Help to Buy is now open nationwide: the 2% deposit scheme, its catches, and how it compares to the 5% scheme

The federal shared equity scheme is now open in every state and territory, and it lets you buy with a 2 per cent deposit while the government takes up to 40 per cent of your home. Here is how it works, who qualifies, the fine print that catches people, and how it stacks up against the 5 per cent Deposit Scheme.

The Australian Government's Help to Buy scheme is now running in all eight states and territories. Tasmania was the last to join, going live on 9 June 2026, which completed a national rollout that started when the scheme opened to applicants on 5 December 2025.

Help to Buy is a shared equity scheme. In plain terms, the government buys a slice of your home alongside you and takes a matching share of the eventual gain or loss. You put in a small deposit, a bank lends the bulk, and the government fills the gap in the middle. That gap is what lets buyers who are close but not quite there get in years earlier. There are 10,000 places each financial year, and a fresh 10,000 opened on 1 July 2026 alongside higher income limits. One thing to know up front: it is only for buyers who cannot get in without it. Your lender has to confirm you could not buy the same home on your own savings and borrowing.

How it works

Under Help to Buy you do two things: save a deposit of at least 2 per cent of the price, and get a home loan from a participating lender. You cannot apply directly to Housing Australia, the government body that runs the scheme. The lender assesses you and lodges the application.

The government then contributes up to 30 per cent of the price for an existing home, or up to 40 per cent for a newly built one. Because your own borrowing shrinks by that amount, your loan is smaller and your repayments are lower. It also lets most buyers skip Lenders Mortgage Insurance, the premium banks normally charge when you borrow with a deposit under 20 per cent, which can save thousands.

The catch is you do not own the whole home. You own your share, the government owns its share, and when you sell or buy the government out, it takes its percentage of the value at that time, not the dollars it put in. If the home has risen in value, the government shares the gain. If it has fallen, it shares the loss. Here is how the money splits on an $899,000 existing home.

Who qualifies

Eligibility is tighter than the headline suggests, and the income test is where most people find out whether they are in. You must be at least 18, an Australian citizen (every applicant, not just a resident), and buying the home to live in as your main residence. Investors are shut out, and you cannot rent the place out while you are in the scheme.

Your taxable income has to sit at or below the cap: from 1 July 2026 that is $103,000 for a single applicant and $165,000 for joint applicants or a single parent, taken from your Australian Taxation Office Notice of Assessment for the previous financial year. Those caps rose on 1 July, from $100,000 and $160,000, and are indexed to wages each year. You also generally cannot own any property here or overseas, with an exception for single parents buying out or selling an existing joint share. And you cannot double up on other government help such as state shared equity schemes, though stamp duty concessions and first home grants are still fine.

What you can buy, and the price caps

Even if your income clears the test, the home has to come in at or below the price cap for its location. The caps vary sharply by state and by capital versus regional, and unlike the income limits they are not indexed. Help to Buy covers a house, townhouse, apartment, unit or duplex, new or existing, plus vacant land with an eligible building contract or a knock-down-rebuild.

Which banks offer it

This is where Help to Buy is still narrow, though it is finally starting to widen. For most of the scheme's life only two lenders offered it. A third, the Teachers Mutual Bank group, came on board on 27 July 2026, taking the panel to six brand names in total, and Housing Australia says it will keep reviewing and adding to the list over the coming months.

For now, though, the practical choice is still thin, and thinner again if you go through a broker. That limits your ability to shop around for a sharper rate, so it pays to compare what the panel lenders actually offer rather than assume the scheme sets the price.

The fine print that catches people

Most of the catches are not hidden, but they are easy to miss and several change the maths.

You cannot choose to put in just 2 per cent if you can afford more. The 2 per cent is a floor. Your lender runs a financial capacity assessment and you must tip in the maximum you can reasonably afford. And critically, in Housing Australia's own words, "if you can purchase a property using your savings and borrowing capacity, you will not be eligible." The scheme is only for people who genuinely cannot buy without it.

The government shares your capital growth, not just gets its money back. On a 40 per cent share you keep only 60 per cent of any gain, and because you buy it out at market value, exiting gets more expensive the more your home rises. If your taxable income exceeds the cap for two consecutive financial years, Housing Australia can require you to repay part or all of its share, though not until you can afford it, with reviews at least every five years. There are no exemptions on the income cap either. There is a strict owner-occupier lock, so the common "live in it then rent it out" plan is not allowed without written approval. You must notify Housing Australia before you renovate, refinance or sell, substantial improvements of $21,000 or more can shift the government's share, and refinancing to a lender off the panel generally means repaying the government in full first.

How to apply

You cannot apply to Housing Australia directly. The application runs through a participating lender, and places are capped at 10,000 a year, so it pays to have everything ready before you start. Once your lender lodges the application and you are conditionally approved, your place is reserved for up to 90 days while you find a home.

Help to Buy versus the 5 per cent Deposit Scheme

The other big federal option is the 5 per cent Deposit Scheme, renamed from the Home Guarantee Scheme and expanded on 1 October 2025 to remove income caps and waitlists. It works completely differently. Instead of taking an equity share, the government guarantees part of your loan so the bank waives Lenders Mortgage Insurance. You put down 5 per cent (2 per cent for single parents and legal guardians), borrow the other 95 per cent, and you own 100 per cent of the home. It has been used by more than 320,000 buyers since 2020 and runs through a large panel of dozens of lenders.

The trade-off is the heart of the decision. Help to Buy needs less deposit and leaves you a much smaller loan and lower repayments, but you give up a chunk of your capital growth and face income caps and only three lenders. The 5 per cent scheme lets you keep every dollar of growth and has no income cap and far more lenders, but you borrow much more, so repayments and total interest are far higher, and you carry all the risk if prices fall.

The real cost difference: 2 per cent versus 5 per cent on an $899,000 home

Take a capital-city home at $899,000, priced within both schemes' caps. Under Help to Buy you need a 2 per cent deposit of $17,980. Under the 5 per cent scheme you need $44,950. That is $26,970 more to save upfront for the 5 per cent scheme.

The gap widens on the loan. With Help to Buy on an existing home, the government's 30 per cent ($269,700) means your loan is about $611,320, a loan-to-value ratio (the size of your loan against the home's value) of 68 per cent. Under the 5 per cent scheme you borrow $854,050, a 95 per cent ratio. On an illustrative 6 per cent, 30-year loan, that is roughly $3,665 a month with Help to Buy versus about $5,120 with the 5 per cent scheme, close to $1,455 a month more. The 5 per cent scheme buyer pays more each month, but owns the whole home and keeps all the growth. The Help to Buy buyer pays less, but hands back up to 40 per cent of the future value.

How long it takes to save the deposit

The deposit target is fixed, but how long it takes depends on how much you put away each month. To ground it, a single buyer earning right at the Help to Buy cap of $103,000 takes home about $79,520 a year after income tax and the Medicare levy on 2026-27 rates, or roughly $6,627 a month. Saving $1,500 of that a month, about 23 per cent of take-home pay, you would reach the 2 per cent Help to Buy deposit in around 12 months, versus about 30 months for the 5 per cent deposit. Put away more or less and both timelines move together, but the 5 per cent target always takes roughly two and a half times as long.

Which one suits you

Help to Buy makes most sense if you are stuck just below the deposit line, your income is under the caps, you want the lowest possible repayments, and you are comfortable sharing future growth with the government. The 5 per cent Deposit Scheme suits you better if your income is above the Help to Buy caps, you want to own the whole home and keep all its growth, or you want a wider choice of lenders and can service the larger loan.

Anyone weighing this up should read Housing Australia's Customer Guide and get independent legal and financial advice before signing, because the core trade-off is real: Help to Buy gets you in sooner and cheaper, but you give up a share of your home's growth until you buy the government out.