Help to Buy set to kick off: How does it stack up?
05 Dec 2025
More first home buyers will be able to get a foothold on the property ladder from today, with the launch of the government’s long-awaited Help to Buy scheme.
The initiative, which was first proposed back in 2022, will see low-income households co-buy with the federal government, with the government contributing up to 30% of the cost of an existing home, and up to 40% of new builds – not as a cash handout, but as a co-owner in the property.
While the government recently lifted the lid on its alternative offering, the Home Guarantee scheme, Help to Buy remains more targeted, with a limit of 10,000 places per year and strict income caps in place for the scheme of $100,000 for single buyers and up to $160,000 for joint applicants and single parents, which are indexed annually to wage growth. Participants’ incomes are re-assessed every five years.
People using the Help to Buy scheme will have to stump up a deposit of at least 2% of the entire property’s value, but will not have to pay lenders’ mortgage insurance.
The scheme starts for most states and territories from tomorrow, however, Western Australia and Tasmania are yet to pass the legislation to participate in the scheme.
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| How do the two home buying schemes stack up? | ||
|---|---|---|
| Help to Buy | Home Guarantee | |
| Minimum deposit (% of property price) | 2% | 5% for first home buyers, 2% for single parents |
| House price cap in Sydney | $1.3 million | $1.5 million |
| Income cap | $100k for singles, $160k for single parents or joint applicants | None |
| Number of places | 10,000 per year | Unlimited |
| Number of lenders available | 2 | 38 |
| % purchased by home buyer | At least 70% for existing, or 60% for new builds | 100% |
| Investors Y/N? | N | N |
| Lenders mortgage insurance Y/N? | N | N |
Help to Buy – the pros:
- Smaller mortgage – because the government contributes up to 30% for an existing property and up to 40% for a new build, applicants will be saddled with less debt and lower monthly mortgage repayments.
- Greater chance of being approved – taking on less debt means a low-income borrower is more likely to get approved for the loan.
- Avoid paying lenders’ mortgage insurance – which can be thousands, if not tens of thousands of dollars.
- Rent-free – Borrowers are not required to pay rent on the portion the government owns. Additionally, they can buy out the government when they’re in a position to do so.
- Not limited to first home buyers – the scheme is available to anyone who does not currently own property in Australia or overseas (with exceptions for single parents).
Help to Buy – the cons:
- Shared ownership = shared profits – the government retains partial ownership, which means when you sell, the government takes its share of the profits.
- Must live in the property – if you need to move out, you might have to sell the property, unless you’re in a position to buy out the government’s share by taking on a bigger loan.
- Only two participating lenders at this stage – applicants face restricted choice and reduced competition on rates and features, with just CBA and Bank Australia currently in the scheme.
- Low deposit loan = greater risk – if property values fall, you could end up stuck in a co-ownership arrangement for longer than expected, with no or limited opportunity to switch lenders.
- A pay rise could trigger a forced buy back – anyone who starts earning above the threshold for two consecutive years will need to undergo a review with their lender and may need to buy out at least part of the Government’s share if they can afford to.
- Limited in size and scale – Only 10,000 spots per year and not currently available in Western Australia or Tasmania.
Help to Buy will see low-income earners buy a property they otherwise couldn’t afford
Help to Buy won’t increase how much someone can borrow, however, with the government co-purchasing, it will enable people to buy a property that would otherwise be out of reach financially.
Research shows someone earning $90,000, taking out a 30-year loan with CBA at a rate of 5.64%, could potentially borrow $438,000 – regardless of which scheme they consider.
Under the Help to Buy scheme, with a deposit of 2% – or $12,882 – and a government contribution of 30%, they could potentially buy a property valued at $644,117 (excluding stamp duty, fees and other expenses).
If they instead use the Home Guarantee scheme, they would need to stump up a 5% deposit of $23,053 and could buy a property worth $461,053.
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| How do the two key government home buying schemes stack up? | |||
|---|---|---|---|
| Help to Buy | Home Guarantee | Difference to Help to Buy | |
| Max loan size for $90k income | $438,000 | $438,000 | $0 |
| Deposit | $12,882 | $23,053 | +$10,171 |
| Property value | $644,117 | $461,053 | -$183,064 |
| Monthly repayment | $2,526 | $2,526 | $0 |
Source: Canstar. Calculations are based on CBA owner-occupier paying principal and interest at a rate of 5.64% and 70% LVR. Assumes minimal expenses, no debts, no dependents. Full notes below.
| Property price caps for Help to Buy and Home Guarantee – Capital city and regional centres | ||
|---|---|---|
| Help to Buy | Home Guarantee | |
| NSW | $1,300,000 | $1,500,000 |
| Victoria | $950,000 | $950,000 |
| Queensland | $1,000,000 | $1,000,000 |
| WA | N/A at this stage | $850,000 |
| SA | $900,000 | $900,000 |
| Tasmania | N/A at this stage | $700,000 |
| NT | $600,000 | $600,000 |
| ACT | $1,000,000 | $1,000,000 |
| Jervis Bay Territory and Norfolk Island | $550,000 | $550,000 |
| Christmas Island and Cocos (Keeling) Islands | $400,000 | $400,000 |
Source: Housing Australia. Note: Help to Buy will not initially be available in WA or Tas.
Canstar’s data insights director, Sally Tindall says, “Help to Buy could well be a lifeline for people who’ve been watching the first rung on the property ladder rise further out of reach. For some, this scheme will be the difference between renting indefinitely and finally getting the keys to their own home.”
“This scheme is deliberately aimed at lower-income households, people who’ve been locked out of the market as prices have taken off. The income caps make sure the help goes to those who genuinely need the support.
“Having the government chip in up to 30 per cent on existing homes, and up to 40 per cent on a new build, means a significantly smaller mortgage, smaller repayments and no lenders’ mortgage insurance.
“Unlike the Home Guarantee Scheme, Help to Buy is capped and highly targeted. As a result, it’s not expected to put any extra heat into an already inflated property market.
“Shared equity gives people a foot in the door, but it comes with some pretty significant strings attached. You’re sharing any profits with the government and if your income rises above the cap for two consecutive years, you might be called on to buy out part of the government’s share. This type of arrangement could end up weighing heavily on participants’ minds. It’s not going to suit everyone who’s eligible.
“With only two lenders on board at the start, borrowers won’t have the luxury of shopping around. That’s not ideal in a market where competition can save you thousands over the life of the loan.
“Help to Buy will get more people into the market, but again, it does nothing to fix the structural affordability issues facing the country. It’s a helping hand for tens of thousands of households – not a silver bullet.”
Borrowing power calculation notes
Calculations are based on the current new owner-occupier variable rate from CBA for LVR of 70% of 5.64%, a loan term of 30 years, with the bank assessing the government contribution as part of the deposit, annual expenses of $24,000 for singles, 90% of post-tax income available to service the loan and expenses, and a 3%-point interest rate buffer. Tax calculations based on the current financial year, excluding Medicare Levy. Assumes borrowers have no existing debts, minimal expenses and no dependents. Borrowers should seek personal financial advice before deciding how much to borrow and know the actual amount will vary depending on their personal circumstances and between lenders.
This article was reviewed by our Consumer Editor Meagan Lawrence before it was updated, as part of our fact-checking process.
