Articles

Help to Buy – Is a 2% Deposit Your Ticket to a Home?

On the 5th of December 2024, something pretty big happened. After three years of “yeah, it’s coming… eventually,” the federal government finally launched Help to Buy , a shared-equity scheme that lets eligible buyers get into a property with just a 2% deposit and no Lenders Mortgage Insurance (LMI) to pay.

Sounds amazeballs, right?

Yeah, it kind of is. But before you start scrolling Realestate.com.au with renewed hope, there are some important things you need to know. Because while this scheme can genuinely open doors for people who’ve been priced out of the market, it also comes with trade-offs that require some serious long-term thinking.

(I know, I know – we all have three-second attention spans these days. But stick with me here. This one matters.)

So, What Exactly Is Help to Buy?

In a nutshell, Help to Buy is a shared-equity scheme. That means the government chips in a chunk of the purchase price, and in return, they own a slice of your home.

Here’s how it works:

For brand-new properties: The government can contribute up to 40% of the purchase price.
For existing homes: The government can contribute up to 30% of the purchase price.

So if you’ve got the borrowing capacity to cover the rest with a home loan, you only need to bring a 2% deposit to the table. And because the government’s contribution reduces your loan amount, you dodge LMI entirely.

For buyers who’ve been stuck in the “saving forever but prices keep rising” loop, this could be a genuine game-changer.

Who’s Eligible for Help to Buy?

Not everyone can access this scheme : there are some pretty specific eligibility requirements:

You must be an owner-occupier. No investors here. This is for people who actually want to live in the home.
Income thresholds apply:
- $100,000 for singles
- $160,000 for single parents or joint applicants (couples)
You need to be an Australian citizen who is at least 18 years old.
Property price caps apply : and they vary depending on where you’re buying. (More on this in a sec.)

If you tick those boxes, you might be in the running. But here’s the catch – there are only 10,000 spots available Australia-wide, and only certain lenders are participating in the scheme.

So even if you qualify, timing and lender capacity can mean missing out. It’s not a “she’ll be right” situation : you’ll want to move strategically.

The Trade-Offs (Because There’s Always a Catch)

Look, I’m not here to rain on your parade. Help to Buy can be brilliant for the right buyer. But it’s not a free lunch, and you need to go in with your eyes open.

1. The Government Owns Part of Your Home

This is the biggie. With Help to Buy, the government becomes a part-owner of your property. That means if your home goes up in value over time, you don’t keep all of that growth. It’s shared.

Now, to be fair, they also share the downside if values fall. But let’s be honest : most people feel the sting of giving up future gains way more than the comfort of having some protection on the way down.

2. Buying the Government Out Isn’t Always Easy

The good news? You’re not locked into this arrangement forever. You can buy back the government’s share over time.

The catch? Each buy-back is based on the property’s market value at that point. So if property prices rise (which, historically, they tend to do), it’ll cost you more to buy them out later.

This is not a “we’ll deal with that later” situation. You really do need a plan from day one.

3. Property Price Caps Can Limit Your Options

Every location has a maximum property price under the scheme. In some areas, that cap is generous. In others? It can seriously limit what’s available to you.

If the cap pushes you into a compromised property like something in a dodgy location or with poor long-term growth potential, the upfront savings can be outweighed by higher costs and missed gains down the track.

4. Ongoing Reporting Requirements

Because the government owns part of your home, they can ask for updated income details or information if your circumstances change after you buy. It doesn’t usually affect day-to-day life, but it’s something to be aware of.

5. The Bigger Picture: Supply and Demand

Some economists point out that schemes like this can actually push prices higher when housing supply is already tight. More buyers with easier access to finance = more competition = potentially higher prices.

It’s not a reason to avoid Help to Buy entirely. But it’s worth understanding before you jump in.

Buying Back the Government’s Share

Let’s talk about this a bit more, because it’s where long-term thinking really matters.

Under Help to Buy, you can choose to buy back some or all of the government’s share over time. You don’t have to do it all at once : partial buy-backs are allowed.

But here’s the thing, timing is everything.

If property values rise, each buy-back costs more.
If values are flat or fall, buying out the government at that time can be cheaper.

So the question becomes: when do you buy them out? And how do you plan for it?

This is where getting advice early matters. Having a strategy from day one – not just “I’ll figure it out later” – can make a massive difference to your financial outcome over the life of the loan.

If you’re not sure where to start, chat with us and we can help you map out a plan that actually makes sense for your situation.

Is Help to Buy Right for You?

Help to Buy can absolutely open doors, especially for buyers who’ve hit a wall with deposits and repayments. If you’ve been trying to crack into the market and the numbers just haven’t worked, this scheme might be the thing that tips the scales.

But it works best when it’s chosen deliberately, with a clear view of the long game.

Here are some questions to ask yourself:

Am I comfortable with the government owning a share of my home?
Do I have a realistic plan to buy them out over time?
Does the property price cap in my area allow me to buy something I’d actually want to own long-term?
Am I working with a lender who participates in the scheme?

If you’re weighing Help to Buy against other options : like the First Home Owner Grant, Family Guarantee, or just saving a bigger deposit : it’s worth running the numbers properly before you commit.

Different lenders assess these applications differently, and the right approach depends on your income, your goals, and your timeline.

Ready to See Where You Stand?

If Help to Buy has piqued your interest, the first step is figuring out what you can actually borrow.

Jump on to our Borrowing Power Calculator to get a quick snapshot of your position. It takes two minutes and gives you a solid starting point.

And if you want to dig deeper : or you’re ready to explore whether Help to Buy (or another pathway) is right for you : book a chat with us. We’ll walk you through the options, run the numbers, and help you make a decision you’ll actually feel good about.

No pressure. Just clarity.

The Bottom Line

Help to Buy is a genuine opportunity for the right buyer. A 2% deposit, no LMI, and a faster path to homeownership? That’s not nothing.

But shared equity isn’t for everyone. It requires trade-offs, long-term planning, and a clear understanding of what you’re signing up for.

The buyers who’ll get the most out of this scheme are the ones who go in with a strategy – not just a dream.

So if you’re thinking about it, let’s talk. We’re here to help you figure out if it’s the right move – and if it is, how to do it in a way that sets you up for the future.