The Federal Government’s Help to Buy Scheme, which formally opened for applications in 2025, represents one of the most significant shared-equity housing initiatives introduced in Australia in recent decades. The scheme is designed to address one of the most persistent barriers to home ownership for low- and middle-income earners: the difficulty of saving a sufficient deposit and servicing a large home loan in an increasingly expensive property market.
By allowing eligible purchasers to buy a home in partnership with the Commonwealth, the scheme reduces both the upfront deposit requirement and the size of the mortgage required from a private lender. However, while the scheme offers substantial financial assistance, it also introduces a more complex ownership structure that carries legal, financial, and practical implications. Prospective participants should therefore have a clear understanding of how the scheme operates and what obligations attach to shared-equity ownership.
Administration and Legal Structure of the Federal Help to Buy Scheme Australia
The scheme is administered by Housing Australia, a Commonwealth entity responsible for managing the Government’s equity contribution. Housing Australia does not simply provide a grant or subsidy; instead, it acquires a proportional ownership interest in the property.
This interest is legally secured by a second registered mortgage, ranking behind the participating lender’s first mortgage. The homeowner retains legal title to the property, but Housing Australia’s registered interest ensures that its equity share is protected and recoverable upon sale or buy-out. This dual-mortgage structure distinguishes the scheme from traditional home ownership and has important consequences for refinancing, renovations, and future transactions.
How the Federal Help to Buy Scheme Australia Works
Under the Help to Buy Scheme, the Government may contribute:
- Up to 30% of the purchase price for an existing home; or
- Up to 40% of the purchase price for a new home, including off-the-plan purchases, house-and-land packages, and newly constructed dwellings.
The participant must still contribute a deposit. While the minimum required deposit is 2%, applicants are generally expected to contribute whatever amount is reasonably available to them, having regard to their savings and financial circumstances. This assessment is made by the participating lender as part of the standard loan approval process.
A conventional home loan is then obtained to fund the balance of the purchase price. The lender holds the first mortgage, while Housing Australia holds the second mortgage. Importantly, the Government’s equity interest is not fixed in dollar terms. Instead, it represents a proportional share of the property’s market value. As a result, Housing Australia shares in both capital gains and capital losses when the property is sold or when the participant elects to buy back the equity.
Eligible Properties
The scheme applies to a broad range of residential properties, including:
- New dwellings, such as off-the-plan apartments, newly built homes, knock-down rebuilds, and house-and-land packages
- Existing homes, including detached houses, townhouses, and apartments
- Certain types of accommodation are expressly excluded, including caravans located in caravan parks and retirement village accommodation. In addition, each state and territory imposes price caps that limit the maximum value of eligible properties. These caps vary depending on location and property type and are intended to ensure that the scheme targets modestly priced homes rather than high-value properties.
At present, Western Australia and Tasmania are not participating, meaning properties in those jurisdictions are excluded from the scheme.
Eligibility Requirements
To qualify for the Help to Buy Scheme, applicants must satisfy a number of criteria, including:
- Income thresholds of $100,000 per annum for single applicants, or $160,000 per annum for joint applicants or single parents
- Australian citizenship and a minimum age of 18 years
- No current ownership of land or residential property, subject to limited exceptions (most notably for certain single parents)
- Not receiving assistance under another shared-equity or Commonwealth home-buyer support scheme
- A commitment to occupy the property as the applicant’s principal place of residence
These requirements are strictly assessed, and eligibility must be maintained throughout participation in the scheme.
Application and Settlement Process
Applications are made through participating lenders rather than directly through Housing Australia. The lender assesses the applicant’s eligibility, borrowing capacity, and deposit contribution, and coordinates approval under the scheme.
Once a contract for sale is exchanged, a conveyancer acting for Housing Australia prepares the second mortgage and associated shared-equity documentation. These documents must be executed prior to settlement, alongside the lender’s mortgage and the usual conveyancing instruments. This additional documentation can extend timeframes and requires careful coordination between the purchaser’s solicitor or conveyancer, the lender, and Housing Australia.
Ongoing Obligations of Participants
Participation in the Help to Buy Scheme involves continuing obligations that go beyond those of a standard homeowner. Participants must:
- Maintain adequate building insurance and provide annual evidence of that insurance to Housing Australia
- Keep the property in a reasonable state of repair
- Undergo a compliance review every five years, during which eligibility and occupancy requirements are reassessed
- Continue to occupy the property as their principal place of residence, unless an exemption is granted (for example, due to temporary relocation or hardship)
Failure to comply with these obligations may trigger enforcement action or require early exit from the scheme.
Exiting the Scheme
Participants may exit the scheme in several ways:
- Incremental buy-backs, allowing the homeowner to gradually purchase portions of the Government’s equity
- Refinancing, to buy out Housing Australia’s entire interest in one transaction
- Sale of the property
Where the property is sold, Housing Australia must be notified at least three months prior to the intended settlement date. The sale must occur at arm’s length and at market value. Housing Australia is entitled to receive its proportional share of the net sale proceeds, and the participant bears the costs of valuation, sale, and conveyancing.
Legal and Practical Considerations
Shared-equity ownership introduces a number of legal and practical complexities, including:
- The interaction between first and second mortgages
- The sharing of capital gains and losses
- Potential complications in family law proceedings, particularly where property settlements are required
- Issues in estate planning, as the Government’s equity interest must be accounted for upon death
- The need to consider how renovations or improvements may affect the value of the property and, consequently, the Government’s equity share
In many cases, Housing Australia’s consent is required before significant alterations are undertaken, adding another layer of regulatory oversight.
Conclusion
The Help to Buy Scheme provides meaningful assistance to eligible purchasers by lowering financial barriers to entry into the property market. However, it fundamentally alters the nature of home ownership by introducing a shared-equity partner with enforceable legal rights.
For buyers considering the scheme, it is essential to understand not only the immediate benefits, but also the long-term implications of shared ownership, ongoing compliance obligations, and the mechanics of exit. Independent legal advice is strongly recommended to ensure that participants fully understand their rights, responsibilities, and risks before entering into the scheme.
Jake McKinley notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Jake McKinley are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.
By Peter Raykhman, Solicitor
