A new home with just a 2 per cent deposit? The new Help to Buy scheme offers that

The Help to Buy scheme is the federal government's new shared-equity initiative designed to help more Australians cross the threshold into home ownership sooner.

Unlike the First Home Guarantee, this program sees eligible buyers effectively co-purchase a home with the government, where it receives equity in your home in exchange for its contribution.

The scheme, which kicks off on December 5, will allow eligible home buyers to get a government contribution of up to 40 per cent towards the purchase price of their property, while only requiring a 2 per cent deposit from the buyer themselves.

Commonwealth Bank is currently the only major bank participating.

As the bank puts it, the scheme "allows Australians to buy sooner" by bridging the gap between a customer's borrowing power and the market price of a home.

How does the Help to Buy scheme work?

The government contributes up to 40 per cent of the purchase price for new homes and up to 30 per cent for existing homes.

Buyers must still qualify for a standard home loan to cover the remaining value, but because the government covers such a substantial slice, the resulting mortgage is significantly smaller.

Home owners are not required to pay rent on the government's share of the home and the equity can be repaid gradually over time or settled when the property is sold.

CBA explains that customers who purchase through the scheme can repay the contribution through a few avenues: voluntary repayments at any time; buying back the government's equity when they have the financial capacity; or when the property is sold.

"We know it can be challenging for first home buyers or someone returning to the market to take that step onto the property ladder," said Angus Sullivan, CBA's Retail Bank Group Executive.

"We're really pleased to be supporting the government's Help to Buy initiative, aimed at making home ownership more accessible for more Australians [so] eligible customers can get into a home sooner, with support towards the purchase price.

"It's also flexible, giving people more choice on how they repay the government's contribution."

Who is eligible?

The program is aimed at prospective buyers who've saved what they can but are still a little short of being able to buy a home that meets their needs.

With taxable income caps sitting at $100,000 for individuals and $160,000 for single parents, and couples combined, the scheme is aimed at low- and middle-income earners.

To be an eligible applicant, you must be Australian citizens over 18, live in the purchased property as their principal place of residence, have saved the minimum 2 per cent deposit, qualify for the remaining finance with a participating lender, and be able to cover all upfront and ongoing property-related costs.

You also cannot currently own property in Australia or overseas (with some exceptions for single parents) or be receiving assistance from other schemes.

If a buyer's income rises above the threshold for two consecutive years, you may be required to repay the government's contribution - either partly or in full - depending on policy settings at the time.

It's also important to note that once you've purchased a home using the scheme, you'll need to continue meeting certain eligibility criteria.

This includes: maintaining your home; keeping your home insured; and participating in reviews for things like updated income details and information about key changes to personal circumstances.

Up to how much can be spent on a home?

Help to Buy supports you to buy a newly built or existing home in Australia at or below the property price cap for the location.

Included in the scheme are new or existing homes including houses, townhouses, apartments, units or duplexes, as well as vacant blocks of land for building a new home or a property that's being demolished and rebuilt, provided you've signed a comprehensive building contract with an eligible builder.

Of course, property price caps vary by city and region.

Melbourne homes are now capped at $950,000 and Brisbane at $1 million. Sydney homes are capped at $1.3 million, which might seem a little low. This is intentional.

The New South Wales capital city and regional centre price cap is set at $1.3 million - rather than at the median house price of around $1.5 million - to ensure purchase prices remain within the borrowing capacity of first-home buyers.

Regional centres for NSW include Newcastle and Lake Macquarie; Illawarra; Central Coast; Mid-North Coast; Coffs Harbour-Grafton and Richmond-Tweed.

Regional centres for Victoria and Queensland include Geelong and the Gold Coast and Sunshine Coast respectively.

Eligibility is also limited by location, with 10,000 places allocated nationally each year and divided across specific areas.

Western Australia and Tasmania are yet to pass legislation to participate in the scheme.

How does it compare to what's already available?

The government has confirmed that the existing Home Guarantee Scheme will continue to operate alongside Help to Buy.

While both reduce deposit requirements and remove Lenders Mortgage Insurance, the mechanisms differ.

Under the First Home Guarantee, the government provides a guarantee on part of the loan.

However, under Help to Buy, it provides an equity contribution, allowing buyers to take out a smaller mortgage and reduce repayments.

This shared-ownership arrangement means the government also shares in capital gains or losses when equity is repaid or the home is sold.

So when can I sign up?

The Help to Buy scheme was first announced as part of Labor's federal election campaign in 2022, but only legislated on 27 November 2024.

The scheme will open to applications from Friday, 5 December 2025.

To apply, you'll need to speak with a participating lender who will assess your eligibility and then guide you through the application process.