Help To Buy Scheme Problems; What First Time Home Buyers Need To Know

Universal Finance • May 22, 2025

Help To Buy Scheme Problems; What First Time Home Buyers Need To Know

Buying your first home in Australia has become increasingly difficult. Between skyrocketing house prices, cost-of-living pressures and high-interest rates, many first-time home buyers are struggling to enter the property market. In response, the government regularly rolls out new initiatives aimed at making the great Australian dream more achievable. One of the most talked-about programs is the Help to Buy scheme.


While the Help to Buy scheme in Australia promises to ease the burden for first-time buyers, it’s important to understand exactly how it works, along with the potential drawbacks. In this article, we’ll break down what the scheme is, its benefits, eligibility criteria and state-specific property caps. 


What is the Help To Buy scheme?


The Help to Buy scheme is a shared equity initiative announced by the Australian Government, which is expected to launch in July 2025. Under this program, eligible first-home buyers can purchase a home with as little as a 2% deposit, with the government contributing up to 40% of the property’s value for new homes (or 30% for existing homes). In return, the government retains a proportional interest in your property.


This means that you don’t need to take out a loan for the full value of the home, reducing your mortgage repayments and avoiding Lenders Mortgage Insurance (LMI), which can be an additional financial burden for many first-time buyers. The government’s contribution is interest-free, and there are no ongoing repayments for the equity share unless you sell, refinance or choose to buy back the share.


How does the Help to Buy scheme work? 


Sounds interesting? Here’s a simplified look at how the Help to Buy program works:

  • You find a property within your state's price cap (more on that below).
  • You contribute at least a 2% deposit.
  • The government contributes up to 40% (for new homes) or 30% (for existing).
  • You take out a mortgage for the remaining amount (for example, 58% if the government contributes 40%).


The scheme aims to reduce the upfront and ongoing financial burden of buying a home, allowing hopeful buyers to get onto the property ladder faster.


What are the benefits of the Help to Buy scheme? 


The Help to Buy scheme in Australia offers several advantages:

  • Lower deposit requirements — For many first-home buyers, the biggest hurdle of buying their first property is saving the initial deposit. While the rule of thumb is to apply for a mortgage with a deposit of 20%, under the Help to Buy scheme, you can buy a home with as little as a 2% deposit.
  • No LMI — Since the government acts as your guarantor, you avoid paying Lender’s Mortgage Insurance. This is an insurance premium borrowers with a deposit below 20% are charged to safeguard the lender against potential repayment defaults. 
  • Reduced monthly repayments — With a smaller loan amount, your monthly repayments are significantly lower, helping you save on interest and creating more wiggle room in your budget. 
  • Increased affordability — The Help to Buy scheme may enable buyers to purchase in areas that would otherwise be out of reach.


These benefits can be game-changing, particularly in high-cost areas like Sydney or Brisbane. However, it’s not all smooth sailing — there are also some limitations and potential concerns you should consider before applying. 


What are the eligibility requirements for the Help to Buy scheme?


To qualify for the Help to Buy scheme, applicants must meet the following criteria:

  • Be an Australian citizen over 18 years old.
  • Earn less than $90,000 annually (individuals) or $120,000 (couples).
  • Intend to live in the property as their principal place of residence.
  • Not currently own or have previously owned residential property in Australia or overseas.
  • Not using other government home ownership schemes such as the First Home Guarantee at the same time.


It’s also worth noting that the scheme's places are limited, with only 10,000 spots available nationally each year. 


What are the property price caps by state?


The Help to Buy scheme in Australia has set maximum property price caps depending on the state. Whether you’re looking to take advantage of the Help to Buy scheme in QLD or NSW, here’s a general breakdown of what you can expect: 

State

Cap

New South Wales — Capital city/regional centre

$1,300,000

New South Wales — Rest of the state

$800,000

Victoria — Capital city/regional centre

 

$950,000

$950,000

Victoria — Rest of the state 

$650,000

Queensland — Capital city/regional centre

$1,000,000

Queensland — Rest of the state

$700,000

Western Australia — Capital city/regional centre

$850,000

Western Australia — Rest of the state

$600,000

South Australia — Capital city/regional centre

$900,000

South Australia — Rest of the state

$500,000

Tasmania — Capital city/regional centre

$700,000

Tasmania — Rest of the state

$550,000

Australian Capital Territory

$1,000,000

Northern Territory

$600,000

Jervis Bay and Norfolk Island

$550,000

Christmas Island and Cocos (Keeling) Islands

$400,000

So, what’s the catch?


While the Help to Buy scheme sounds like a no-brainer, there are some important downsides to be aware of:

  • Shared ownership — You won’t fully own your property. The government will hold a share, and any appreciation in value will be split accordingly.
  • Repayment on sale or refinance — If you sell, refinance or choose to buy them out, you'll need to repay the government's share.
  • Property restrictions — You’re limited to properties under specific caps, which can restrict your choices, particularly in high-demand markets.
  • Potential capital gains implications — The shared equity model may impact your capital gains tax situation down the track, especially if the property is no longer your main residence.
  • Limited availability — With only 10,000 places per year, you may not get access even if you qualify.


These factors highlight the importance of doing your homework — and working with an experienced mortgage broker who can help you assess your options.


Ready to take the first step? Speak to a mortgage broker at Universal Finance Corporation today. 


The Help to Buy scheme can be a fantastic opportunity for some buyers, but it might not be for everyone. With property prices, eligibility requirements and shared equity considerations all playing a role, getting the right advice is essential.


Let Universal Finance Corporation take the stress out of buying your first home. Our experienced brokers are here to help you find the right home loan and navigate the Help to Buy process. Contact us today to speak with a broker and take the first step toward home ownership.


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