How Australia's Help to Buy Scheme Works: The Government's Shared Equity Program Explained

The Help to Buy scheme is the Australian Government's shared equity program for home buyers. Launched in late 2025, it takes a different approach from most other first home buyer support: rather than simply helping you avoid LMI or reducing your deposit requirement, the government actually co-owns a portion of your property alongside you.

It is a significant scheme that suits a specific group of buyers, and it is worth understanding properly before assuming it is the right fit for your situation.

What Is Shared Equity and How Does Help to Buy Work?

In a shared equity arrangement, two parties own a property together, typically in different proportions. With Help to Buy, the Australian Government takes an equity stake of up to 30 per cent for an existing home, or up to 40 per cent for a new home, in the property you purchase.

This means if you are buying a $600,000 home, the government contributes up to $180,000 for an existing property or up to $240,000 for a new build. You borrow the remainder from a participating lender, with a deposit requirement that is substantially reduced as a result.

The government does not charge rent on its share. You live in the property as your primary residence and benefit from any capital growth. When you sell the property, the government receives back the same percentage of the sale price that corresponds to its ownership share.

Why Does This Reduce Your Repayments?

Because the government's equity contribution reduces the amount you need to borrow, your monthly mortgage repayments are lower. This is the scheme's central benefit.

For a buyer purchasing a $600,000 home with a 40 per cent government contribution on a new build, the borrower only needs to finance $240,000 (assuming a minimal deposit), rather than $600,000. The difference in monthly repayments is substantial.

Who Is Eligible for Help to Buy?

The scheme targets Australians on low to moderate incomes who could reasonably sustain homeownership but struggle to save a deposit or qualify for a full loan under standard conditions.

Eligibility criteria as at early 2026:

Income limits. To qualify, your annual income must be $90,000 or below as an individual applicant, or $120,000 or below for joint applicants. These limits apply to your taxable income.

First home buyer status or long-term non-ownership. You must either be a first home buyer or have not owned property in Australia for at least 10 years.

Citizenship or residency. Applicants must be Australian citizens.

Property price caps. The property must fall within the applicable regional price cap, which varies by location. Properties in metropolitan Sydney and Melbourne have higher caps than regional areas.

Deposit requirement. Applicants need a minimum deposit of two per cent of the purchase price, which you contribute from your own savings.

The property must be purchased for owner-occupation, meaning you intend to live in it. Investment purchases are not eligible.

How Many Places Are Available?

The Help to Buy scheme has 10,000 places available per year. This is a significantly smaller pool than the First Home Guarantee, which from October 2025 has had no annual cap on places. Given the income thresholds, the scheme is targeted at a specific segment of the market.

Applications are managed through Housing Australia, and places are allocated as applications are approved through participating lenders.

What Happens Over Time?

One of the more nuanced aspects of Help to Buy is what happens after you purchase.

You can buy out the government's share at any time, in increments as your financial position improves. The buy-out price is calculated at market value at the time of each transaction, not the original purchase price. If the property has grown in value, the buy-out cost increases proportionally.

If the property increases significantly in value, you will pay more to fully acquire the government's stake than the government originally contributed. Conversely, if the property value falls, the government's repayment amount also falls.

If you sell the property, the government receives its proportionate share of the sale proceeds based on its percentage ownership at that time.

If you refinance, change the loan in a way that would increase the government's risk, or want to rent out the property, you will generally need to obtain consent from Housing Australia.

Help to Buy vs First Home Guarantee: What Is the Difference?

These two schemes are often confused since both assist first home buyers.

The First Home Guarantee allows eligible buyers to purchase with a five per cent deposit without paying LMI. The government provides a guarantee, not ownership. You own 100 per cent of the property from day one. The scheme has no annual income cap and no ongoing ownership sharing.

Help to Buy involves the government co-owning your property. You borrow less, pay lower repayments, but share any future capital gains (and losses) with the government proportionally. It is better suited to buyers on lower incomes who need repayments reduced to an affordable level over the long term.

For most buyers who can afford standard repayments and qualify for the First Home Guarantee, that scheme is simpler and preserves full ownership. Help to Buy suits buyers who genuinely need the lower repayment level that a reduced loan creates.

What Are the Long-Term Costs?

Help to Buy can be an effective entry point to homeownership, but it is worth understanding the long-term implications clearly.

If your property value grows significantly, the government's equity stake grows in dollar terms too. Buying out that stake later costs more than the government originally contributed. Buyers who enter the scheme and then see strong capital growth may find that buying out the government's share is expensive.

That said, if the alternative was not buying at all, or renting indefinitely, the scheme may still represent a better outcome even with a shared upside.

How to Apply

Applications go through participating lenders who are accredited for the Help to Buy scheme. The process is similar to a standard home loan application, with the additional step of Housing Australia assessing eligibility.

The first step is to confirm your eligibility against the income and property price caps, then approach a participating lender. Given the limited places, applying early in each year's allocation round is advisable.

To understand your borrowing capacity and estimate the loan size you would need under Help to Buy, use the free Borrowing Capacity and Purchasing Power calculators at HomeLoanTools.com.au.