The Help to Buy shared equity scheme, first floated ahead of the 2022 election, will launch in Queensland, Victoria, New South Wales, South Australia, the ACT, and the Northern Territory.
It will offer 10,000 places per year for eligible first home buyers or those returning to the market over the coming four years.
The scheme will see the federal government effectively purchasing homes alongside eligible buyers, forking out up to 40% of the value of a new home or 30% of the value of an existing home.
It's intended to help buyers enter the market with a smaller deposit (as little as 2%), avoid lenders mortgage insurance (LMI), and allow them to take out a smaller mortgage.
This can lessen the financial burden and help bridge any gap between a person's borrowing capacity and home values in their local market.
After the purchase, the government will hold a stake over the property equivalent to its contribution, which will increase or decrease in value alongside the property.
The owner must live in the property and can choose to buy out the government's stake over time or hand over a portion of their sale proceeds when they sell their home.
"For families and individuals including essential workers, Help to Buy offers a meaningful pathway to home ownership," said Scott Langford, CEO of scheme administrator Housing Australia.
To be eligible, individual homebuyers must be earning less than $100,000 annually while joint applicants can earn up to $160,000 combined - caps that were boosted from $90,000 and $120,000 earlier this year.
Once they purchase a property through Help to Buy, participants must continue to meet the scheme's eligibility requirements.
If their income rises above the threshold, they'll be required to work with their lender to buy back some or all of the government's share, depending on what they can afford.
Buyers must also purchase properties within price caps, which vary from $1,300,000 in Sydney and NSW regional centres to $500,000 in regional South Australia or $400,000 on Christmas Island and Cocos (Keeling) Islands.
Homebuyers in Western Australia and Tasmania won't be able to access the scheme when it launches, as neither state has passed the legislation needed for Help to Buy to operate in their jurisdictions.
Help to Buy participating lenders revealed
To use the scheme, buyers must apply through a participating lender, revealed to be CommBank and Bank Australia.
For comparison, the federal government's other major housing cornerstone, the 5% Deposit Scheme, boasts over three dozen participating lenders.
"[Help to Buy is] an important initiative to help more people enter the property market and we look forward to helping Australians access the Scheme," CommBank retail bank group executive Angus Sullivan said.
Bank Australia said its participation reflects its commitment to helping customers access affordable housing.
"As a 100% customer owned bank, our customers have a voice on the issues we take action on, and we know they care about affordable and accessible housing solutions," Bank Australia chief customer officer Steve Odgers said.
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