Help to Buy: Australia's Shared Equity Scheme Explained

What is the Help to Buy scheme?

Help to Buy is a shared equity scheme run by Housing Australia on behalf of the Commonwealth. The government contributes part of the purchase price and takes a proportional equity interest in the property, which reduces both the deposit you need and the loan you have to service. There are 10,000 places a year and the scheme now operates in every state and territory.

Shared equity is a different mechanism from a guarantee. Under the First Home Guarantee the government guarantees part of your loan so you avoid lenders mortgage insurance, but you still borrow the full purchase price. Under Help to Buy the government actually owns a share, so you borrow less — and you give up a corresponding share of the eventual capital gain.

You still buy the property in your own name, live in it as your home, and hold the title. The government's interest is registered against the property and settled when you repay it, refinance to buy it out, or sell.

How the government equity share works

The maximum contribution depends on whether the home is new or existing: up to 40% of the purchase price for a newly built home, and up to 30% for an existing home. You need a deposit of at least 2%, and you borrow the balance from a participating lender.

On an $800,000 newly built home with a 40% contribution, the government puts in $320,000 and you fund $480,000 — a 2% deposit is $16,000, leaving a mortgage of about $464,000 rather than $784,000. The reduction in the loan is the entire point of the scheme: it is what brings the repayment within reach.

You do not pay rent or interest on the government's share. What you give up instead is the growth on it. The amount you repay is always based on the property's value at the time you make the payment, so the government shares proportionally in gains — and in losses if the property is worth less.

You can exit the arrangement in three ways: make voluntary repayments out of savings over time, refinance to borrow the government's share out in one go, or sell the property and settle the share from the proceeds. Confirm the mechanics of voluntary repayments with your lender before you commit, since that detail is administered by Housing Australia rather than set out on the public page.

Income and property price caps by state

Two caps apply. Your taxable income must be at or below $103,000 for a single applicant, or $165,000 for joint applicants and single parents. These thresholds are indexed to wages annually, so check them again in a new financial year rather than relying on a figure you read earlier.

Whether a given suburb counts as a capital city or regional centre is defined by postcode, and the boundaries are not always intuitive. Housing Australia publishes a postcode search tool, and you are responsible for confirming the cap for the exact suburb — an application over the cap cannot be approved, regardless of everything else being in order.

Who is eligible?

You must be at least 18, an Australian citizen, and buying the home to live in as your principal place of residence. Help to Buy is not available for an investment property.

You must not own, or have a beneficial interest in, any property in Australia or overseas, with limited exceptions available to single parents. You also cannot be receiving shared equity assistance from another Commonwealth program at the same time.

Unlike most first home buyer support, Help to Buy is not restricted to first home buyers. Previous owners can apply provided they do not currently own property — which makes it relevant to people re-entering the market after a separation or a period of renting.

Your income has to sit within the caps above, and you still have to satisfy an ordinary lender that you can service the reduced loan. Meeting the scheme criteria does not oblige a lender to approve you.

What happens when you sell or your income rises

When you sell, the government's share is worked out as its percentage of the sale value and settled from the proceeds. If the property has gained, the government takes its proportion of the gain; if it has fallen, it wears its proportion of the loss. You keep the balance.

That is the trade at the heart of shared equity, and it is worth quantifying rather than glossing. A 30% share of $200,000 of growth is $60,000 you do not keep. Against that, buying years earlier at a lower price — and paying interest on a much smaller loan the entire time — is often worth more than the forgone share. Which way it falls depends on your numbers, not on a rule of thumb.

The income cap is tested when you apply. If your income later rises above it, that alone does not force a sale, but the terms around ongoing eligibility are administered by Housing Australia and are worth confirming in writing before you sign, particularly if a substantial income increase is likely.

You remain the owner throughout: you pay the rates, insurance, strata levies and maintenance in full, not proportionally. The government contributes to the purchase, not to the running costs.

Help to Buy vs the First Home Guarantee

They solve different problems and cannot be used together. Help to Buy reduces how much you borrow by taking an equity share. The First Home Guarantee lets you borrow the full amount with a small deposit and no lenders mortgage insurance, guaranteeing part of the loan instead.

The practical question is whether servicing is your constraint or the deposit is. If you can save a deposit but cannot service the loan at assessed rates, the equity share is what unlocks the purchase. If you can service comfortably but the deposit and LMI are the barrier, the Guarantee keeps all the growth in your hands.

How to apply

Applications go through a participating lender, not to Housing Australia directly. The lender assesses your loan in the ordinary way and lodges the Help to Buy application alongside it, so your first step is finding a lender that participates and getting pre-approval on the reduced loan amount.

Before you apply, confirm three things: that your taxable income is within the cap, that the suburb's price cap covers what you intend to spend, and whether the property is classed as newly built or existing — that classification is worth up to 10 percentage points of contribution.

Places are limited to 10,000 a year, so timing matters. Have your deposit evidence, income documents and identification ready rather than assembling them after you have found a property.

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