Help to Buy Explained, the 2% Deposit and the Catch

You've done the sums a dozen times. A 5% deposit on a house out west is still $30,000 or more, and the balance in your savings account isn't getting there fast.

Then a mate mentions Help to Buy. Two per cent deposit. The government chips in the rest.

It sounds too good, so you assume there's a catch. There is. It's just not the one most people expect.

What Help to Buy actually is

Help to Buy is the federal shared equity scheme. It's been open since December 2025, with 10,000 places a year.

You save a 2% deposit. You get a home loan from a participating lender. The government then contributes up to 30% of the price on an existing home, or up to 40% on a new build.

In return, the government owns that share of your home.

Say you buy an existing house in Melton for $600,000. You put in $12,000. The government puts in $180,000. Your loan is $408,000, which is a 68% loan to value ratio, so there's no Lenders Mortgage Insurance and the lender is very comfortable.

Your repayments are on $408,000. That's what changes what you can afford each month.

The catch, in plain terms

You don't pay rent or interest on the government's share. But it isn't a loan you slowly pay off either.

The government owns 30% of the house. When you sell, or when you buy them out, they get 30% of what the house is worth then. Not 30% of what you paid.

So if that Melton house is worth $700,000 in ten years, the government's share is $210,000. If it's worth less, their share is worth less too. They share the gain and the loss.

That's the trade. A much smaller loan today, in exchange for a smaller slice of the growth.

If you want to see how that plays out on a house you're actually looking at, book a chat. We'll run the numbers side by side with a 5% deposit loan.

Who can use it

The rules were updated on 1 July 2026, and the income caps went up.

• You need to be an Australian citizen and at least 18.
• Your taxable income on last year's tax notice must be $103,000 or less as a single applicant, or $165,000 or less for joint applicants and single parents.
• You can't own any other property, here or overseas.
• You have to live in the home. No renting it out.
• In Melbourne and Geelong the price cap is $950,000. Across the rest of Victoria it's $650,000.
• You apply through a participating lender, not to Housing Australia directly.

You don't need to be a first home buyer. Someone returning to ownership after a divorce or a tough few years can qualify.

What it stacks with, and what it doesn't

Help to Buy sits alongside the Victorian stamp duty exemption. If you're a first home buyer paying $600,000 or less, duty is zero. It slides into a concession up to $750,000.

The $10,000 First Home Owner Grant still applies on a new home up to $750,000. And you can use First Home Super Saver money for the deposit.

What it doesn't stack with is another state or territory shared equity scheme, loan or guarantee. You pick one path.

The obligations people skip past

You're in a partnership with the government, and partnerships come with paperwork.

You need to keep the home insured and maintained. Housing Australia runs periodic reviews where you provide your tax notice and insurance certificate.

If your income rises, you may be asked to start buying back the government's share in increments. That can mean refinancing.

Big renovations change the maths too. Spend over $21,000 on improvements and the government's percentage can be adjusted so you keep the value you added.

None of that is a dealbreaker. It's just different from owning outright.

How to think about it

Help to Buy is built for the person who has the income to make repayments but can't close the deposit gap.

If you can get to a 5% deposit within a year, the federal 5% Deposit Scheme lets you keep 100% of your home. If that's three or four years away, and rent keeps climbing, a smaller slice of a house you own now may be worth more than all of a house you don't.

It depends on your savings, your income and how long you plan to stay.

We've helped over 100 first home buyers into the market, and we're rated 10/10 on Reviewr by over 100 customers. Book a time and we'll walk through both options with your actual numbers.

Let's get you into a home.