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  • Writer's pictureColin Green

Help To Buy Scheme: Supporting You To Get on the Property Ladder

Updated: Dec 4, 2023

Are you a first-time home buyer struggling to save up for a deposit? Have you heard about the Australian Government's Help to Buy scheme but don't know much about it? Well, you've come to the right place! In this blog post, we'll be delving into all the details of the Help to Buy scheme. From eligibility criteria to property price thresholds, we've got you covered with everything you need to know about this initiative. So let's get started and help you prepare for this much anticipated initiative that’s due to start some time in 2024!

Understanding the Australian Government's Help to Buy Scheme

If you're a first-time home buyer in Australia, you might have heard about the Help to Buy scheme. This Federal Government initiative aims to make it easier for aspiring homeowners to get on the property ladder by providing financial assistance.

couple celebrating house purchase through a help to buy scheme

So, what exactly is the Help to Buy scheme? It is a shared equity scheme that allows eligible first home buyers to purchase a property with a smaller deposit, lower repayments and no Lenders Mortgage Insurance payable. The idea is to help reduce the amount of money you need to save for a deposit, making it more achievable for many people to get on the property ladder.

The Help to Buy scheme offers numerous benefits for first home buyers. It helps to overcome the challenge of saving for a deposit, enables you to enter the property market sooner, and potentially reduces your monthly mortgage repayments. However, it's essential to weigh up the risks and consider the potential impact on your finances in the long term.

Find out more about this eagerly anticipated scheme as we delve into the nitty-gritty of how the Help to Buy scheme will work, explore the eligibility criteria, analyse the pros and cons, and provide a breakdown of property price thresholds by region. Plus, we'll reveal when the scheme is set to commence. So, let's dive in and help you understand whether this scheme will help you achieve your home ownership goals.

Diving into the Nitty-Gritty: How Will the Help to Buy Scheme Work?

So how will the Help To Buy scheme work? Essentially, the government will co-fund a home by providing an equity contribution of up to 40 per cent of the cost of a new home or 30 per cent for existing homes. This means you would only need to secure a mortgage for the remaining 60 to 70%. You would effectively be able to purchase a property with just a 2% deposit and avoid the usual fees associated with Lenders Mortgage Insurance.

While the Government would effectively co-own up to 40% of your home, you would not need to pay ‘rent’ on this portion of the property they own. Once you are in a stronger financial position, after the first 2 years, you would also have the option to start buying back the Government’s equity stake. This would involve buying back the Government’s share of the home in 5% increments.

Places on the scheme will be limited and will be on a first come, first served basis with places allocated between states and territories on an equal per capita basis.

By participating in the Help to Buy scheme, you can overcome the challenge of saving for a deposit, enter the property market sooner, and potentially reduce your monthly mortgage repayments. However, it's important to consider the risks and potential long-term impact on your finances.

In the next section, we'll delve into the eligibility criteria, so keep reading to find out if you might qualify for this scheme.

Are You Eligible? The Criteria for the Help to Buy Scheme

There will initially be 10,000 places a year open on this scheme and the scheme is expected to run for 4 years. To be eligible for the Help To Buy scheme, you need to meet specific criteria.

  • You have to be an Australian citizen aged 18+.

  • You have to be buying a property to live in and you cannot currently own any other property in Australia or overseas.

  • You will need to have saved the minimum 2% deposit required and be able to finance the remainder of the loan.

  • You will also have to prove that you can cover all associated up-front costs, such as stamp duty, legal fees and bank fees.

  • Your annual income must be less than $90,000 for an individual applicant or less than $120,000 for couples.

There are also specific limits on how much you can bid for depending on where you live. The specific thresholds vary by region, so it's important to familiarise yourself with the guidelines in your area. We cover this in the next section.

The Property Price Thresholds: Breakdown by State

The scheme will cover a range of dwellings including new houses, established homes, units, townhouses and duplexes. However, there will be a property price threshold limit applied, depending on the median house price in your area.

While the price caps are yet to be confirmed, it’s expected that they will be similar to existing schemes such as the First Home Guarantee, and will be based on the lower of the purchase price or property valuation:

property price caps expected for the help to buy scheme

Weighing the Pros and Cons: Benefits and Risks of the Scheme

As with any government scheme, it's essential to weigh up the pros and cons of the Help To Buy scheme before deciding whether it’s right for you.

One of the biggest advantages is that it allows first home buyers to get on the property ladder sooner. With just a 2% deposit required, this should make it much more accessible for a lot of first time purchasers.

You also won’t pay Lender’s Mortgage Insurance, which would normally be applicable if you have a deposit of less than 20% of the purchase price. This would be a significant saving.

The Government also won’t charge any fees or interest and the overall loan amount and repayments will be significantly lower than if the loan balance was for the full equity amount.

At this stage the only potential drawbacks lie in some of the as-yet unanswered questions about the scheme. These include understanding what happens if your income goes up and exceeds the annual threshold for 2 years in a row. It is unclear whether you would be required to re-pay the Government’s contribution at this time.

We will aim to update this article as and when any new information becomes available.

Mark Your Calendars: When does the Help to Buy Scheme Commence?

The scheme is set to launch early to mid 2024. The Help to Buy scheme is eagerly anticipated by many aspiring homeowners and it’s expected that it will offer valuable opportunities for many home buyers to enter the property market. Keep an eye on the official government announcements and our blog page for updates on the exact launch date.

The information in this article is however general in nature as the final details of the scheme have not yet been confirmed. It also doesn’t take into account your personal circumstances or financial situation.

If you are looking to buy or build your first home, the experienced home loan experts from CJG Finance can help you navigate the process.

To find out more, contact us or call Colin at CJG Finance on: 0402 413 917 or email him:


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