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How the government's Help to Buy scheme works

By Niko Iliakis and Jack Dona
Fact Checked
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Prime Minister Anthony Albanese

The federal Labor government introduced the Help to Buy scheme in May 2022. Two years on, Labor’s plan to help Australians purchase a home is closer than ever to reality.

But who is eligible for the scheme and how does it work? 

What is the Help to Buy Scheme?

  • The government will cover up to 40% of the purchase price of your home 
  • The scheme is available for low-to middle-income earners 
  • Buy a home with as little as a 2% deposit and pay no LMI.

The federal government’s Help to Buy scheme will contribute up to 40% of the purchase price of a new home, or up to 30% of the purchase price of an existing home, to help low- to middle-income earners get a foot on the property ladder.

There are 10,000 places each financial year, up to a total of 40,000 places after four years from the scheme’s start date.

Under the scheme, borrowers can avoid paying lenders mortgage insurance (LMI), despite only needing to save up a minimum 2% deposit. However, they will still undergo a financial assessment from lenders when applying for a home loan and must meet certain eligibility criteria. 

To be eligible for the Help to Buy Scheme: 

  • You must be an Australian citizen 
  • You must be at least 18 years of age
  • You must not own any other property or land in Australia or elsewhere
  • Your income must not exceed $90,000 if you are an individual and $120,000 if you are a couple
  • You must intend to use the home as your principal place of residence
  • You must have a deposit of at least 2 per cent of the property’s value
  • You must qualify for the remainder of the purchase price through a home loan with a participating lender.

How does the Help to Buy scheme work?

An infographic representing the government's share of your home's equity under the Help to Buy scheme with a house 40 per cent shaded-in

The Help to Buy scheme is a national shared equity program, administered by Housing Australia on behalf of the Commonwealth. 

Through the scheme, eligible buyers will enter into a contract with Housing Australia, who will then contribute up to 40% of the home’s purchase price on a new property, or up to 30% of the purchase price on an existing property.

This equity contribution is intended to lower borrowers’ monthly repayments.

The government’s contribution will be recognised as a second mortgage, meaning that the government will own that share of your property. 

Homeowners are then expected to buy back equity from the government after four years, starting at a minimum of 5% of the government’s stake in the property.

Help to Buy scheme price caps

There are price caps on the properties you can purchase using the Help to Buy scheme, which differs depending on the state or territory you intend to buy in. The table below outlines the government’s proposed price caps for the scheme. 

Eligible region
Price cap
NSW - Capital city & regional centres
$950,000
NSW - rest of state
$600,000
VIC - Capital city & regional centres
$850,000
VIC - rest of state
$550,000
QLD - Capital city & regional centres
$650,000
QLD - rest of state
$500,000
WA - capital city
$550,000
WA - rest of state
$400,000
SA - capital city
$550,000
SA - rest of state
$400,000
TAS - capital city
$550,000
TAS - rest of state
$400,000
ACT
$600,000
NT
$550,000

Help to Buy scheme FAQs

What if my income goes up during the loan period?

If you’re enrolled in the Help to Buy scheme and your yearly income exceeds the eligibility threshold for two consecutive years, you will be asked to repay the amount contributed by the Government — either in part or in whole depending on your circumstances.

How will the government pay for the scheme?

To pay for the Help to Buy scheme, along with other policies aimed at addressing housing unaffordability, Labor will double foreign investment screening fees and financial penalties beginning July 2022. This is expected to raise around $445 million in revenue.

Will I have to pay Lenders Mortgage Insurance (LMI)?

No, the scheme will allow homebuyers to skip purchasing Lenders Mortgage Insurance. LMI is typically required on low deposit loans (as they are regarded as riskier) and protect the lender in case a borrower cannot service their mortgage.

Does the scheme cover stamp duty?

No. The Labor Party notes that while the scheme will reduce the size of the deposit and ongoing mortgage repayments, homebuyers will still be required to cover other costs associated with buying a home, such as stamp duty and loan fees.

Is it only available for first home buyers?

The ALP explains that the scheme will be available to those that do not own land or property in Australia or overseas. It does not specify that it is only available to first home buyers.

Will I have to pay rent to the government?

No. Though the government will own a stake of the home, homebuyers will not be required to pay rent on that portion.

Are there any similar schemes in Australia?

Yes. Victoria’s Homebuyer Fund is another shared equity scheme in which the government contributes up to 25 per cent of a property’s value. As with the Help to Buy scheme, homebuyers can buy back the government’s share of the property over time.

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Niko Iliakis
Niko Iliakis
Money writer

Niko has three years experience as a finance journalist. He specialises in home loans, business loans and interest rate movements at Mozo.

Jack Dona
Jack Dona
RG146
Money writer

Jack is degree-qualified in communications and creative writing, with a talent for simplifying financial jargon. His approach helps consumers make better decisions. Jack is RG146 certified in generic knowledge and uses flair to make finance interesting.

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