The Reserve Bank of Australia held the cash rate at 4.35 per cent for a seventh consecutive meeting in September 2024, keeping the serviceability assessment floor that major lenders apply to new borrowers at roughly 9 per cent. APRA’s 3 percentage-point buffer, unchanged since its 2021 tightening, means a single applicant earning the Sydney median wage of $94,000 has maximum borrowing capacity in the order of $440,000. Over the same two-year period, the median dwelling price in Greater Sydney drifted above $1.4 million, according to CoreLogic’s June 2024 quarterly report. That arithmetic locks thousands of creditworthy households out of the purchase market, regardless of their ability to service a loan once rates eventually decline.
The NSW Government’s response was not a short-term subsidy but a reshaping of its Shared Equity Home Buyer Helper. On 18 June 2024, the Treasurer announced a package of measures that took effect on 1 July: income caps were lifted to $100,000 for singles, $160,000 for couples, and $145,000 for single parents; property price ceilings in Sydney and major regional hubs rose to $1,200,000; and the scheme was opened to all first-home buyers, dropping the earlier requirement that applicants be key workers, single parents, or over-50 singles. With 3,000 additional places funded in 2024-25 alongside the carry-over of unallocated spots from the initial two-year pilot, the program now represents a material supply of government co-equity accessible under precise, lender-assessed loan conditions that every borrower and their mortgage broker must understand.
How the Equity Co-purchase Works
The scheme is a shared-equity arrangement, not a grant. The government contributes a percentage of the purchase price in exchange for a proportionate ownership interest, and the buyer funds the remainder with a first mortgage and a minimum cash deposit.
Government contribution limits
On an existing dwelling, the government may take an equity stake of up to 30 per cent. On a newly constructed home or a house-and-land package that has not been previously occupied, the stake can reach 40 per cent. The buyer must occupy the property as their principal place of residence and cannot own any other real estate, in Australia or overseas, at settlement (Revenue NSW, 1 July 2024).
Property price caps from 1 July 2024
The purchase price must not exceed the prescribed cap, which varies by location:
- Sydney and the regional centres of Newcastle, Lake Macquarie, Wollongong, Central Coast, and the Illawarra: $1,200,000.
- All other NSW postcodes: $750,000.
These figures are inclusive of any government contribution and apply to the total purchase price, not the buyer’s equity. A property bought for $1,180,000 in a metro zone qualifies; the same price in Orange does not.
Deposit and borrower equity
The scheme’s legislation requires a minimum deposit of 2 per cent of the purchase price from genuine savings. In practice, most approved lenders will underwrite only where the borrower can demonstrate 5 per cent genuine savings plus funds to cover stamp duty and legal costs. With the government’s 30 or 40 per cent equity replacing the need for a 20 per cent deposit, the effective loan-to-valuation ratio seen by the lender sits well below 80 per cent. On an $800,000 existing home, a 5 per cent buyer deposit ($40,000), a 30 per cent government share ($240,000), and a first mortgage of $520,000 produce an LVR of 65 per cent. That eliminates the cost of lenders mortgage insurance, a saving of roughly $12,000 to $18,000 on a metro-priced property.
Eligibility Thresholds for 2024–25
Eligibility is defined by a pair of hard caps — income and property price — and a straightforward ownership test. The 2024 budget removed the occupational gateway that previously confined access to nurses, teachers, and police.
Income caps
Gross household income limits, which apply to the combined income of all applicants and are measured against the most recent Notice of Assessment, are:
- Single applicant: $100,000 per annum.
- Couple (married or de facto): $160,000 combined.
- Single parent with at least one dependent child under 18: $145,000.
Income includes salary, rental income, business earnings, and certain Centrelink benefits. Overtime and bonuses are included if they are regular and ongoing. A single buyer earning $99,500 qualifies; an identical wage earner with a $500 bonus that pushes total income to $100,500 does not.
Property price caps by region
The $1,200,000 / $750,000 split is the only geographic divider. There is no tiered cap for different regional centres outside the five named coastal cities. A buyer in Dubbo and a buyer in Byron Bay face the same $750,000 ceiling, which can severely constrain stock selection in higher-value lifestyle markets.
Eligible buyer categories
Since 1 July 2024, any first-home buyer who meets the income and asset criteria is eligible, regardless of profession. Additionally, the scheme remains open to:
- Single parents of a child under 18 (not required to be a first-home buyer if they do not own property at settlement).
- Single people aged 50 years and over (who may have previously owned a home but must be non-owners at the time of application).
All applicants must be Australian citizens or permanent residents, 18 years or older, and must not have any ownership interest in other real estate.
Approved Lenders and Loan Serviceability
A shared-equity arrangement does not insulate the buyer from a full serviceability assessment. The government’s equity reduces the principal and eliminates LMI, but the loan component is stress-tested at the same buffer rate applied to a vanilla 80 per cent LVR mortgage.
The panel of participating lenders
The scheme is not available through every broker channel. The NSW Government has appointed a limited panel of financial institutions. As of August 2024, Bendigo and Adelaide Bank is the primary listed lender, with Newcastle Permanent Building Society and Unity Bank also offering the product. The panel may expand, but borrowers must use an approved lender to access the government share; refinancing with a non-panel bank after settlement is not permitted without exiting the scheme.
Serviceability buffer and assessment rate
APRA requires depository institutions to assess a borrower’s ability to repay at the higher of the product rate plus 3 per cent or an industry-wide floor rate. With most owner-occupied variable rates sitting around 6.30 per cent p.a., the effective assessment rate is 9.30 per cent p.a. Some lenders apply a slightly higher internal floor, up to 9.50 per cent, which further constrains maximum borrowing capacity.
On a $520,000 mortgage (the earlier $800,000 property example), monthly principal-and-interest repayments at 6.30 per cent over 30 years are approximately $3,218. Stressed at 9.30 per cent, the same loan requires a capacity of $4,292 per month. A sole borrower with a $99,000 income and no other liabilities will typically clear the net-income ratio test, but any material consumer debt — a $15,000 car loan, for instance — can tip the assessment into a decline.
Debt-to-income considerations
APRA’s guidance to limit new lending above 6 times debt-to-income remains in force. However, the shared-equity structure compresses DTI naturally. The $520,000 mortgage on a $99,000 income yields a DTI of 5.25x, comfortably inside the regulatory expectation. Compare this with a standard 80 per cent LVR loan on the same property: a $640,000 mortgage on the same income pushes DTI to 6.46x, which would face heightened scrutiny and a higher probability of knock-back from credit.
Ongoing Costs and the Government’s Position
The government is a silent equity partner: it does not charge interest, does not receive rent, and does not interfere with day-to-day ownership. Its return comes from the property’s capital growth when the buyer eventually exits.
Annual fees and adjustments
There is no ongoing interest charge or administration fee levied on the government’s share. The Department of Communities and Justice may conduct an annual review of the buyer’s income and circumstances, but an increase in income above the entry cap does not trigger a forced repayment or buy-out. The government simply retains its equity percentage until the property is sold or the 25-year maximum term expires.
Exit pathways
The buyer can exit the scheme in three ways:
- Sell the property and repay the government’s percentage of the sale price.
- Voluntarily buy out all or part of the government’s equity at current market value, subject to a formal valuation and lender consent. A buyer who acquires an additional 10 per cent stake must cover valuation costs, which typically run $600–$900.
- Reach the 25-year term, at which point the property must be sold or the government share must be repaid in full.
Importantly, the government shares proportionately in any decline in value. If the property is sold for less than the original purchase price, the government’s dollar return reduces accordingly. The borrower is not guaranteeing the government’s capital.
Refinancing restrictions
Refinancing the first mortgage with a non-panel lender while retaining the government’s equity is not permitted. If a buyer wishes to move to a different bank, they must simultaneously exit the shared-equity arrangement by paying out the government’s share. That requirement effectively locks most borrowers into the panel lender for the duration of their participation, unless they have accumulated sufficient equity or savings to buy out the government.
Stamp Duty and Tax Implications
The interaction between shared equity and state/federal tax regimes is complex and, in some cases, poorly understood by applicants who assume the government’s presence on title washes out standard charges.
Transfer duty concessions
The NSW First Home Buyer Assistance Scheme provides full transfer duty exemption for properties up to $800,000 and a concessional rate between $800,000 and $1,000,000. The Shared Equity Home Buyer Helper is compatible with this scheme: the buyer’s eligibility for the duty concession is assessed on the total purchase price, not on their proportional equity. A first-home buyer purchasing a $950,000 existing home under shared equity will pay a reduced rate of duty, saving roughly $20,000 compared with the standard rate. Buyers should instruct their solicitor to lodge the necessary Revenue NSW forms at settlement.
Land tax
Under the Land Tax Management Act 1956, the government’s equity interest is exempt from land tax. The buyer, as a part-owner, may be liable for land tax on their proportion of the land value if the property is not their principal place of residence. However, because the scheme requires owner-occupation, no land tax is payable while the buyer lives in the home. If the buyer later rents out the property — which is not permitted without government consent — land tax would become applicable on the buyer’s share.
Capital Gains Tax
The Australian Taxation Office treats the buyer’s and the government’s interests as separate CGT assets. Upon sale, the buyer is liable for CGT only on their percentage of the capital gain, and only if the property was not their main residence for the entire ownership period. The full main residence exemption applies to the buyer’s share provided the dwelling is their primary home. The government, as a state entity, is not subject to CGT on its portion. This structure removes a common concern that shared equity creates a hidden tax bill at exit.
What First-Home Buyers Should Do Now
- Confirm your income against the new caps using the most recent tax assessment. If you are $500 over the $100,000 single threshold, a salary sacrifice arrangement that reduces assessable income to $99,000 may bring you into contention — but only if your employer agrees and you have documented it before the annual review.
- Use the Revenue NSW property price cap map to filter target suburbs. Remember that the cap is total purchase price, not the loan amount. A listing priced at $1,220,000 in a metro zone is out of reach even if the vendor might accept $1,195,000; the cap is applied to the contract price.
- Approach a panel lender early for an indicative serviceability assessment. The same 9.3 per cent stress rate applies, and credit card limits, HECS debt, and car loans all reduce maximum borrowing. Pre-approval under shared equity can take longer than a standard loan due to additional government paperwork.
- If you are a key worker who qualified under the old rules and have not yet applied, you now face a larger pool of eligible applicants competing for the 2024-25 allocation. The scheme has a finite number of places and operates on a first-come, first-reserved basis. Westpac’s analysis of the first pilot tranche showed that 42 per cent of available spots had been claimed within four months of opening.
- When running your numbers, treat the government’s equity as debt that must be repaid proportionately to future value. A 30 per cent share in a property that appreciates by 5 per cent annually over seven years adds roughly $141,000 to the government’s exit claim on a $800,000 purchase. Building a separate savings buffer to buy out part of the equity in year three or four can materially reduce the total hand-back at sale.