There are now two federal schemes competing for the same first home buyer, and they work in opposite directions.
The First Home Guarantee lowers the deposit you need and leaves the property entirely yours. Help to Buy lowers the amount you borrow by taking an ownership share of the property. One costs you cash flow. The other costs you capital growth. Choosing between them is a genuine financial decision, not a formality.
The Two Schemes in Plain Terms
The First Home Guarantee (the 5% deposit scheme) lets eligible buyers purchase with a 5% deposit, or 2% for single parents and legal guardians, without paying lenders mortgage insurance. Place limits were removed on 1 October 2025 and there is no income test. You borrow the rest, and you own 100% of the property.
Help to Buy opened on 5 December 2025. The government takes an equity share of up to 40% on a new home or up to 30% on an established home, and you contribute a deposit from 2%. Because the government funds part of the purchase, your loan is smaller and your repayment is lower. In return, the government holds a proportional interest in the property.
Help to Buy is capped at around 10,000 places a year and carries income tests, reported at $103,000 for singles and $165,000 for joint applicants and single parents for 2026-27. Property price caps apply and vary by state and region. The First Home Guarantee has neither an income test nor a place limit, but its own price caps apply.
The Numbers on an $800,000 New Home
The following is illustrative only, using a 6% interest rate over 30 years and round figures.
Under the First Home Guarantee:
- Deposit at 5%: $40,000
- Loan: $760,000
- Repayment: roughly $4,560 per month
- You own 100% of the property
Under Help to Buy at a 40% equity share:
- Government contribution: $320,000
- Deposit at 2%: $16,000
- Loan: $464,000
- Repayment: roughly $2,780 per month
- You own 60% of the property
The monthly difference is close to $1,780. Over a year that is more than $21,000 in cash flow, which is the entire appeal of Help to Buy and the reason it exists.
Now Price the Exit
Assume the property grows from $800,000 to $1,000,000 and you sell.
Under the guarantee, the full $200,000 of growth is yours, less selling costs and any capital gains position that applies. Your main residence is generally exempt from capital gains tax, so for an owner occupier the growth is typically yours in full.
Under Help to Buy at a 40% share, the government's interest is 40% of the sale value. That is $400,000 out of the $1,000,000, meaning $80,000 of the $200,000 in growth goes with it. You keep $120,000.
That $80,000 is the price of the $21,000 a year in cash flow relief. Whether that is a good trade depends almost entirely on two things: how long you hold, and how much the property grows.
Hold for two years with modest growth and the cash flow saving dominates. Hold for fifteen years in a strong market and the forgone equity is very large. Run your own numbers over the period you realistically expect to own the home, not over the period the brochure uses.
The Details That Decide It
You can usually buy the government out. Help to Buy is designed to allow the buyer to purchase additional equity over time, in increments, at market value. Buying out early limits the growth you give away, but it requires capacity to refinance a larger loan, which is the constraint that pushed most buyers toward the scheme in the first place.
Income caps are ongoing, not just at application. If your income rises above the threshold and stays there, you may be required to begin repaying the government's contribution. A promotion is a good problem to have, but it is a problem the guarantee does not create.
Places are limited under Help to Buy. Roughly 10,000 places a year across the country is not many. The guarantee has no such queue.
Serviceability still applies to both. A smaller loan under Help to Buy makes approval easier, but you are still assessed with a lender buffer, and the equity share does not remove the need for a clean borrowing position.
Neither scheme touches stamp duty. State duty and any first home owner grant are separate, and in every state the grant now applies to new homes only. Factor that in before you decide between new and established, because it interacts with the Help to Buy equity share too. The government share is up to 40% on new homes and up to 30% on established, so the same decision changes the size of the benefit.
A Simple Way to Frame the Choice
Help to Buy tends to suit a buyer whose problem is monthly cash flow, who expects a long steady income rather than a sharp rise, and who values getting into a home now over maximising the eventual gain.
The First Home Guarantee tends to suit a buyer who can service a full loan, who wants the whole of the growth, and who does not want a third party on the title or a set of ongoing tests to satisfy.
There is a third possibility worth naming. If you can service the full loan comfortably and you are within twelve months of a 20% deposit, neither scheme may be necessary. The cheapest first home is often the one bought with a conventional deposit and no conditions attached.
What to Do Next
Model both schemes over your actual holding period. Five years and fifteen years produce very different answers.
Confirm the current price caps for your suburb under each scheme. They differ, and they change.
Check the buy out mechanics before you commit. Ask specifically about minimum increments, valuation basis and costs.
Get pre approval that reflects the scheme you intend to use. Not every lender participates in both.
If you want help comparing the two against real stock in your price range rather than against a calculator, the team at Elite Wealth Creators works through this with first home buyers regularly. You can read more on the insights page or book a call.
General information only, not personal financial advice. Figures are illustrative, current as at August 2026, and subject to change. Confirm current scheme rules and speak with a licensed adviser before acting.