Help to Buy Scheme Melbourne 2026 - 2% Deposit, Government Equity Explained
The Help to Buy scheme, launched 5 December 2025, allows eligible Melbourne buyers to purchase a home with a 2% deposit and no LMI – with the federal government contributing up to 40% of the purchase price (new homes) or 30% (existing homes) as a shared equity contribution. In Melbourne, the property price cap is $950,000. Individual income cap is $100,000; couple/single parent cap is $160,000. Up to 10,000 places per year are available over four years. Currently, only Commonwealth Bank and Bank Australia are participating lenders. The government becomes a co-owner of the property proportional to its equity contribution and may require equity buyback if the buyer’s income exceeds the cap for two consecutive years.
Australia’s Help to Buy scheme is the most accessible government homeownership program ever created in Melbourne – requiring only a 2% deposit on a property priced up to $950,000. A first home buyer purchasing a $750,000 Melbourne property needs just $15,000 in deposit (plus costs) to participate.
However, Help to Buy is more complex than its headline suggests. The government becomes a co-owner of your property for the life of your loan, there are only two participating lenders, ongoing income obligations apply, and refinancing requires buying back the government’s equity share. Understanding the full picture before applying is critical.
How Help to Buy Works - Step by Step
- You apply through a participating lender (currently CBA or Bank Australia). You cannot apply directly to Housing Australia.
- The participating lender assesses your eligibility and financial position, then submits a pre-approval application to Housing Australia.
- If approved, your pre-approval is valid for 90 days (with one possible 90-day extension). You can search for a property that meets the scheme requirements within this window.
- The government contributes up to 40% of the purchase price for new homes (or 30% for existing homes) at settlement – this is not a loan, it is an equity contribution. No interest or rent is charged on the government’s share.
- You own the property outright with a mortgage covering the remaining 60–70% (less your 2% deposit). The government holds a proportional equity interest.
- You can buy back the government’s equity over time, either in stages or in full. There is no obligation to buy it back on any fixed timeline – but if you sell, the government receives its proportional share of the sale price.
Help to Buy Melbourne - Eligibility Requirements
- Australian citizen aged 18 or over
- Taxable income at or below $100,000 (individual) or $160,000 (couple or single parent) as shown on the most recent ATO Notice of Assessment
- Must intend to occupy the property as a principal place of residence
- Property must be valued at or below the price cap for the location - in Melbourne: $950,000
Melbourne Price Cap and What It Means
The $950,000 Melbourne price cap was raised from an initial $850,000 following Housing Minister Clare O’Neil’s announcement expanding the scheme. This means Melbourne buyers can access Help to Buy on a broad range of inner-ring and middle-ring properties:
- Richmond, Footscray, Brunswick, Coburg, Reservoir - eligible at $950,000 cap
- Tarneit, Wyndham Vale, Craigieburn, Pakenham - eligible at $950,000 cap
- Hawthorn, Kew, South Yarra, Prahran - some properties may exceed the $950,000 cap
- Doncaster, Glen Waverley, Box Hill, Ringwood - eligible at $950,000 cap
HELP TO BUY REAL SCENARIO – MELBOURNE NURSE:
| Buyer: | Registered nurse, income $92,000 p.a. |
| Property: | $850,000 existing townhouse, Brunswick |
| Government share: | 30% of $850,000 = $255,000 |
| Buyer deposit: | 2% of $850,000 = $17,000 |
| Buyer mortgage: | $850,000 – $255,000 – $17,000 = $578,000 |
| LMI: | $0 waived – government contribution reduces effective LVR below 80% |
| Monthly repayment: | On $578,000 at 5.75% (30yr P&I): ~$3,374 |
Compared to purchasing without Help to Buy:
| Standard 5% deposit: | $42,500 deposit needed |
| LMI at 95% LVR: | ~$22,000 |
| Monthly repayment: | On $807,500: ~$4,712 |
Help to Buy saving: $25,500 in deposit, $22,000 in LMI, $1,338/month lower repayment.
Help to Buy vs First Home Guarantee - Which Is Better for Melbourne Buyers?
| Feature | Help to Buy | First Home Guarantee | Winner |
|---|---|---|---|
| Minimum deposit | 2% | 5% | Help to Buy |
| Government role | Co-owner (30–40% equity) | Guarantor only (no ownership) | First Home Guarantee |
| Income cap | $100K individual / $160K couple | No income caps (from Oct 2025) | First Home Guarantee |
| Melbourne price cap | $950,000 | $950,000 | Equal |
| LMI | $0 | $0 | Equal |
| Lender choice | 2 lenders only | 40+ participating lenders | First Home Guarantee |
| Government share on sale | Must repay proportionally | No ongoing obligation | First Home Guarantee |
| Places per year | 10,000 nationally | Unlimited (from Oct 2025) | First Home Guarantee |
| Best for | Buyers with very limited deposit | Buyers with 5%+ deposit and higher income | Depends on situation |
Help to Buy creates an ongoing relationship between you and the federal government as a co-owner of your property. Key obligations to understand:
- If your taxable income exceeds the income cap ($100K individual / $160K couple) for two consecutive years after purchasing, Housing Australia may require you to buy back part or all of the government's equity share.
- If you want to refinance to a lender that does not participate in Help to Buy, you must first buy back the government's equity share - which may require significant cash or additional borrowing.
- If you sell the property, the government receives its proportional share of the sale proceeds. If your property has increased in value, the government's share has grown accordingly.
- If you want to renovate or improve the property in a way that increases its value, the government benefits proportionally from that value increase when you sell or buy back their equity.
Frequently Asked Questions - Help to Buy Scheme Melbourne 2026
The government receives its proportional share of the sale proceeds, based on the percentage it contributed at purchase. If the government contributed 30% of the purchase price and the property has increased in value, the government receives 30% of the current sale price - not the original contribution amount. The government participates proportionally in both capital gains and any capital losses.
Yes - if you are purchasing a new home in Victoria under $750,000, you may be eligible for the $10,000 FHOG in addition to Help to Buy. The FHOG is paid directly to your lender at settlement, reducing your effective loan balance. Clarity Financial Solutions confirms which schemes can be combined for your specific property and purchase price before any application is submitted.
Yes - you can buy back the government's equity share at any time, either in full or in stages. There is no obligation to do so on a fixed timeline (unless your income exceeds the cap for two consecutive years). Buying out the government's share typically requires a formal property valuation and is processed through Housing Australia. Clarity Financial Solutions models the buyback cost and timeline for each client's income and property growth trajectory.
The government's equity contribution is not treated as a debt — you do not pay interest or rent on it. Your mortgage serviceability is assessed only on the remaining 60–70% of the purchase price that you are borrowing. This significantly reduces your monthly repayment and improves your APRA stress test outcome compared to borrowing the full purchase price.
→ First Home Buyer Mortgage Broker Melbourne
Preeti Sidhu — CPA Australia Member | Licensed Mortgage Broker | ACL 475676 | MFAA Member
📍 303 Collins St, Melbourne VIC 3000 | 📞 0429 533 236 | 🌐 clarityfs.com.au
🔗https://clarityfs.com.au/first-home-buyer-mortgage-broker-melbourne/
Preeti Sidhu
This article was prepared by Preeti Sidhu, Mortgage Broker at Clarity Financial Solutions (ACL 475676). Information is general in nature and does not constitute financial advice. Always consult a licensed mortgage broker before making refinancing decisions.
This article provides general information only and does not constitute financial, tax, legal or credit advice. Information is current as at April 2026. Rates, thresholds and eligibility criteria may change. Readers should seek independent professional advice before making any financial decisions.
Clarity Financial Solutions | ACL 475676 | O&S Services Pty Ltd | ABN: 81 687 299 887 | Credit Representative of Purple Circle Financial Services