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Help to Buy - Federal Government's Shared Equity Scheme

Arnav Narula

Understanding shared equity

The Help to Buy scheme allows the federal government to co-purchase your home by contributing up to 40% of the purchase price for new homes or 30% for existing homes. This reduces your required loan amount and makes home ownership more accessible for eligible buyers.

How the scheme works

Rather than providing a loan, the government becomes a co-owner of your property, sharing in both the costs and any future value changes. This arrangement significantly reduces your borrowing requirements and ongoing mortgage repayments.

  • Government contributes substantial portion of purchase price
  • You provide minimum 2% deposit from your own savings
  • Smaller loan amount needed, reducing repayment burden
  • Government shares proportionally in property value increases and decreases
  • No interest charged on government's contribution

Eligibility requirements

The scheme targets moderate-income earners who are locked out of home ownership due to high property prices and deposit requirements.

  • Australian citizen or permanent resident status required
  • Singles: annual taxable income under $90,000
  • Couples: combined annual taxable income under $120,000
  • First home buyers or those who haven't owned property recently
  • Property must be under price caps that vary by location
  • Must occupy property as primary residence

Government contribution levels

The government's contribution varies depending on whether you're purchasing a new or established property, with higher contributions available for new builds to support construction industry.

New homes and off-the-plan purchases: Government can contribute up to 40% of purchase price, significantly reducing your borrowing requirements for newly constructed properties.

Existing established properties: Government contribution capped at 30% of purchase price, still providing substantial assistance while focusing higher support on new construction.

Property price limits and locations

Similar to other government housing schemes, Help to Buy includes property price caps that vary by location to reflect different market conditions across Australia.

Price limits are set at levels that capture median-priced properties in each area, ensuring the scheme supports access to reasonable housing while managing taxpayer costs.

Ongoing obligations and restrictions

Participating in shared equity involves ongoing obligations to the government as co-owner, including restrictions on property use and requirements for regular reporting.

  • Property must remain your primary residence throughout participation
  • Cannot rent property without government approval
  • Must maintain comprehensive property insurance
  • Regular income reporting required to confirm ongoing eligibility
  • Restrictions on property modifications without approval

Exit strategies and buyout options

The scheme includes several options for ending the shared equity arrangement, providing flexibility as your circumstances change over time.

  • Purchase government's share at any time based on current market valuation
  • Sell property with government receiving proportionate share of proceeds
  • Refinance to buy out government portion when financial position improves
  • Transfer arrangements may be available in specific circumstances

Benefits and considerations

While shared equity reduces borrowing costs and deposit requirements, participants should carefully consider the long-term implications of shared ownership.

Primary benefits:

  • Significantly reduced deposit requirements (2% minimum)
  • Lower loan amounts result in smaller mortgage repayments
  • No interest payments on government's contribution
  • Access to home ownership sooner than traditional saving approach

Important considerations:

  • Share both capital gains and losses with government
  • Ongoing restrictions on property use and modifications
  • Complex valuation and exit processes
  • Limited annual places available creating competitive application process

Relevant Guides

Split Rate Home Loans

Split rate loans divide your home loan between fixed and variable rate portions, allowing you to enjoy benefits of both loan types while reducing exposure to interest rate volatility.

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Rentvesting

Rentvesting involves renting a property where you want to live while purchasing an investment property where you can afford to buy.

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Settlement

Settlement is the final legal step in the property buying process where ownership officially transfers from the seller to you as the buyer.

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Regional First Home Guarantee Scheme

The Regional First Home Guarantee Scheme is a government initiative designed to help first home buyers purchase property in regional areas with just a 5% deposit.

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