People mix up Help to Buy and the 5% Deposit Scheme all the time, and they are very different deals. Under the 5% scheme the government guarantees your loan and you own the whole home. Under Help to Buy, Australia’s shared equity scheme, the government buys a share of the home with you, up to 40% for a new build or 30% for an existing one, and you need only a 2% deposit.
That makes Help to Buy the more powerful scheme for the right buyer, but also the more expensive one over time, and that cost is easy to miss. Here is how it works, what the government’s share ends up costing you, and who it suits.
How Help to Buy Works
The mechanics are different from every other first home buyer scheme currently running. You save a 2% deposit and get a home loan from one of the four Participating Lenders — Commonwealth Bank, Bank Australia, Teachers Mutual Bank or Queensland Country Bank, as at October 2026. The government then contributes the rest of the gap: up to 40% of the purchase price for a newly built home, or up to 30% for an existing one, secured through a second mortgage that Housing Australia registers on the property.
Housing Australia’s own published example shows how this plays out. A buyer named Rob bought an $800,000 existing home with a $16,000 deposit (2%), a $544,000 loan from his lender, and a $240,000 contribution from the government. That gave him a 68% loan-to-value ratio to service on his own loan, instead of the roughly 98% he’d otherwise be carrying — and no Lenders Mortgage Insurance on top of it.
You don’t pay rent or interest on the government’s share while you hold it. What you do carry is exposure to its value: when you sell the home, or buy back the equity, the payment is calculated against whatever the property is worth at that time — not what it cost when the government bought in.
Help to Buy Price Caps by State: What You Can Buy
Help to Buy uses property price caps too, and they’re set state by state, capital city versus rest-of-state, the same way the 5% Deposit Scheme’s are.
| State/Territory | Capital City / Regional Centre | Rest of State |
|---|---|---|
| New South Wales | $1,300,000 | $800,000 |
| Victoria | $950,000 | $650,000 |
| Queensland | $1,000,000 | $700,000 |
| Western Australia | $850,000 | $600,000 |
| South Australia | $900,000 | $500,000 |
| Tasmania | $700,000 | $550,000 |
| Australian Capital Territory | $1,000,000 | n/a |
| Northern Territory | $600,000 | $600,000 |
Source: Housing Australia, Help to Buy property price caps.
If you’ve read the guide to the 5% Deposit Scheme price caps, these numbers will look familiar — outside NSW the caps are the same for both schemes. In Sydney and the other major NSW centres, Help to Buy tops out at $1,300,000 against $1,500,000 for the 5% scheme. Yarrabilba, Queensland sits at a $1,000,000 cap, while Wyndham Vale, Victoria comes in at $950,000. Alkimos, Western Australia is capped at $850,000, and Angle Vale, South Australia at $900,000. That overlap matters — it means a buyer priced out of a capital city under one scheme is priced out under the other too, and a buyer who fits a growth corridor’s cap can weigh both schemes against the same property.
Help to Buy vs the 5% Deposit Scheme: What’s Different
The two schemes solve the same problem — not enough deposit — in opposite ways. One guarantees your loan so you can borrow with less saved. The other has the government buy part of the home with you, so you need to borrow less in the first place.
| Help to Buy | 5% Deposit Scheme | |
|---|---|---|
| Minimum deposit | 2% | 5% |
| How it helps | Government co-owns up to 40% (new) / 30% (existing) of the home | Government guarantees the loan — no Lenders Mortgage Insurance |
| Who owns the home | You and the government, proportionally | You, 100%, from settlement |
| Income cap (FY26) | $103,000 single / $165,000 joint or single parent | None — removed October 2025 |
| Annual places | 10,000 for 2026–27 | Unlimited |
| Participating lenders | 4 (Commonwealth Bank, Bank Australia, Teachers Mutual Bank, Queensland Country Bank) | 30+ |
In practice, the income cap and the short lender panel are what rule Help to Buy out for a lot of buyers before they even get to the price caps. If your income sits under the threshold and you’re comfortable with one of the four participating lenders, though, Help to Buy does more to lower your actual monthly repayment — you’re borrowing against 60–70% of the purchase price instead of the full amount.
Who’s Using It
Help to Buy opened to applicants on 5 December 2025 and reached full national coverage in June 2026 when Tasmania joined. Since launch, the Scheme has received more than 7,200 applications, with around 4,800 of those buyers already settled into a home and the rest still looking. Demand has been strongest in Victoria, followed by New South Wales and Queensland.
Almost 7 in 10 applications are from single applicants, including 12% who are single parents — a group the Scheme was specifically designed to reach. The median deposit used is just $30,000, and 86% of participants are buying their first home. Housing Australia has also flagged Help to Buy’s growing role for older single women, one of the fastest-growing groups facing housing insecurity: 42% of the women supported so far are aged 40 or above.
The Catch: You’re Sharing the Growth, Not Just the Risk
The government’s share isn’t a fixed dollar figure — it’s a fixed percentage of whatever the home is worth when you pay it back. That cuts both ways, but in a market where prices tend to rise over time, it usually works against the buyer.
Take Rob’s $800,000 home from Housing Australia’s own example, with the government holding a 30% share worth $240,000 at settlement. If that property grows at a modest 5% a year — in line with long-run Australian averages — it’s worth roughly $1,303,000 after 10 years. The government’s 30% share has grown right along with it, to about $391,000. Buying that share back at the 10-year mark costs around $151,000 more than the government originally put in — not because of interest or fees, but because Rob doesn’t own that 30% of the capital growth either.
That’s the trade-off in one sentence: a smaller deposit and lower monthly repayments today, in exchange for giving up a proportional share of everything the property gains from here. The 5% Deposit Scheme doesn’t have this cost at all, because you own 100% of the home — and 100% of its growth — from day one.
Looked at the way an accountant would, the government’s share isn’t free money. It behaves like an investor who takes no rent or interest but keeps its full share of capital growth. Over ten years in a rising market that can cost far more than the mortgage insurance you avoided. Help to Buy is worth using only if the realistic alternative is not buying at all, and the share is best bought back as early as you can afford to.
Help to Buy Eligibility: Which Scheme Fits You
If you can scrape together a 5% deposit and just need to avoid Lenders Mortgage Insurance, the 5% Deposit Scheme is the simpler option — no income cap, unlimited places, and more than 30 lenders to shop between.
Help to Buy is worth the extra paperwork if you’re genuinely short of even a 5% deposit, or if your borrowing capacity is tight and a smaller loan changes what you can afford to service — particularly relevant while the cash rate outlook stays uncertain. It only works, though, if your income sits under the cap and you’re comfortable applying through Commonwealth Bank, Bank Australia, Teachers Mutual Bank or Queensland Country Bank.
General information only, not financial or legal advice. Based on Housing Australia’s guidance as at September 2026. Eligibility rules, income limits and price caps change, so check firsthomebuyers.gov.au or a participating lender before deciding.
