The Victorian Homebuyer Fund: how shared equity works

Update: The Victorian Homebuyer Fund closed to new applicants on 10 September 2025, so the scheme described below is no longer open — this explains how it worked. If you are looking for a shared equity option now, the Commonwealth Help to Buy scheme is administered by Housing Australia through participating lenders. Check the Help to Buy page for current availability and eligibility.

It's part of our complete guide to buying your first home in Victoria.

Saving a sufficient deposit remains one of the biggest barriers to buying property in Victoria. The Victorian Homebuyer Fund (VHF) was a state government scheme designed to address that problem in a specific way: rather than giving you a grant or loan, the government co-purchased a share of the property with you.

This is called a shared equity arrangement, and it works differently from most other forms of government assistance. Understanding the mechanics, the trade-offs, and the requirements is important before you decide whether it's the right path for you.

What is shared equity?

In a shared equity arrangement, a third party (in this case the Victorian state government) contributes a portion of the purchase price in exchange for a corresponding share of ownership in the property. You live in the property as the owner-occupier, but the government holds a financial interest proportional to their contribution.

When you eventually sell the property, or when you buy out the government's share, the government receives their proportion of the value at that point. If the property has gone up in value, the government's share has also grown. If it has gone down (which is less common over longer periods in Victoria), their share has also reduced.

You contribute your own deposit, take out a mortgage for the remaining amount, and the government's contribution fills the gap between what you have and what you need.

How much does the government contribute?

Under the Victorian Homebuyer Fund, the government can contribute up to 25% of the purchase price (for most eligible buyers), or up to 35% for Aboriginal and Torres Strait Islander applicants.

The practical effect is significant. If you're buying a $600,000 property and the government contributes 25% ($150,000), you only need to borrow $450,000 (less your deposit). A smaller loan means smaller repayments and potentially a more manageable financial position.

The minimum deposit requirement

To access the VHF, you need a minimum 5% deposit from your own funds. This is lower than the 20% typically needed to avoid lenders mortgage insurance (LMI). Combined with the government's contribution, the scheme is designed to help buyers who have a small deposit get into the market without the full 20%.

The deposit must be genuine savings, not a gift (though specific rules apply and it's worth checking the current requirements with Homes Victoria).

Who is eligible?

Eligibility criteria apply and should be verified against the current scheme details at the time you're applying, as the rules can change. As of the scheme's established parameters:

Income limits: There are maximum income thresholds. Individual applicants must earn below a certain annual income, and joint applicants must earn below a higher combined threshold. These limits are intended to focus the scheme on buyers who genuinely need assistance.

Property price caps: The purchase price of the property must be below a specified cap, which varies by location (metropolitan Melbourne vs regional Victoria). The caps are set to reflect what might reasonably be considered an entry-level property in each area.

Owner-occupier only: You must intend to live in the property as your principal place of residence. The VHF is not available for investment purposes.

First home buyers and others: The scheme has been available to both first home buyers and some other buyers who don't currently own property. Check the current eligibility requirements directly with Homes Victoria or your lender, as this has been subject to change.

Property type: The scheme applies to residential property. Some property types (including certain off-the-plan apartments and properties with specific characteristics) may have restrictions.

How the government's interest works in practice

The government registers its financial interest in your property on the title. This is done through a caveat or a registered interest, which makes the arrangement visible to anyone searching the title.

Practically, this means:

• You can't sell the property without settling the government's share
• You can't refinance or take out additional equity without taking the government's interest into account
• The government is notified of any dealings with the property that affect their interest

This isn't obstructive in normal circumstances, but it's a real legal interest that needs to be factored into any future financial decisions relating to the property.

Buying out the government's share

You're not locked into the shared equity arrangement forever. You can buy out the government's share at any time, and the expectation is that most participants will do so as their financial position improves.

To buy out the government's share, the property is valued at the time of the buyout, and you pay the government their percentage of that value. If you've made mortgage repayments and the property has grown in value, the amount you need to pay for the buyout will be higher than their original contribution. That's the trade-off: the government shares in any capital growth.

You can also make partial buybacks over time, gradually reducing the government's share as your equity grows.

The capital gains trade-off

This is the central trade-off of any shared equity arrangement. In exchange for a lower deposit requirement and a smaller mortgage, you share any capital gains with the government.

If you buy a $600,000 property with a 25% government contribution, and the property grows to $800,000 before you sell, the government's 25% share is now worth $200,000 (not the original $150,000). You keep 75% of the gain.

For buyers who value getting into the market sooner over maximising their share of future gains, this trade-off makes sense. For buyers who are close to meeting the deposit requirements on their own, the trade-off may be less attractive.

How to apply

The VHF is accessed through participating lenders. You don't apply directly to the government; instead, you apply through an approved lender who manages the process. The lender assesses your eligibility and coordinates the application with Homes Victoria.

Because the scheme has a limited number of places available each year, it's worth applying early in the financial year if you're planning to access it.

What to do before applying

Before applying for the VHF:

• Check your income against the current eligibility thresholds on the Homes Victoria website
• Check the property price cap for the area where you're looking to buy
• Speak with a mortgage broker who is familiar with the scheme about whether it suits your situation
• Understand the buyback process and think about your timeline for increasing your equity

The Victorian Homebuyer Fund is a practical option for buyers who have a small deposit and can't yet reach the 20% threshold on their own. But it works best when you understand what you're agreeing to, particularly the shared equity structure and the implications of sharing capital growth with the government.

Sources

• State Revenue Office Victoria: Victorian Homebuyer Fund: the (now closed) scheme's terms: the government contribution of up to 25% (35% for Aboriginal and Torres Strait Islander applicants), the 5% minimum deposit, income and price-cap eligibility, and buyback rules.
• Housing Australia: Help to Buy: the current Commonwealth shared-equity scheme that succeeds the VHF as a shared-equity option.

Sources verified 25 July 2026. The Victorian Homebuyer Fund is closed to new applicants; shared-equity scheme terms and eligibility change over time; confirm current options with Housing Australia or your lender.