Unlock the Secrets to Government Home Loan Schemes

The Australian Government 5% Deposit Scheme and Help to Buy program let eligible buyers purchase with a smaller upfront deposit than a standard home loan requires.

These schemes work by having Housing Australia provide either a guarantee to the lender or an equity contribution to the purchase, reducing or removing the need for Lenders Mortgage Insurance. Both programs operate through participating lenders and have property price caps that vary by location. Ringwood sits within the Melbourne metropolitan area, subject to Victoria's capital city cap under both schemes. For buyers in the area, that means navigating not just eligibility criteria but also how these programs interact with your borrowing capacity and lender assessment.

The 5% Deposit Scheme and How It Works in Ringwood

Under the 5% Deposit Scheme, eligible first home buyers need a deposit of just 5% of the property value, while single parents or legal guardians can purchase with as little as 2%. Housing Australia guarantees up to 15% or 18% respectively to the participating lender, bringing the combined deposit and guarantee to 20% and removing the need to pay LMI.

In Victoria, the property price cap for capital cities and regional centres is $950,000. Both the purchase price and the lender's valuation must sit at or below that cap. Ringwood falls within this metropolitan threshold, so any property you're considering must meet that upper limit. There are no income caps, and no annual place limits apply since the scheme was expanded in October 2025.

Consider a first home buyer looking at a townhouse valued at $900,000 in Ringwood. With a 5% deposit, that's $45,000 upfront. Housing Australia's 15% guarantee covers the gap to 20%, so the buyer avoids LMI, which could otherwise add $20,000 to $30,000 in upfront costs depending on the lender and loan structure. The home loan still needs to be serviced at standard variable or fixed interest rates, and the lender assesses borrowing capacity in the usual way. The scheme doesn't reduce your loan amount, it reduces your upfront cost and removes an insurance premium.

Participating lenders manage the application process. You can't apply directly to Housing Australia. At the time the scheme expanded, the panel included 3 major banks and 28 non-major lenders, with further lenders added throughout the following year. Not every lender on your broker's panel will be a participant, so confirming which lenders are available under the scheme is a necessary step before proceeding with home loan pre-approval.

Help to Buy and the Equity Contribution Model

Help to Buy allows the Australian Government to take an equity stake in your property in exchange for contributing up to 40% of the purchase price for a new home or up to 30% for an existing home. You provide a minimum 2% deposit, and the government's equity share reduces the loan amount you need to borrow.

From 1 July 2026, income limits are $103,000 for individual applicants and $165,000 for joint applicants or single parents, based on the most recent ATO Notice of Assessment. Property price caps vary by postcode and are searchable via the official tool at firsthomebuyers.gov.au. Tasmania joined the scheme in June 2026, completing national coverage. Up to 10,000 places are available each financial year, and applications are processed through participating lenders only.

The government's equity share means they hold a proportional interest in the property. If the property increases in value, the government's share of that gain increases proportionally. If the property decreases in value, their share of the loss is proportional as well. There are no ongoing fees or interest charged on the government's equity portion, but when you sell or refinance, the government is repaid their percentage based on the property's value at that time.

How These Schemes Affect Your Borrowing Capacity

Both schemes reduce your upfront deposit requirement, but they don't change how lenders assess your ability to service the loan. Your income, expenses, existing debts, and the lender's serviceability buffer all apply in the standard way.

With the 5% Deposit Scheme, you're borrowing 95% of the property value if you're a first home buyer or 98% if you're a single parent. The lender assesses your capacity to repay that loan amount at the interest rate offered, plus the buffer they apply to allow for potential rate increases. Removing LMI lowers your upfront costs but doesn't reduce the loan size or the repayment amount.

Under Help to Buy, the government's equity contribution reduces the loan amount you need. If you're purchasing a $900,000 existing home with a 2% deposit and the government contributes 30%, you're borrowing 68% instead of 98%. That's a loan of $612,000 rather than $882,000. The lower loan amount can improve your borrowing capacity and reduce ongoing repayments, but the income caps and place limits mean not every buyer will be eligible.

Can You Use State Stamp Duty Concessions Alongside Federal Schemes?

In most cases, yes. State and territory stamp duty concessions and grants can generally be used alongside both the 5% Deposit Scheme and Help to Buy, though each jurisdiction has its own set of rules.

Victoria offers a First Home Buyer Duty Exemption for properties valued up to $600,000 and a concessional rate for properties between $600,000 and $750,000. The exemption applies to first home buyers purchasing or building their principal place of residence, and the property must be valued below the relevant threshold. Ringwood properties valued under $600,000 would qualify for the full exemption, while those between $600,000 and $750,000 would attract a reduced rate. Properties above $750,000 incur standard stamp duty.

Because the Victorian First Home Buyer Duty Exemption has a $750,000 threshold and the 5% Deposit Scheme has a $950,000 cap, there's a price range from $750,000 to $950,000 where you could use the federal scheme but would pay full stamp duty. For buyers in that range, the federal scheme still removes LMI, but the state concession doesn't apply.

If you're eligible for Help to Buy and purchasing below the state duty threshold, you can combine both benefits. The income limits and price caps are different between the federal and state programs, so checking eligibility for each separately is necessary before assuming both apply to your situation.

What Happens When You Want to Sell or Refinance Under Help to Buy?

Under Help to Buy, the government's equity share remains in place until you sell, refinance to buy out the government's portion, or reach the maximum holding period. When you sell, the government receives their percentage of the sale proceeds based on the property's market value at settlement. If the property has increased in value, their dollar return increases accordingly. If it has decreased, their return is lower.

If you want to refinance to a different lender or buy out the government's share entirely, you'll need to have the property revalued and repay the government based on that valuation. Some buyers choose to do this once they've built enough equity or their income has increased beyond the scheme's caps. Others remain in the scheme for the full period.

There's no penalty for exiting early, but you do need to organise the valuation and settlement process through your lender and Housing Australia. The government's equity share is recorded on the property title, so any sale or refinance requires their formal release.

Choosing Between the Two Schemes or Using a Standard Loan

The right option depends on your deposit size, income, and how long you plan to hold the property. The 5% Deposit Scheme suits buyers who have a smaller deposit and want to avoid LMI but can service a loan at 95% or 98% of the property value. Help to Buy suits buyers with a very small deposit who also want to reduce their loan size and repayments, and who are comfortable with the government holding an equity share.

If you have a 10% or 20% deposit already, neither scheme may be necessary. A standard owner occupied home loan with a larger deposit gives you full ownership from settlement and often access to better interest rate discounts from lenders. Some lenders offer LMI waivers for certain professionals or reduce LMI where the borrower holds a genuine savings history, which can make a standard loan more competitive even at lower deposit levels.

For Ringwood buyers near the $950,000 price cap or those purchasing above it, a standard loan may be the only option. The federal schemes don't apply to properties over the cap, even if you're otherwise eligible. Working with a mortgage broker gives you access to a broader panel of lenders and lets you compare all available structures before committing to one path.

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