Help to Buy or the 5% scheme: which one fits?

Bayley Clarke · Mortgage broker on the road · Last checked 11 November 2026 · 7 min read

The short answer

The 5% scheme lends you a guarantee. Help to Buy brings in a co-owner. One lets you keep every dollar of growth, the other gets you in with a much smaller loan and takes a slice of the growth in return.

If you can save 5% and the repayments on a 95% loan fit your budget, the 5% scheme is usually the cleaner door, because nobody else owns part of your home. If a 95% loan is out of reach on your income, Help to Buy can shrink the loan enough to get you in, and that is a real trade worth understanding properly before you sign. You can't use both. This page lays out who each one is for, what each costs you on the way out, and the answers underneath.

Help to Buy vs the First Home Guarantee: two different deals

The names make them sound like cousins. They're not. The 5% Deposit Scheme, which used to be called the First Home Guarantee and is still part of the Home Guarantee Scheme, doesn't put a dollar into your purchase. You save at least 5%, borrow the rest from a participating lender, and the government guarantees the part of the loan between 80% and 95% of the value. That guarantee is what lets the bank skip lenders mortgage insurance. Your name is on the title, the whole home is yours, and the growth is yours.

Help to Buy is shared equity. You put in as little as 2%, the government pays up to 30% of the price on an existing home or up to 40% on a new one, and in return it holds that share of the property. You don't make repayments to the government and you don't pay it rent or interest, but it sits in the deal until you buy it out or sell. So for you that means a much smaller home loan and smaller repayments, and a partner in your future growth.

To give you a bit of an idea, on a $600k existing home: the 5% scheme means $30k down and a loan of about $570k. Help to Buy at 30% means $12k down, the government in for $180k, and a loan of about $408k. Illustrative numbers before costs, but that gap in the loan is the whole appeal, and it's also exactly what you're paying for later.

Not sure which door is open to you?

Send me your income, your savings and roughly what you want to spend. I'll tell you which scheme you qualify for and run both side by side, what each costs you now and what each costs you when you sell.

Book a 30 minute call Call 0437 189 939

No application, no credit check, nothing on your file. Just the numbers.

Who can use each one: income caps, citizenship and owning before

This is where the two split hardest. The 5% scheme has no income cap and no limit on places. If an old income cap was the thing stopping you, I earn over the income cap. Can I still buy under the scheme? covers what changed and what still applies. You need to be 18 or over, an Australian citizen or permanent resident, saving between 5% and 20%, and either a first home buyer or someone who hasn't held an interest in property in Australia in the last 10 years. Buy on your own or with one other person, partner, friend or family member.

Help to Buy is tighter on every line. Taxable income at or below $103,000 for a single applicant, or $165,000 for joint applicants and single parents, taken from last year's notice of assessment and indexed every 1 July. Every applicant has to be an Australian citizen, so permanent residents are out. And you can't own any property at all right now, in Australia or overseas, with a narrow exception for single parents. The deposit is the most you can reasonably put in, with 2% as the floor, not the target.

Both want you living in it. Both run through participating lenders only. And both still need the bank to say yes on the normal test of whether you can afford the repayments, which plenty of people forget until the pre-approval comes back.

Price caps: same map, different numbers

Both schemes cap the purchase price by postcode, with capital cities and the bigger regional centres on one number and the rest of the state on a lower one. Most of the caps line up between the two schemes, but not all of them. In NSW, for example, the top band sits at $1.5 million for the 5% scheme and $1.3 million for Help to Buy, as at the official tables I checked today. What's the scheme price cap where I live? walks through how to look yours up in about ten seconds.

The bit people miss is that the cap is a ceiling on the price, not a measure of your budget. A high cap doesn't mean a bank will lend you that much, and stamp duty and costs still sit on top of the deposit. The caps get reviewed, so check the official postcode tool for each scheme on the day you're making offers.

What happens when you sell, or want to rent it out

Under the 5% scheme, nothing special happens when you sell. You pay out your loan and the rest is yours. The guarantee falls away on its own once your scheduled repayments bring the loan down to 80% of the value the lender assessed when you bought. Growth on its own doesn't move that line, but a sale, or refinancing to a lender outside the scheme once you're under 80% of a fresh valuation, also ends it. What is the catch with the 5% scheme? covers the one rule that catches people: you can't put tenants in while the guarantee is on, and if you move out without an exemption the lender may charge you lenders mortgage insurance or other costs.

Help to Buy is different. Help to Buy: the government owns 30% of my house. What happens when I go to sell it? spells it out with real numbers: the government's share is a percentage of the home's value at the time you sell or buy it back, not the dollar amount it put in. Buy at $600k with the government on 30%, sell years later at $800k, and its share is $240k, not $180k. It shares the loss too if prices fall. You can buy it out in chunks along the way, and if your income stays above the cap the government can ask you to start. Renting the place out isn't allowed while it holds a share.

Which lenders do each one

The 5% scheme runs through a long panel of participating lenders, though not every bank offers it and a couple of well known names have stepped back. Help to Buy is still a short list. Can I use my own bank for Help to Buy? covers where that leaves you: only a handful of lenders are signed up, fewer again through the broker channel, and if your bank isn't one of them, the home loan goes where the scheme is and your everyday banking stays put. Expect that list to grow, and check it when you're ready, not now.

Picking the scheme before the lender matters, because the scheme then decides which lenders are even in the room. That's the bit of the job I'm actually useful for.

Where a guarantor fits, and what you can stack

The two federal schemes can't be used together. Either one can generally sit alongside your state's first home buyer stamp duty concession and, if you're buying new, the first home owner grant, as long as you meet each one's rules separately. What you can't do is add a family guarantee on top of the 5% scheme. Guarantor loan or the government 5% scheme: which one is best? goes through how I pick between those two: no deposit and high rent points one way, savings in the bank and a place that needs work can point the other.

So the real choice is often three-way: the 5% scheme, Help to Buy, or a guarantor. Only one of those three hands over part of your future growth, and that's the one I'd want you to look at with the numbers in front of you.

The honest part

Help to Buy gets people into a home who otherwise couldn't, and I'm not going to talk anyone out of that. But a 30% or 40% co-owner on a home you plan to live in for twenty years is a lot of growth to give away, and the cost of buying them out goes up with the market. If your income and savings would get you there on the 5% scheme or with a guarantor inside a year or two, compare that path first.

Equally, the 5% scheme isn't free. A 95% loan is a thin cushion, the repayments are bigger, and you're committing to live there until the loan is down to 80% of what you paid. Neither scheme is the safe one. The right one is the one that fits your income, your timeline and how long you'll actually stay.

Eligibility rules, caps and the lender list all change. Everything here was checked against the official scheme pages on 11 November 2026, and your lender confirms eligibility on the day.

Want both schemes run on your numbers?

Half an hour. We check which scheme you qualify for, look at the price cap where you're buying, and put the 5% scheme, Help to Buy and a guarantor side by side: what you put in, what you repay, and what each one costs you the day you sell.

Book a 30 minute call Call 0437 189 939

No application, no credit check, nothing on your file. Just the numbers.

Common questions about Help to Buy and the 5% scheme

What's the difference between Help to Buy and the 5% Deposit Scheme?+

The 5% Deposit Scheme is a guarantee. You buy with as little as 5% down, the government guarantees the gap to 20% so you skip lenders mortgage insurance, and you own the whole home and keep all of the growth. Help to Buy is shared equity. You put in as little as 2%, the government pays up to 30% of an existing home or up to 40% of a new one, and it owns that share of the property until you buy it back or sell.

Can I use Help to Buy and the 5% scheme together?+

No. The official scheme guide says the two federal schemes cannot be used together, so it is one or the other. Either one can generally still sit alongside your state's first home buyer stamp duty concession and first home owner grant, if you qualify for those separately.

Is there an income cap on the 5% Deposit Scheme?+

No. The 5% Deposit Scheme has no income cap and no limit on places. Help to Buy does have income caps, currently $103,000 of taxable income for a single applicant and $165,000 for joint applicants or single parents, indexed every 1 July. People mix the two up all the time.

What happens to the government's share when I sell a Help to Buy home?+

The government takes its percentage of what the home sells for, not the dollar amount it put in. If it holds 30% and the home has gone up, its 30% has gone up too. If the home has gone backwards, its share goes backwards with it. Buying the share back before you sell works the same way, priced off the value at the time.

Can I rent out my home under either scheme?+

Not while you're in it. Both schemes are for a home you live in. Under the 5% scheme you need to move in within six months and keep living there while the guarantee is on. Under Help to Buy it has to be your principal place of residence and renting it out isn't allowed without a written exemption.

Next question

The First Home Guarantee, explained

The 5% scheme in full: how the guarantee works, who qualifies and the rules that apply once you're in.