In short: Help to Buy is a federal shared equity scheme where the Australian Government contributes up to 40% of the price of a new home (30% for an existing home) and you buy the rest with as little as a 2% deposit and no lenders mortgage insurance. In Victoria the price cap is $950,000, and income must be under $100,000 (single) or $160,000 (couple) at the time of writing.
Shared equity sounds complicated, but the idea is simple: the government becomes a silent co-owner, you live in the home, pay the mortgage on your share only, and buy the government out over time or when you sell. For buyers in Melbourne's north who have steady income but a thin deposit, it can cut the loan you need by hundreds of thousands of dollars. This guide covers who qualifies, what it costs, how it compares with the First Home Guarantee, and the traps to avoid.
What Help to Buy actually is
Help to Buy is run by Housing Australia on behalf of the federal government. Instead of guaranteeing your loan (as the Home Guarantee Scheme does), the government puts real money into the purchase in exchange for an equity share of the property. You hold the title, you live in the home, and you take out a standard home loan with a participating lender for the balance.
Three numbers define the scheme:
| Feature | New home | Existing home |
|---|---|---|
| Maximum government equity contribution | 40% of purchase price | 30% of purchase price |
| Minimum deposit from you | 2% | 2% |
| Lenders mortgage insurance | Not required | Not required |
The government does not charge you rent or interest on its share. Its return comes when the home is sold or when you buy it out, at which point it receives its percentage of the property's market value at that time, not the original dollar amount. If the property has grown in value, the government's dollar share grows too. If it has fallen, the government wears its portion of the loss.
Places are limited each year and are allocated across states, so the scheme is not open-ended in the way the First Home Guarantee now is. Full scheme details are published by Housing Australia.
Eligibility checklist
You need to tick every box on this list, not most of them.
- You are an Australian citizen aged 18 or over (permanent residents are not eligible under Help to Buy, unlike the First Home Guarantee).
- Your taxable income is no more than $100,000 as a single applicant or $160,000 combined for a couple (joint applicants), at the time of writing.
- You do not currently own any property or land in Australia or overseas. You do not need to be a first home buyer, so previous owners who no longer hold property can apply.
- You will live in the home as your principal place of residence.
- The property is at or under the Victorian price cap of $950,000.
- You have at least a 2% deposit plus enough for purchase costs.
- You can service a loan with a participating lender under normal lending rules.
- You are buying with a partner (couple) or alone. Two friends or siblings cannot pool under the scheme as a "couple".
Income is tested on your most recent notice of assessment from the ATO. If you have had a pay rise since, that generally does not push you out, but your income will be reviewed each year and if it exceeds the cap for two consecutive years you may be asked to start buying out the government's share.
Worked example: a Mickleham house-and-land package
Say you are a couple earning a combined $140,000 and you find a new house-and-land package in Mickleham for $650,000. Being a new build, the maximum government contribution is 40%.
| Item | Amount |
|---|---|
| Purchase price | $650,000 |
| Government equity (40%) | $260,000 |
| Your deposit (2%) | $13,000 |
| Home loan required | $377,000 |
| Monthly repayment (for illustration, at 6.00% p.a. over 30 years) | approx. $2,260 |
Compare that with the same purchase under the First Home Guarantee with a 5% deposit: loan of $617,500 and a repayment of roughly $3,703 a month at the same rate. Help to Buy reduces the monthly outlay by around $1,440, which is often the difference between passing and failing a lender's serviceability test at the APRA assessment rate of your rate plus 3 percentage points.
As first home buyers on a new home, this couple would also likely qualify for the $10,000 First Home Owner Grant and the Victorian first-home-buyer duty concession. At $650,000 duty is reduced from $34,070 to roughly $11,357. Use the stamp duty calculator to confirm the figure for your price.
What the numbers look like when you sell
Suppose you sell the Mickleham home ten years later for $850,000. The government's 40% share is now $340,000, which is repaid from the sale proceeds. Your remaining loan balance is roughly $315,000 at that point. After paying out both, you walk away with about $195,000 before selling costs, having put in $13,000 at the start. If instead you had bought out part of the government's share along the way, your share of that growth would be larger.
Buying the government out over time
You are not locked in for life. You can make voluntary payments to reduce the government's stake in increments of at least 5% of the property's current value, and most buyers plan to do this as their income rises. Each buy-out is priced at a fresh valuation, so a rising market makes each tranche more expensive and a flat market makes it cheaper.
Practical ways people fund buy-outs:
- Refinancing to a bigger loan once their LVR and income allow it. See the refinancing guide.
- Using bonuses, inheritances or the proceeds of selling a car or shares.
- Waiting until the loan balance has fallen and then borrowing back against the equity.
You are required to begin buying out the government's share if your income exceeds the cap for two consecutive years, if you stop living in the property, or if you rent it out. You do not have to buy it out before selling; the government simply takes its share from the sale.
Help to Buy versus the First Home Guarantee
Both schemes let you buy without LMI, but they suit different buyers.
| Help to Buy | First Home Guarantee | |
|---|---|---|
| Minimum deposit | 2% | 5% |
| Government involvement | Owns an equity share | Guarantees part of your loan |
| Income cap | $100k single / $160k couple | None (since October 2025) |
| Places | Limited each year | Unlimited |
| Citizenship | Citizens only | Citizens and permanent residents |
| Melbourne price cap | $950,000 | $950,000 |
| Who keeps all the capital growth | Shared with government | You |
| Loan size on a $650k purchase | $377,000 (new) | $617,500 |
The rule of thumb: if you can service the full loan, the First Home Guarantee keeps every dollar of growth for you. If you cannot, or if a smaller repayment gives you breathing room for a family or a business, Help to Buy is the tool that gets you in the door. Some buyers use Help to Buy first and refinance out of it within five to seven years. Run both scenarios through the First Home Guarantee eligibility calculator and talk to a broker before deciding.
Costs and obligations you still carry
Shared equity reduces your loan, not your responsibilities as an owner. You still pay:
- All council rates, water, insurance and owners corporation fees.
- All repairs and maintenance, even though the government shares in the value.
- Standard loan fees, valuation fees and conveyancing costs.
- Stamp duty on the full purchase price (subject to any first-home-buyer concession).
You will also need the government's consent for major renovations that change the value of the home, and you generally cannot use the property as security for other borrowing without approval. Read the participation agreement carefully with your conveyancer; the contract of sale will be a normal Victorian contract, but the scheme documents sit alongside it.
How to apply
- Check your income against the cap using your latest ATO notice of assessment.
- Speak to a broker who works with participating lenders. Not every bank is on the panel, and the process runs through the lender, not directly with Housing Australia.
- Get pre-approval for the loan portion. The lender assesses you on the reduced loan, which is a big advantage for borrowing power.
- Reserve a scheme place through the lender. Places are released in rounds, so timing matters.
- Find a property under $950,000 in Victoria that meets the scheme's dwelling rules (new or existing, house, townhouse or apartment).
- Sign the contract with a subject-to-finance clause and the scheme approval as conditions.
- Settle. The government's contribution is paid at settlement alongside your loan.
Suburbs in Melbourne's growth corridor sit comfortably under the cap. Established homes in Craigieburn and Epping, and new builds in Kalkallo and Wollert, are all realistic targets with a 30–40% equity contribution.
Common mistakes
- Assuming permanent residents qualify. They do not under Help to Buy. If you hold PR, the First Home Guarantee is your scheme.
- Forgetting purchase costs. A 2% deposit covers the deposit only. Budget separately for conveyancing, building inspections, moving and any stamp duty using the upfront costs calculator.
- Treating the government share as a fixed dollar amount. It is a percentage of market value. If your $650,000 home becomes worth $900,000, the 40% share becomes $360,000.
- Buying above your comfort level because the loan is small. Serviceability still applies, and living costs in a new estate (commuting, fencing, landscaping) add up.
- Renting the property out. Doing so breaks the owner-occupier condition and triggers a buy-out requirement.
- Applying to several lenders at once. Multiple credit enquiries in a short window can dent your credit score and slow down scheme approval.
Frequently asked questions
Who pays the government back under Help to Buy?
You do, but only when you sell, refinance the government out, or choose to buy back its share. The government receives its percentage of the property's market value at that time, not the original amount. There is no rent, interest or monthly payment on the government's share while you live in the home, which is what makes the scheme affordable on a modest income.
Can I use Help to Buy with the First Home Owner Grant in Victoria?
Yes. Help to Buy is a federal scheme and the $10,000 First Home Owner Grant is a Victorian scheme, so they stack. If you are buying a brand-new home valued up to $750,000 and you have not owned property before, you can generally claim the grant and the first-home-buyer duty concession alongside your Help to Buy place, subject to meeting each scheme's residency rules.
What happens if my income goes over the cap after I buy?
Nothing immediately. Your income is reviewed annually, and if it exceeds the cap for two consecutive years you will be asked to begin buying out the government's share, usually through refinancing. You will not be forced to sell. Many buyers see this as a positive milestone, because it means their income has risen enough to carry a bigger loan.
Is Help to Buy only for first home buyers?
No. You must not currently own property in Australia or overseas, but you can have owned before. Separated or divorced buyers who have sold or transferred their previous home, and people who sold up years ago, are commonly eligible. Note that the Victorian First Home Owner Grant and duty exemption do still require you to be a genuine first home buyer.
Can I buy an apartment or townhouse under Help to Buy?
Yes. Houses, townhouses, units and apartments all qualify, whether new, off the plan or established, as long as the price is under the Victorian cap of $950,000. Off-the-plan purchases attract the 40% new-home contribution. Check the buying off the plan guide for the extra risks around valuation shortfalls at settlement.
How is Help to Buy different from Victoria's own shared equity scheme?
Victoria previously ran its own Homebuyer Fund, which has now closed to new applications and been replaced by the federal Help to Buy scheme. The federal version offers a larger contribution for new homes (40% versus 25%) and a lower minimum deposit (2% versus 5%). If you are an existing Homebuyer Fund participant, your arrangement continues under its original terms.
Talk to GNT Finance
Help to Buy places are limited and the application runs through a participating lender, so having a broker who knows the panel and the paperwork matters. Gorakh Timilsina and the GNT Finance team in Mickleham can check your eligibility, model Help to Buy against the First Home Guarantee for your exact budget, and manage the application from pre-approval to settlement at no cost to you for our home-loan service in most cases. Book a free consultation or call 0426 403 703.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.