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Help to Buy scheme

The government will help more Australians buy homes by sharing the upfront purchase costs. The catch? The government gets a share of the equity.

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What you need to know:

  • Buyers using the Help to Buy scheme can purchase homes with just 2% deposits. The government contributes up to 40% of the price.
  • Buyers can also avoid lenders mortgage insurance (LMI). However, the government will own a portion of your home until you repay them later.
  • The scheme will be open to 10,000 buyers a year. The scheme has been announced but has not come into effect yet.

Who is eligible for Help to Buy?

To take advantage of this scheme, buyers must meet these criteria:

  • You need to be an Australian citizen aged at least 18 years old
  • You need to earn $90,000 a year or less. For a couple, it's $120,000.
  • You need to live in the home for at least 12 months.
  • You can't own (or have previously owned) any land or property.
  • You need to pay for stamp duty and all other home buying costs, and get approved for a home loan with a lender.
  • The price of the property you are buying needs to fall under the price cap for your region (see the table below).

Help to Buy: Property price caps

There's a price cap in place with this scheme. This means you are only eligible to access the scheme if your property's value is at or below the threshold.

Every city and region has a different price cap, reflecting the differences between various property markets in Australia.

City/state regionPrice cap
NSW – capital city and regional centres$950,000
NSW – rest of the state$600,000
VIC – capital city and regional centres$850,000
VIC – rest of the state$550,000
QLD – capital city and regional centres$650,000
QLD – rest of the state$500,000
WA – capital city$550,000
WA – rest of the state$400,000
SA – capital city$550,000
SA – rest of the state$400,000
TAS – capital city$550,000
TAS – rest of the state$400,000
ACT$600,000
NT$550,000

How does the Help to Buy scheme benefit buyers?

The scheme allows buyers to enter the market with small deposits. But while most buyers with low deposits get hit with high borrowing costs and lenders mortgage insurance premiums, under the Help to Buy scheme you can avoid both.

The government covers part of your costs so you have to borrow less. And because the government's contribution effectively boosts your deposit size, you avoid LMI.

This can save you quite a bit. Here are 2 examples using the same figures as above. These are completely hypothetical.

Buying a home with a low deposit (no support)
  • You buy a $600,000 property with a 5% deposit ($30,000).
  • You borrow the remaining $570,000.
  • You get a 30-year home loan with an interest rate of 3.00%.
  • Your monthly loan repayments are $2,403.
  • Your lender also charges you an LMI premium of $22,788.
Buying a home with a low deposit and the Help to Buy Scheme
  • You buy a $600,000 property with a 5% deposit ($30,000).
  • Under the Help to Buy scheme, the government contributes 15% ($90,000).
  • You borrow the remaining $480,000.
  • You get a 30-year home loan with an interest rate of 3.00%.
  • Your monthly loan repayments are $2,023.
  • You do not pay a cent in LMI premiums.

The difference here is significant. Using the Help to Buy scheme, a buyer avoids potentially tens of thousands in LMI premiums and has a smaller monthly loan repayment.

How does Help to Buy compare to other buyer support policies?

There are many first home buyer support policies from state and federal governments. Most of these policies help Australians enter the market with the following:

The Help to Buy scheme is similar to the First Home Loan Deposit Scheme and New Home Guarantee in that you can also avoid LMI and buy with a low deposit.

However, the scheme is unique in that the government is essentially co-buying the property with you. This is because it is a shared equity scheme. The most similar policy is the Victorian government's Homebuyer Fund. In this state scheme, you can buy with a 5% deposit and the state government contributes up to 25% of the price.

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2 Responses

  1. Default Gravatar
    ClareJune 20, 2022

    I had to sell my house in a property settlement in 2015.
    I’ve never been able to re-enter the property market and I’m 48 yo single mum w two teenagers.
    I’m thinking I’m not going to be eligible for either the federal or NSW home equity scheme as ive already owned a home.
    Disappointed

    • Avatarfinder Customer Care
      RichardJune 23, 2022Staff

      Hi Clare,

      Sorry to hear this. If you are referring to the Help to Buy, you can’t own (or have previously owned) any land or property to be eligible.

      There is the family home guarantee, which helps single parents get home loans. You don’t need to be a first home buyer to qualify for this scheme.

      All the best,
      Richard

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