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Help to Buy Scheme 2024: Who’s Eligible & What’s the Catch?

Help to Buy Scheme 2024

If you’ve been wanting to buy your very first home but were feeling hopeless after seeing real estate prices and mortgage rates reach record highs, there is good news!  

The Labor government is planning to relaunch the Help to Buy Scheme in 2024. This program means the government will share the cost of the house with you, which can reduce your home deposit to as little as 2% and bring you closer to your dream home than you thought possible.   

So how is this program structured in Australia, what potential drawbacks should individuals be aware of, and is it accessible to everyone? Keep reading to learn all the details. 

What is the Help to Buy Scheme 2024?  

The Help to Buy Scheme 2024 is a government initiative designed to assist first-time homebuyers in purchasing real estate.    

These schemes are common in Australia and are designed to offer financial support to eligible low-income households, making it easier for them to enter the property market. The government’s objective with these programs is to make homeownership more attainable for those who might not otherwise have the means to do so.    

While it is a national government program, the specific details, including the home cost contribution and eligibility criteria, can vary by state or territory.   

Note that it is particularly important to check with your state or territorys government and talk with an expert for the most up-to-date information on the Help to Buy Scheme in your area, as policies and offers may still change over time. 

What does the Help to Buy Scheme 2024 offer? 

This program is designed for first-time homebuyers and aims to assist with the home deposit for buying or constructing a new house or apartment.  

The deposit is the focus of this scheme because it is known to be one of the main challenges for low-income earners and first-time buyers. The Help to Buy Scheme 2024 addresses this issue by offering a generous contribution to the total home price. 

The Help to Buy 2024 scheme’s goal is to help 100,000 qualified homebuyers achieve homeownership within four years, starting in the first half of 2024. The program also incorporates some geographical restrictions to ensure that it is not all used up by homeowners in specific regions (like NSW). 

Who is the Help to Buy Scheme 2024 for? 

To qualify to participate in this scheme, you need to meet the following criteria: 

  • You must be an Australian citizen and at least 18 years old. 
  • Your annual income should not exceed $90,000 for individuals, or $120,000 for those applying as couples. 
  • You must reside in the property you purchase under this program. 
  • You must not currently own any other real estate or property, either within Australia or overseas. 
  • You need to have saved a minimum deposit of 2% of the home’s purchase price.
  • You need to be capable of financing your portion of the home loan not covered by the scheme. 
  • You should have the financial capacity to cover all initial expenses, including stamp duty, legal fees, and bank charges, among others.  
  • Additionally, you will be responsible for ongoing property-related costs like rates, strata fees, electricity bills, and more, so you should have the solvency needed to cover those as well. 

Help to Buy Scheme 2024 Percentages

Under this government’s assistance program, they will subsidize up to 40% of the cost for new properties and 30% for existing ones. Qualified participants will be required to provide just a 2% deposit and will also be exempt from paying Lenders Mortgage Insurance (LMI). 

Why are they bringing back the Help to Buy Scheme in 2024? 

The Grattan Institute (a think tank) proposed a shared equity initiative as a component of the remedy for the increasing housing affordability crisis in the country.  

Prime Minister Albanese stated that this program aims to make homeownership accessible once more for countless potential buyers who have been excluded from the housing market. Our government will step up and put in our share, opening the door of home ownership to tens of thousands of hard-working people”, he said. 

According to Forbes, the Aussie property market is one of the most expensive in the world, and when measuring the affordability using the household debt-to-income ratio, we see that the housing sector in Australia carries one of the highest debt burdens globally, marked by a household debt-to-income ratio of 211%. This is over twice the 101% in the United States and even significantly higher than the UK’s 148% and Japan’s 115%. 

What properties can I buy with the Help to Buy Scheme 2024? 

It’s essential to keep in mind that the value of properties eligible under the Help to Buy Scheme will be capped, depending on the city and region where the homes are located, like this: 

Help to Buy Scheme 2024 Caps

What will I owe the government under the Help to Buy Scheme 2024?   

The government won’t charge any fees or interest, and there won’t be any interest payments to the bank on the government’s share of the home loan amount. This means that successful applicants will enjoy better terms because the home loan amount, along with the associated repayments, will be lower compared to a loan covering the entire equity amount. 

Cameron Kusher, Director of Economic Research at REA Group, said: “Taxpayer-wise, it is basically a free loan that is being given to help people get into the market […] They only have to repay the equity on sale, with no rent component during the life of the loan.” 

What are the risks regarding the Help to Buy Scheme 2024? 

For individuals with lower incomes facing challenges in purchasing a home, the Help to Buy Scheme could represent a significant opportunity. Nevertheless, it’s crucial to consider that the scheme involves sharing ownership of your property with the government, which means there are some risks to be aware of. 

For example, in the event you choose to sell the property in the future, a portion of the sale proceeds will be claimed by the federal government. This includes the amount contributed, and the capital gains from that amount. 

There may also be penalties if you don’t follow the rules of the program or if your circumstances change. For instance, if you can’t commit to living in the house after you’ve purchased it, the government may request you to start paying off its portion of the loan. If your wage suddenly increases, it could also have similar implications. 

Additionally, if the property value declines, you could find yourself in a situation where you owe the government more than you initially borrowed. However, this is a highly unlikely scenario, as property prices would have to decrease by a substantial 30-40% for this to become an issue. 

Always consult with loan experts to make sure you understand the full terms and downsides before signing a contract as important as a home loan.  

Can I buy the government’s share in a home I buy through the Help to Buy Scheme 2024? 

Yes, you have the option to gradually repurchase the government’s portion of the property. You can buy a minimum of 5% of the government’s share at a time. That said, the process of buying back the government’s equity can only start after the initial two years have passed. 

If you were to buy back a 5% share each year after those first two years, you could get full ownership of the property in about eight years, assuming the government initially contributed just 30%.  

Help to Buy Scheme 2024

Want to get ready to take advantage of the Help to Buy scheme in 2024? Get in touch with us  to find out more about the application process for your specific state. 

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