Help to Buy Scheme 2026: how federal shared equity actually works

Help to Buy is the federal shared-equity scheme that lets eligible Australians buy a home with as little as a 2 per cent deposit, by having the Commonwealth contribute up to 40 per cent of the purchase price in exchange for an equity share. It is one of two main federal first-home schemes in 2026 (the other being the First Home Guarantee), and it solves a very different problem. This guide walks through how it works, who qualifies, the trade-offs, and how it stacks against the alternatives.

How Help to Buy is different from a standard mortgage

A standard owner-occupier mortgage means you put up a deposit (typically 5 to 20 per cent), borrow the rest from a lender, and own 100 per cent of the property. You make monthly repayments on the full loan amount.

Help to Buy changes the structure. You put up a 2 per cent deposit, the Commonwealth contributes up to 40 per cent (new build) or 30 per cent (existing) as an equity share, and you borrow the remainder. Your name and the Commonwealth\'s are both on the title as co-owners, but you have full occupation rights and you do not pay rent or interest on the Commonwealth\'s share.

The practical effect: a much smaller loan, which means materially smaller monthly repayments. On a $600,000 new home, a buyer using the maximum 40 per cent Commonwealth share would borrow $348,000 instead of around $570,000 under a standard 5 per cent-deposit loan. That is the difference between roughly $2,080 a month and $3,410 a month at current owner-occupier variable rates (around 6 per cent).

Eligibility: who qualifies in 2026

You must meet all of the following:

• Be an Australian citizen aged 18 or over (permanent residents qualify in some scheme variants; check current Housing Australia parameters)
• Earn no more than $90,000 if applying as a single, or $120,000 combined for couples
• Have not owned residential property in Australia in the past 10 years
• Intend to live in the property as your principal place of residence
• Be able to demonstrate genuine savings of at least the 2 per cent deposit
• Pass the participating lender\'s serviceability test on the reduced loan amount

The property must also be within the scheme\'s price caps, which vary by region and are updated annually. Caps are set close to capital-city medians and are generally lower than the First Home Guarantee\'s caps.

Worked example: a Help to Buy purchase end-to-end

Take a single applicant earning $80,000, with $25,000 saved, looking at a $480,000 unit in suburban Adelaide. Without Help to Buy, their borrowing capacity at a 6 per cent serviceability rate would be around $390,000, requiring an $85,000+ deposit they do not have, and they would still face LMI.

Under Help to Buy on an existing dwelling, the Commonwealth could contribute up to 30 per cent of the $480,000 price ($144,000). The buyer puts down a 2 per cent deposit ($9,600), and borrows $326,400 to cover the remaining 68 per cent. Their borrowing capacity at $80,000 income comfortably covers $326,400. No LMI applies because the loan-to-Commonwealth-and-buyer-equity position is treated as fully covered.

Monthly P&I repayment on $326,400 at 6 per cent over 30 years is approximately $1,957. Compare to a $390,000 loan at the same rate: $2,338 a month. The Help to Buy structure saves $381 a month and gets the buyer into a property they otherwise could not afford.

The trade-off: when they eventually sell, the Commonwealth gets 30 per cent of the sale proceeds. If the property sells in 10 years for $700,000, the Commonwealth recovers $210,000 (30 per cent of $700,000), an effective return of $66,000 on the $144,000 contribution, or about a 3.8 per cent annualised yield on its equity. The buyer keeps $490,000 (70 per cent) plus 10 years of mortgage paydown.

How it stacks against the First Home Guarantee

The First Home Guarantee (FHG) and Help to Buy are often discussed as if they compete. They do not. They target different buyer profiles.

FHG is the right pick if: your income is comfortably above the Help to Buy caps, your binding constraint is deposit size, and you want to keep 100 per cent of future capital gains.

Help to Buy is the right pick if: your borrowing capacity is the binding constraint (you cannot service a loan large enough to buy the property you want), and you are comfortable trading a share of future capital gain for the ability to buy now.

The buyback mechanic

You can buy out the Commonwealth\'s share over time in tranches of 5 per cent or more. The buyback price is based on the current market valuation of the property, not the original contribution amount. Three ways the buyback typically happens:

1. Refinance the equity portion: as your income grows, you refinance to increase your loan and use the proceeds to buy back the Commonwealth\'s share at the current valuation.
2. Cash buyback: if you have savings (inheritance, bonus, capital event), you can buy back equity directly.
3. Sale settlement: if you sell the property, the Commonwealth\'s share is settled out of the sale proceeds at the sale price.

The compounding implication: if you expect the property to appreciate strongly, buying out the Commonwealth\'s share earlier locks in a lower valuation and a smaller buyback cost. If you expect prices to be flat or fall, deferring the buyback can work in your favour.

Risks and trade-offs to understand

• Limited capital-gain upside. If the property doubles in value, you only capture 60-98 per cent of that gain, not 100 per cent. Over a 20-year hold, that adds up to a material number.
• Buyback at market value. If you cannot afford to buy out the Commonwealth as values rise, you are locked into the shared-equity structure indefinitely, which can complicate future financing decisions.
• Lender panel. Not every lender participates. The scheme operates through a specific list of participating lenders, and the panel is different from (and typically narrower than) the broader First Home Guarantee panel.
• Income-cap recapture. If your income materially exceeds the cap for two consecutive years, you are required to begin buying back at 5 per cent per year, which forces refinancing decisions you may not want to make.
• Renovations and additions. Major capital improvements that significantly increase property value generally require Commonwealth notification, since they shift the equity balance.