The Help to Buy Scheme: Buy With a 2% Deposit and No LMI

How does Help to Buy work?

The government pays part of the price for you and takes a matching equity share in the home. You borrow the rest from a Participating Lender, with a loan-to-value ratio (LVR) of 80% or less.

You must put in the largest deposit you can reasonably afford, and at least 2% of the price from your savings, plus stamp duty and other purchase costs. The government's share is at least 5% of the price, and at most 30% for an existing home or 40% for a new one: a new build, house and land, an off-the-plan home under construction and settling within 90 days, or a new home no one has lived in.

You are the only owner on the title; the government's share is secured by a second mortgage to Housing Australia, which runs the scheme. There are no instalments, interest or rent on it: you repay the government's share of the home's value later. Your home loan must be principal and interest, for up to 30 years (interest only while you build).

Do you pay LMI with Help to Buy?

No, not when you buy. The program rules set the government's share so that it and your deposit together equal at least 20% of the lender's valuation, and note that you will not need to bear the cost of lenders mortgage insurance.

Without a scheme, an $800,000 home in NSW with a 5% deposit would typically attract about $31,900 of LMI (range $22,400 to $40,000), an estimate from figures lenders publish, not a quote. Check your own figure with the LMI calculator. A 2% deposit with LMI is usually not possible at all: QBE's LMI Guide sets its maximum LVR at 95% before the premium is added.

Three ways LMI can come back

1. Your build costs more. If your loan increases to cover a building contract variation, the Customer Guide says you may become liable for LMI.
2. You borrow more to buy back the government's share. Housing Australia will not force a repayment that would mean taking out LMI, but you can choose LMI to fund a buy-back.
3. You refinance to a lender outside the scheme. You must then buy out the whole share. If the new loan is more than 80% of the value, it is new borrowing above 80%, and the lender would normally charge LMI. This is our reading of the mechanism the program rules describe, not a separate official rule.

Who is eligible for Help to Buy?

Australian citizens aged 18 or over who own no property, will live in the home, and have taxable income under the cap.

Income caps

The test uses the taxable income on your previous financial year's Notice of Assessment (from 1 July 2026, your FY2026 notice) at final approval. There are no exceptions, even for one-off bonuses, and the caps are indexed each 1 July.

Property price caps by state and region

The purchase price must be at or under the cap for where you buy. For land and a build, the cap applies to the land price plus the fixed build price. The caps are not indexed.

Regional centres on the higher cap: in NSW, Newcastle and Lake Macquarie, the Illawarra, the Central Coast, the Mid North Coast, Coffs Harbour to Grafton, and Richmond to Tweed; in Victoria, Geelong; in Queensland, the Gold Coast and the Sunshine Coast. Help to Buy caps are lower than the 5% Deposit Scheme's in Sydney and those NSW centres, and in Darwin. Check your postcode on the official price cap page.

Which homes qualify?

A new or existing house, townhouse, apartment, unit or duplex, or vacant land with a fixed-price, turn-key contract with a licensed builder. Investment properties do not qualify, and the sale must be at arm's length, so buying from family or friends can rule you out. Some lenders add their own restrictions.

How do you repay the government's share?

You repay a percentage of the home's value at the time, not the dollar amount the government put in. You can do it in steps of at least 5% of the current value, or all at once.

Each partial repayment must be at least 5% of the home's current value, rounded to the nearest $1,000. You pay for a valuation and any administrative costs each time, but Housing Australia cannot charge application, approval or operating fees. You can fund a repayment from savings or by increasing your home loan.

If your income goes over the cap

If your taxable income is above the threshold for two financial years in a row, your lender assesses what you can afford. You may then have to repay part or all of the government's share, within 90 days of the assessment. If you cannot afford it, you are assessed again at least 12 months later. Insurance is checked each year, and your taxable income is reviewed at least once every five years.

Renovations

Improvements costing more than $21,000 (up from $20,000 on 1 July 2026) need notice to Housing Australia and valuations before and after. The government's percentage is then adjusted so you keep the value you added.

What happens when you sell or refinance?

You can sell at any time. Housing Australia receives its percentage of the sale price or the current valuation, whichever is greater, so it shares any gain or loss.

From the sale, your lender is paid first, then Housing Australia, then anyone else with a claim on the property, and you receive the rest. You pay the sale costs: the valuation, legal fees and agent's fees. If poor upkeep or unauthorised changes lower the value, Housing Australia may increase its percentage.

Refinancing

You can refinance to another Participating Lender, with approval from your current lender and Housing Australia, and buy out part of the share (at least 5% of the value) or all of it. Refinancing to a lender outside the scheme means buying out the whole share. You pay the refinancing costs, including the cost of discharging the Help to Buy mortgage.

Which lenders offer Help to Buy?

As at 29 September 2026, six lender brands from three institutions: Bank Australia, Commonwealth Bank, and the four brands of Teachers Mutual Bank Ltd.

You cannot apply to Housing Australia directly: a Participating Lender assesses you and applies for you, and a mortgage broker can deal with the lender on your behalf. Teachers Mutual Bank Ltd says that from 6 October 2026 its eligible members can also apply through its accredited brokers. More lenders are being added gradually, so check the official Participating Lenders list before you apply.

How do you apply for Help to Buy?

Through a Participating Lender, in seven steps set out in the official Customer Guide.

1. Check your eligibility with the official Eligibility Tool.
2. Meet a Participating Lender, which assesses your finances.
3. Prepare your documents: identity, citizenship, income including last year's Notice of Assessment, savings for a deposit of at least 2%, and your assets and debts.
4. Get conditional approval. Housing Australia reserves a place for up to 90 days, and you can ask to extend it by another 90 days.
5. Look for a home. Your approval letter shows your maximum purchase price, and you get a letter of support for the vendor.
6. Sign the contract. It must allow at least 30 days between signing and settlement, and a subject to finance clause is recommended.
7. Settle. You sign the Participation Agreement, show building insurance, and Housing Australia takes its second mortgage.

After final approval, you must settle within 90 days.

How many people have used Help to Buy?

More than 7,200 applications by 1 July 2026, with 4,800 of them having found a home or settled. These are Housing Australia's 1 July 2026 figures, the most recent we found on 29 September 2026.

Almost 7 in 10 applications came from single applicants, including 12% from single parents. The median deposit was $30,000, and 86% were first home buyers. Demand was strongest in Victoria, then NSW and Queensland. Earlier, on 10 February 2026, 278 households had bought and more than 2,078 were preparing to buy.

There were 10,000 places in 2025-26 and there are 10,000 new places in 2026-27, with unused places carried over. The program rules cap the total places used, across all years, at 40,000. The scheme opened on 5 December 2025 with two lenders, and has been available in every state and territory since 9 June 2026.

Help to Buy vs paying LMI vs the 5% Deposit Scheme

Help to Buy needs the smallest deposit and leaves the smallest loan, but has the tightest rules and takes a share of any rise in value. The 5% Deposit Scheme has no income cap. Paying LMI has no scheme rules but costs the most upfront.

Which suits you depends on your income, your citizenship and how much of any rise in value you want to keep. The full rules for the guarantee are on the 5% Deposit Scheme page, and every other route is in how to avoid LMI. Single parents can compare the Family Home Guarantee, which needs 2% and has no income cap.

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