Help to Buy Explained: Is a 2% Deposit Worth Giving the Government a Slice of Your Home?

First home

Help to Buy launched in December 2025 and it is the most misunderstood of the federal housing schemes — because it is the only one where the government doesn’t just help you buy, it buys in alongside you.

Used in the right situation it’s powerful. Used in the wrong one, it’s expensive. Here’s the honest version.

How it works

Administered by Housing Australia:

You contribute a deposit of as little as 2%

The government contributes up to 40% of the purchase price for a new home (a smaller share for an established home — )

You borrow the rest

10,000 places per year

Income caps: $100,000 for an individual, $160,000 for a couple

You must live in the property

Because you’re borrowing far less, your repayments are far lower. That’s the appeal, and it’s a real one.

The catch: it’s equity, not a gift

The government’s contribution is not a loan and it’s not free money. It’s an equity stake.

When you sell — or when you buy the government out — they take their percentage of the property’s value at that time, not the value they put in. If the government contributed 30% and the property doubles, they take 30% of the doubled value.

This is the trade. You get in with a very small deposit and low repayments. In exchange, you give up a share of your capital growth.

Who it genuinely suits

People whose income is stable but modest, who could comfortably make repayments but will realistically never accumulate a large deposit

People currently paying high rent with no path to saving 5%

People who value security of tenure and low repayments over maximising capital growth

People whose alternative is not buying at all

For that person, Help to Buy is not a compromise. It’s the difference between owning and not owning.

Who it probably doesn’t suit

Anyone who can reach a 5% deposit within a reasonable timeframe. The 5% Deposit Scheme leaves you owning 100% of your home and all of its growth

Anyone whose income is likely to rise sharply (you may be able to buy the government out later, but you’ll buy them out at the new, higher value)

Anyone in a market they expect to grow strongly — the more it grows, the more the government’s share is worth

You cannot combine Help to Buy with the First Home Guarantee. You choose one.

The comparison that matters

5% Deposit Scheme

Help to Buy

Deposit

5%

2%

You own

100%

Your share only

LMI

None

None

Government takes

Nothing

An equity share of future value

Income caps

None

$100k single / $160k couple

Places

Unlimited

10,000 per year

Repayments

Higher (bigger loan)

Lower (smaller loan)

The right answer depends entirely on your income trajectory, your savings capacity, and what you’re actually optimising for. There is no universally better scheme.

Frequently asked questions

Can I buy the government out later? Generally yes, in increments, subject to the scheme rules — but at the property’s value at the time of the buyout, not the original price. If your home has appreciated, buying them out costs more than what they put in.

What if the property falls in value? The government shares in the downside as well as the upside — their stake is a percentage of value, not a fixed dollar amount.

Are there WA-specific rules or price caps? Yes, price caps are set by state and region.

Which scheme leaves you better off? That question has a real, calculable answer for your specific numbers — and it’s often not the one people assume. Let’s run it.

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