Key Takeaways

• The Help to Buy scheme tests a teacher’s taxable income on the previous year’s Notice of Assessment, not payslip salary, and Housing Australia cannot waive the cap.
• In New South Wales, a single full-time teacher may pass the single cap around Step 3, while two full-time teachers usually exceed the joint cap.
• Income above the cap for two financial years in a row may trigger a required buy-back, priced at the home’s current value.
• Help to Buy stretches buying power through a government equity share and a 2% deposit, while the 5% Deposit Scheme keeps all capital growth with you.

A classroom teacher can qualify for the Help to Buy scheme one year and earn too much for it the next. From 1 July 2026, the scheme’s taxable income cap rose to $103,000 for singles and $165,000 for couples and single parents. For teachers buying a first home, those numbers sit close to the pay scale, and a few thousand dollars either way may decide whether the scheme is open to you.

Help to Buy lets the Australian Government take an equity share of up to 40% in your home, and that share moves with the property’s value. The Australian Government 5% Deposit Scheme, still widely known as the First Home Guarantee, asks for a larger deposit but leaves all of the growth with you. Weighing one against the other is part of the planning we do as a first home buyer broker, because the answer usually depends on where your pay step sits today and where it will sit in two or three years.

How the Help to Buy Scheme Works

Housing Australia administers Help to Buy as a shared equity scheme. The government contributes part of the purchase price and, in return, holds a matching financial interest in the home. Your name, and any co-applicant’s, sits on the title, and the government’s interest is recorded as a second mortgage. The pieces that shape a teacher’s purchase are:

Government Contribution Limits

The government may contribute between 5% and 30% of the price of an existing home, or between 5% and 40% of a new home. Housing Australia’s customer guide says the contribution will be as much as is needed to complete the purchase and to avoid Lenders Mortgage Insurance (LMI), up to the relevant maximum.

A teacher who can borrow close to the purchase price may receive a contribution near the 5% floor. A teacher whose borrowing capacity falls well short may receive one much closer to the ceiling.

Deposit and Loan Split

You put in at least 2%, and usually more, because the lender’s financial capacity assessment expects the most you can reasonably afford. Savings above the minimum therefore usually go into the purchase, not into a buffer account.

Stamp duty, legal fees, inspections and other buying costs come from your own funds, on top of the deposit.

Government Share of Gains and Losses

The government’s share rises and falls with your home’s value, and you pay no rent or interest on it. When you sell or buy back the share, the government receives its percentage of the value at that time. A 20% share on a home that grows from $750,000 to $1,000,000 would be worth $200,000, not the original $150,000.

If the home falls in value, the share falls too, so the government absorbs its portion of the loss.

Participating Lender Panel

Help to Buy applications go through a participating lender, not Housing Australia. The panel has three participating lenders as at September 2026, and Housing Australia has flagged plans to add more.

Refinancing to a lender outside the panel generally requires buying back the government’s share in full.

Help to Buy Eligibility Rules Beyond Income

Beyond the income cap, each of these rules must be met, and missing one ends eligibility:

Australian Citizenship

Help to Buy is limited to Australian citizens. Teachers who hold permanent residency or a visa cannot use it.

Minimum Age

Every applicant must be at least 18 years old.

Property Ownership

You must not currently own property in Australia or overseas, including land and interests held through a trust or company. Previous ownership does not rule you out. Single parents have limited exceptions, such as buying out a former partner’s share of a jointly owned home.

Owner Occupation

The home must be your principal place of residence, and investment purchases are excluded.

Property Price Cap

The purchase price must sit at or below the cap for the postcode, and for a new build the land and construction costs count together. Housing Australia’s published caps for capital cities and regional centres range from $600,000 in the Northern Territory to $1,300,000 in New South Wales, with lower caps outside those areas in most states.

Minimum 2% Deposit

At least 2% of the purchase price must come from your own genuine savings.

Financial Capacity Test

The lender checks your savings, assets, debts and borrowing capacity. Where you could buy a suitable home using your own resources alone, you may not be eligible, because the scheme is designed for buyers who fall short.

Arm’s Length Purchase

Homes bought from a parent, relative or friend are not eligible, because the sale must be at arm’s length.

These rules are a general guide only and may change. Housing Australia’s current guidelines and the participating lender’s assessment decide eligibility in each case.

How the $103,000 and $165,000 Caps Are Measured

The figure tested is not the salary on a teacher’s payslip, and when it is measured matters as much as the amount:

Taxable Income Tested Instead of Salary

Eligibility is based on taxable income, the figure the Australian Taxation Office (ATO) calculates after allowable deductions. A teacher on a $104,000 salary who claims eligible work-related deductions may report a taxable income under $103,000. A teacher on a $100,000 salary who also earns interest, dividends or side income may report a figure above it.

Income Year Used for the Test

The test uses the taxable income shown on your Notice of Assessment (NOA) for the most recent financial year. For an application made in late 2026, that is usually the NOA for 1 July 2025 to 30 June 2026. A pay rise received after 30 June 2026 will not appear until the following year’s assessment.

Final approval is when the caps apply, so an application that runs past 1 July may need the newer NOA. A figure above the cap at that point may end eligibility partway through a purchase.

Extra Income Counted in Full

Rural and remote incentives, responsibility allowances and back pay count towards taxable income in the year they are paid. A lump sum of back pay received in one financial year may push that year’s taxable income over the cap, even though ongoing salary sits below it. Lenders may treat back pay differently when assessing the loan, but for the income test it counts in full.

Income from tutoring, marking or a second job counts in the same way. A lender may assess tutoring income on its own terms, but for the Help to Buy cap it adds to the total. Child support and lump sum workers compensation payments are excluded under the scheme rules.

Salary Sacrifice Counted as Income

Salary-sacrificed income counts towards the Help to Buy income test, according to Housing Australia’s customer guide. Packaging part of a salary may therefore not bring a teacher under the cap, even where it lowers the tax payable.

Joint Income Added Together

For joint applicants, both taxable incomes are combined and tested against $165,000. Each partner’s full taxable income counts, including any interest, dividends and bonuses.

Cap Applied Without Exceptions

Housing Australia applies the Help to Buy income requirement without exceptions, however the income was earned. A taxable income of $103,001 for an individual applicant does not qualify.

Where Teacher Salaries Sit Against the Income Caps

Every state and territory runs its own teacher pay scale, and agreements are renegotiated periodically, so exact figures vary. New South Wales (NSW) offers a useful reference point because the Crown Employees (Teachers in Schools and Related Employees) Salaries and Conditions Award 2024 publishes each step, and a scheduled 3% increase applies from 9 October 2026. Once that increase takes effect, each classroom step sits against the single cap like this:

These figures are salaries before deductions and are a general guide only. Taxable income may sit above or below them, and pay rates may differ for Catholic, independent and interstate schools.

Graduate Teachers

In NSW, a graduate on Step 1 earns $90,177 until 9 October 2026 and $92,882 afterwards. Graduate rates in other states typically sit in a similar range, which places a single graduate under the $103,000 cap in most cases. Lenders assess the loan separately, and the way they view graduate teachers during probation depends on the contract type and its length.

Mid-Scale Teachers

A single mid-scale teacher often sits right at the $103,000 cap. In NSW, Step 3 pays $101,122 until 9 October 2026 and $104,156 afterwards, so the scheduled increase alone moves a Step 3 salary above the single cap. In other states, the crossover usually falls in the middle of the classroom scale.

At this point, deductions and NOA timing may decide eligibility. A taxable income just under $103,000 on the most recent NOA may still qualify a teacher whose current salary is higher.

Top-of-Scale Teachers

Help to Buy is unlikely to be open to a single teacher at or near the top of a classroom scale on that income alone. In NSW, Step 7 pays $129,536 until 9 October 2026 and $133,422 afterwards, and top classroom rates in other states typically sit well above $103,000.

Highly Accomplished or Lead Teacher accreditation and promotion positions sit further above the single cap.

Part-Time Teachers

Part-time salaries are paid pro rata, which can bring an experienced teacher back under the single cap. A teacher at the top NSW step working three days a week would earn about $80,000 from October 2026, well inside the $103,000 limit.

The trade-off is borrowing capacity. A lower income that meets the cap also reduces what a lender will lend, so the government’s contribution may do much of the work. Lenders assess fractional appointments in different ways, and a broker for part-time teachers may help match the application to a lender whose policy suits it.

Casual and Relief Teachers

Casual and relief teachers often sit under the single cap, because income depends on bookings and school holidays are usually unpaid. A year of steady relief work may produce a taxable income comfortably below $103,000, even at daily rates that look high on paper.

Help to Buy tests the NOA figure, but a lender will still want an established pattern of work before approving the loan, usually shown through payslips across several terms.

Two-Teacher Couples

Two full-time teachers will usually exceed the $165,000 joint cap from their first years of teaching. Two NSW graduates on Step 1 would earn a combined $185,764 from October 2026, well above the limit.

A two-teacher couple may still fit the joint cap where one partner works part time or is on unpaid leave during the assessed year. Leave may also affect the lender’s view of ongoing income.

Mixed-Income Couples

Couples where one partner earns well below a teaching salary often fit the joint cap most comfortably. A teacher earning $98,000 with a partner earning $62,000 has a combined taxable income of $160,000, just under the limit.

Citizenship and ownership rules still apply to both partners, so a partner who is a permanent resident or already owns property would rule out a joint Help to Buy application.

Single Parent Teachers

Single parents with at least one dependant are tested against the $165,000 cap, not the $103,000 single cap. This places almost every classroom teacher who is a single parent inside the limit, including teachers at the top of the scale.

Serviceability on one income is often the harder test, and a single parent mortgage broker may help show a lender how that income supports the loan.

What Happens When Your Teaching Pay Rises Above the Cap

Help to Buy keeps checking income after settlement, and scheduled pay rises make that check more likely to affect a teacher than many other buyers. The rules that apply after you move in are:

Step Progression Past the Cap

Annual step increments alone can push a teacher over the cap. Most scales move a teacher up a step each year until the top of the classroom scale, and agreed increases apply to every step on top of that. A teacher who qualifies at $98,000 may be earning well over $103,000 within two years.

Income Reviews Every 5 Years

Housing Australia reviews taxable income at least once every five years and may review sooner if circumstances change. At a review, participants need NOAs for the two most recent financial years. Housing Australia also checks each year that the home remains insured.

A review does not automatically lead to a repayment. It compares your income with the cap in force at that time, which is indexed each 1 July.

Repayment Trigger After 2 Years

Where taxable income sits above the cap for two financial years in a row, you may be required to repay part or all of the government’s share. The requirement depends on your financial capacity. The participating lender assesses what you could reasonably afford, and a repayment may be funded by increasing your home loan.

A single year over the cap, such as a year with a large back pay lump sum, does not meet the two-year test on its own.

Repayment Assessment by Share Size

Where the government holds more than 5% of the home, the lender assesses whether you can afford to repay at least 5% of the property’s current value. If the share is 5% or less, the lender assesses whether you can repay it in full. A required repayment is due within 90 days of the assessment.

Protection From Forced LMI

Housing Australia’s customer guide states it will not force a repayment that would require you to take out LMI. Where a repayment is not affordable, a further assessment usually follows at least 12 months later, and hardship provisions may apply depending on your circumstances.

Buy-Back Priced at Market Value

Every repayment is priced on the home’s value at the time, confirmed by a valuation that you pay for. A share that cost the government $110,000 at purchase may cost well over that to buy back after several years of growth.

Voluntary Buy-Back in Stages

Voluntary repayments are allowed, with a minimum of 5% of the home’s current value, rounded to the nearest $1,000. A teacher expecting steady pay rises may choose to buy back in stages before a review requires it.

These rules and timeframes are a general guide only, drawn from Housing Australia’s customer guide, and may change.

Help to Buy Versus the 5% Deposit Scheme for Teachers

The Australian Government 5% Deposit Scheme has carried that name since it was expanded on 1 October 2025. Instead of taking an equity share, the government guarantees up to 15% of the property’s value to the lender, so an eligible buyer can borrow up to 95% without LMI. The two schemes cannot be combined on the same purchase. The main differences for a teacher are:

These features are a general guide only and reflect the schemes’ published rules in September 2026. The 5% figure applies to the first home buyer stream.

Deposit and Loan Size

Help to Buy requires a minimum deposit of 2%, compared with 5% under the 5% Deposit Scheme. On a $700,000 home, that is at least $14,000 against $35,000 before buying costs.

Under the 5% Deposit Scheme, the loan is the price less your deposit. Under Help to Buy, the loan is usually set close to what the lender assesses you can service, and the government’s share fills the remaining gap. Help to Buy therefore tends to increase what you can buy more than it reduces the repayments on a given home.

Capital Growth Ownership

With the 5% Deposit Scheme, all growth in the home’s value belongs to you. With Help to Buy, the government’s percentage share grows alongside yours until you buy it back or sell.

That shared growth is the long-term cost of the lower deposit. In a strongly rising market, it may exceed the interest on an equivalent loan.

Price Caps by Location

The two schemes use the same price caps in most areas, with two exceptions. In Sydney and the NSW regional centres, Help to Buy is capped at $1,300,000, compared with $1,500,000 under the 5% Deposit Scheme. In Darwin, Help to Buy is capped at $600,000, while the 5% Deposit Scheme cap for Darwin rose to $750,000 on 1 July 2026.

A teacher looking at homes above $1,300,000 in Sydney may find only the 5% Deposit Scheme available at that price. For teachers placed in country schools, lower rest-of-state caps apply under both schemes. Lenders also look closely at zoning, land size and valuation when buying in a regional area.

Citizenship and Ownership History

Teachers who are permanent residents can use the 5% Deposit Scheme but not Help to Buy. The ownership test runs the other way. Help to Buy only asks that you own no property now, while the 5% Deposit Scheme requires that you are a first home buyer or have not owned property in Australia in the past 10 years.

A teacher who sold a home five years ago, perhaps after a separation, may be eligible for Help to Buy but not for the 5% Deposit Scheme.

Single Parent Pathways

Both schemes offer single parents a 2% deposit path, with different trade-offs. Under Help to Buy, that path comes with the $165,000 income test and a government equity share. The 5% Deposit Scheme’s single parent stream has no income test and no equity share, and it is open to single parents and single legal guardians with at least one dependent child.

That stream accepts individual applications only. Applicants may have owned property in the past 10 years but must not hold another property interest once the new home settles, according to the published scheme rules.

Lender Choice and Loan Terms

The 5% Deposit Scheme is offered by a wide panel of lenders, including major banks, smaller banks and customer-owned institutions. Help to Buy is limited to a small panel, which may narrow the choice of rate, features and credit policy.

For teachers on contracts, casual work or allowances, a wider panel usually gives more room to find a lender whose rules suit a teaching income.

Ongoing Obligations

The 5% Deposit Scheme requires you to move in within six months of settlement and to keep living in the home while the guarantee applies. Moving out early may lead the lender to require LMI.

Help to Buy carries more obligations, including income reviews, annual insurance checks, notification to Housing Australia before renovations above a set cost and approval for any extended absence from the home.

Availability of Places

The 5% Deposit Scheme has no annual limit on places. Housing Australia released 10,000 Help to Buy places for 2026–27 and reported that demand in the scheme’s first year was strongest in Victoria, NSW and Queensland. A place is reserved only once a participating lender secures conditional approval, and the reservation usually lasts up to 90 days, with one possible extension. Places may run short later in the financial year.

When Each Scheme May Suit a Teacher’s Situation

Borrowing capacity, the property price you need and how quickly your income is likely to rise usually decide the fit:

Situations Favouring Help to Buy

Help to Buy tends to suit teachers whose borrowing capacity is the main limit, not their deposit. Take a single teacher with a taxable income of $98,000 and $30,000 left for a deposit after buying costs, who can borrow $560,000.

Under the 5% Deposit Scheme, the most that teacher could pay is about $590,000, the loan plus the deposit. Under Help to Buy, the same teacher could buy a $700,000 existing unit, with the government contributing $110,000, or about 15.7%. Should the unit later be worth $800,000, the government’s share would be worth about $125,700. These figures are illustrative only and do not reflect any lender’s actual assessment.

Help to Buy may also suit teachers who have owned property in the past 10 years and single parents buying out a former partner’s share of the family home.

Situations Favouring the 5% Deposit Scheme

The 5% Deposit Scheme tends to suit teachers whose income sits above the Help to Buy caps, including most couples where both partners teach full time. It also suits permanent residents and buyers who want to keep all of the growth in the home.

Teachers on steady step progression may lean this way too, since they could face a required buy-back under Help to Buy once they pass the cap.

Situations Where Neither Fits Well

Some teachers fall outside both schemes. A teacher who owned a home in the past 10 years, earns above the Help to Buy cap and does not qualify for the single parent stream cannot use either, and a buyer looking above the price caps is excluded from both.

Other pathways may still exist, such as a family guarantee, where a parent’s property secures part of the loan. A guarantor home loan broker can explain how that arrangement works and the obligations it places on the guarantor.

Certainty About Your Pay Step and the Income Cap

The cap stops being a moving target once you line up the year on your latest NOA, the date of your next step increment and any scheduled pay rise. Seen together, they show whether Help to Buy is open to you now and how long it is likely to stay that way.

Where it is open, the question becomes whether a larger home with shared growth suits you better than a smaller one you own outright. A specialist mortgage broker for teachers may help set both options against your actual payslips, NOA and step dates.

If you are weighing up Help to Buy against the 5% Deposit Scheme on a teaching salary, the team at Education Home Loans can talk you through the options that suit your circumstances.

Frequently Asked Questions (FAQs)

1. Can I use Help to Buy with a first home owner grant or stamp duty concession?

Yes, in most cases. Housing Australia allows state and territory first home owner grants and stamp duty concessions to be used alongside Help to Buy, subject to each state’s own rules.

It cannot be combined with other government shared equity schemes, guarantees or government-backed loans.

2. Can I rent out my Help to Buy home if I take a rural or remote teaching post?

Generally no, unless Housing Australia approves an exemption. The home must remain your principal place of residence.

Housing Australia does allow approved temporary absences in some cases, including employment relocations after 12 months or more with the same employer. A teacher offered a country placement may be able to seek approval for a period away, but it is not automatic and needs to be arranged before moving.

3. Does a student loan debt affect my Help to Buy application?

A Higher Education Contribution Scheme–Higher Education Loan Program (HECS-HELP) debt is not counted as income in the Help to Buy income test. It can affect borrowing capacity, because lenders usually treat compulsory repayments as an ongoing commitment.

It also forms part of the financial capacity test, which looks at existing debts. For many teachers, the effect is a lower loan amount, which may mean a larger government contribution within the scheme limits.

4. Can I buy with a sibling or friend who isn’t a teacher?

Yes. Help to Buy allows up to two applicants, and they do not need to be partners. Both must be Australian citizens, own no property and have a combined taxable income of $165,000 or less.

5. What happens to the government’s share if my partner and I separate?

The government’s share stays the same. What changes is who remains on the arrangement. A participant can be removed where the lender confirms the remaining person can manage the mortgage alone, or where a court order requires it.

Where the remaining partner has a dependent child, the single parent rules may apply, including the higher $165,000 income cap.

6. Can I switch from Help to Buy to the 5% Deposit Scheme later?

In most cases, no. The 5% Deposit Scheme is for buyers who have not owned property in Australia in the past 10 years, and owning a Help to Buy home counts as ownership.

To leave Help to Buy, you would usually buy back the government’s share through savings or refinancing, or sell the home. We often help teachers plan buy-back timing so it lines up with their step increases and lender policy.

7. Do I need to tell anyone before renovating a Help to Buy home?

Yes, for larger projects. You need to notify Housing Australia before starting work that costs $21,000 or more in a 12-month period (a threshold indexed each year), or work that needs council approval.

Notifying allows a valuation before and after the work, so the value you add stays with you and the government’s percentage share falls. Work carried out without notice may leave the government’s share unchanged, even where the home’s value rises.

This article is general information only. It does not take into account your objectives, financial situation or needs. Scheme rules, income caps, price caps and salary rates can change, and you may wish to speak with a qualified professional before acting on any of it.