shared equity scheme risks to consider
Participating in a shared equity scheme offers a pathway to home ownership for buyers who face challenges saving for a larger deposit. However, the compromise is that a portion of your home will be owned by the government for some time. There are other potential downsides too, according to Money.com.au’s home loans expert Mansour Soltani.
"If you’re considering the Help to Buy scheme as a means to transition to your next property, consider your exit strategy from the shared equity arrangement carefully. The possibility of building up enough equity to buy a larger home in the future may be limited since you will need to repay the government its 30-40% equity stake when you sell."
It could also increase house prices
Mansour Soltani, Money.com.au’s Property Expert
"While the Help to Buy scheme can assist low-income earners to enter the property market sooner, it also has the potential to increase demand for property by boosting buying power, pushing house prices up and out of reach for other buyers in the process. We’ve seen it happen in 2008 with the First Home Owners Boost and the HomeBuilder program during COVID."
Mansour Soltani, Money.com.au’s Property Expert
How to apply for the Help to Buy scheme
Official application details for the Help to Buy scheme are not yet available, but it is expected that homebuyers will need to apply through Housing Australia, similar to the Home Guarantee Scheme. Here are some steps to help you get started:
1
Verify your eligibility
Check that you meet the eligibility criteria, including: having a 2% deposit made up of genuine savings, being within the income limits and property price caps. Consider using a mortgage broker if you need help understanding the scheme and whether you qualify.
2
Evaluate your financial situation
Look at your income, expenses and liabilities (including outstanding debts). Check your credit score to understand how lenders view your creditworthiness. This can help you spot any irregularities in your spending, improve your credit and put your best financial foot forward when applying for a home loan.
3
Gather documentation
Prepare the necessary documents, including your proof of identity, recent tax assessments, payslips and bank statements. There may be other documents you need to provide based on your unique circumstances.
4
Submit an application
Create an account on the Help to Buy portal (to be launched). Complete the application form and submit a statutory declaration confirming the accuracy of your details.
5
Application assessment
Applications will be reviewed by Housing Australia with successful applicants receiving an eligibility certificate detailing the maximum property price threshold and government equity contribution percentage.
6
Scope out properties
Choose a property within the specified price cap and ensure it meets the scheme’s criteria. Proceed with the property purchase, securing a home loan for the remaining amount after accounting for your deposit and the government's contribution.
