The Help to Buy shared equity scheme launches 1 July 2025, offering government co-investment of 30–40% for eligible first-home buyers. With $5.5 billion in funding over four years, the scheme targets 40,000 annual participants across Australia.
Scheme overview
The Help to Buy scheme represents the federal government's most ambitious housing affordability initiative, launched in 2024 and expanded throughout 2025. Unlike traditional home loans, this shared equity arrangement allows the government to become a financial partner in your home purchase.
The scheme operates on a simple principle: the government contributes up to 30% of the purchase price (40% for new builds), which reduces your loan amount and eliminates the need for lenders mortgage insurance (LMI). This partnership continues until you choose to buy out the government's share or sell the property.
Government vs buyer equity share
Based on existing home purchase (30% government contribution)
Key features of the Help to Buy scheme include:
- Minimum 2% deposit: Compared to the usual 20% required to avoid LMI, this dramatically reduces upfront costs
- Government equity contribution: Up to 30% for existing homes, 40% for new builds
- No LMI: The government's equity stake eliminates the need for lenders mortgage insurance
- Buyback option: You can purchase the government's share at any time based on current market valuation
- Shared capital gains: The government receives its proportional share of any capital growth
Pros & cons
Like any financial arrangement, Help to Buy has significant advantages and important limitations you should understand before applying.
✅ Advantages
Lower repayments
Your mortgage amount is reduced by the government's contribution, meaning significantly lower monthly repayments. On a $600,000 home, the government's $180,000 contribution reduces your loan to $408,000 (with a 2% deposit).
Faster path to homeownership
With only a 2% deposit required, you can buy years earlier than saving for a traditional 20% deposit. This is particularly valuable in rising markets where property prices may increase faster than your savings.
No LMI costs
LMI typically costs $8,000-15,000 on a home loan with less than 20% deposit. This cost is completely eliminated under Help to Buy.
❌ Disadvantages
Shared capital gains
The government receives its percentage share of any capital growth. If your $600,000 home increases to $800,000, the government receives 30% of that $200,000 gain ($60,000).
Income and price caps
Strict income limits ($90,000 single/$120,000 couple) and property price caps may exclude many buyers, particularly in expensive metro markets.
Refinancing restrictions
You may face limitations when refinancing, as the government's equity stake complicates the process and may limit your lender options.
Income cap vs property cap
How to apply
The application process involves multiple steps and requires coordination between you, your lender, and Housing Australia (the government agency administering the scheme).
Application Process
Important considerations before applying
Before committing to Help to Buy, consider these key factors:
- Limited places: The scheme has a cap of 40,000 places nationally, with allocations distributed across states based on population
- Property restrictions: Not all properties are eligible. Investment properties, vacant land, and properties above price caps are excluded
- Future planning: Consider your long-term plans. If you expect significant income growth, you might prefer traditional financing to avoid sharing capital gains
- Exit strategy: Understand the process and costs involved in buying out the government's share when you're ready
Buying out the government share
You can purchase the government's equity stake at any time, but the process requires:
- Current valuation: An independent valuation determines the government's share value
- Refinancing: You'll typically need to refinance to raise funds for the buyout
- Administrative costs: Valuation fees and legal costs apply to the buyout process
Key Benefits Summary
Help to Buy offers a genuine pathway to homeownership for eligible buyers who meet the income and property price requirements. While you'll share capital gains with the government, the scheme can get you into the property market years earlier than traditional financing. Carefully weigh the pros and cons against your personal circumstances and long-term financial goals.
First-home buyers should also explore the First Home Buyer Grant and First Home Super Saver Scheme to maximize your available support when entering the property market.