A major new government initiative designed to help Australians break into the housing market will open for applications this Friday, offering a potential lifeline to thousands of struggling buyers.
What is the Help to Buy shared equity scheme?
The Help to Buy scheme is a federal shared equity program where the government contributes a significant portion of the purchase price. For an existing home, the government will stump up 30 per cent of the cost, rising to 40 per cent for a newly built property.
This backing can be used to buy a range of dwellings including houses, townhouses, apartments, and duplexes. Critically, the buyer's name will be on the title and they will own the property, but they will share the property's value with the government.
Participants will not pay rent or interest on the government's contribution. Instead, they are expected to pay it down over time through voluntary contributions or when the home is eventually sold. A key benefit is that eligible buyers will also avoid paying lender's mortgage insurance, a significant cost barrier.
The scheme, administered by Housing Australia, will offer 10,000 places each financial year for four years. The legislation finally passed parliament in November 2024 after a period of political delay.
Am I eligible for the new home buyer program?
The scheme targets Australian citizens who have saved a deposit but remain just short of being able to buy a suitable home. The deposit requirement is slashed to a minimum of just 2 per cent, a dramatic reduction compared to the standard 20% that can take over a decade to save.
However, strict eligibility criteria apply:
- Income caps are set at $100,000 for individuals and $160,000 for single parents or joint applications.
- Applicants must not currently own a property, with limited exceptions for single parents in specific circumstances.
- The purchased home must be the applicant's principal place of residence; investors are excluded.
- Those already using other government housing schemes like the 5% deposit Home Guarantee are also ineligible.
The first participating lenders are the Commonwealth Bank and Bank Australia, with more institutions expected to join in 2026.
Price caps and state-by-state rollout
Property price caps vary by location. The highest cap of $1.3 million applies in Sydney and key NSW regional centres like Newcastle and the Central Coast.
Other capital city caps are:
- Brisbane and Canberra: $1 million
- Melbourne: $950,000
- Adelaide: $900,000
- Perth: $850,000
Not all states are immediately on board. Western Australia is expected to sign up in early to mid-2026, while Tasmania has decided against involvement for now but is monitoring the scheme's progress.
Potential benefits and expert warnings
The Federal Government, through Housing Minister Clare O'Neil, argues the scheme will cut years off deposit saving time and reduce mortgage sizes for low and middle-income earners like retail workers, cleaners, and nurses.
"Help to Buy is about reducing the mortgage size and deposit hurdle so Australians on low and middle incomes can start paying off their own mortgage and not someone else's," Minister O'Neil stated.
However, financial experts urge caution. Sally Tindall from Canstar noted that "shared equity gives people a foot in the door, but it comes with some pretty significant strings attached." Participants share any capital gains with the government, and if their income rises above the cap for two years, they may need to start buying out the government's share.
Mansour Soltani from Money.com.au warned the scheme could inflate prices in an already tight market by adding 10,000 new buyers, similar to effects seen with past stimulus programs. He also highlighted that building equity to trade up later may be limited as the government's stake must be repaid upon sale.
Opposition housing spokesman Senator Andrew Bragg has been critical, calling it a "skewed priority" that stimulates demand without fixing the core supply shortage, estimated at 220,000 homes, potentially pushing entry-level prices higher.
Despite the debates, for thousands of Australians, the Help to Buy scheme represents a tangible, if complex, new pathway onto the property ladder from December 5.
