Dentists are great at delayed gratification (hello, five years of study), however if you are currently making the juggle of renting and trying to save a home deposit it is easy to feel like home ownership is an impossible dream. There is a potential game changer that came in from 1 October 2025. If you’ve scraped together 5%, the government will guarantee up to 15% of the property value so you can skip Lenders Mortgage Insurance (LMI) and get the keys sooner. It’s a boost to the current scheme as there’ll be unlimited places, no income caps, and higher property price caps.
Historically the 5% deposit scheme capped incomes at $125,000 per individual and $200,000 per couple which meant that very few dentists would qualify. Now that the income caps are being scrapped, it could make a big difference for first time buyers.
How it works
You save 5%; and your lender lends the rest. Housing Australia provides a guarantee to your lender (not a cash gift to you) of up to 15% of the property value, so your lender treats you like you had a 20% deposit and therefore doesn’t levy LMI. It’s for owner-occupiers, on P&I loans up to 30 years, and you must buy under the price cap for your location. You apply via a participating lender who reserves your guarantee place, then you have a time limit to find and exchange contracts. You can see if your bank is a part of the scheme here (interestingly ANZ didn’t make the cut): https://www.housingaustralia.gov.au/home-guarantee-scheme-participating-lenders
Who’s in (and where people trip up)
At the time of writing, to qualify you must be:
- An Australian citizen or have PR
- Over 18
- A first-home buyer (or haven’t owned in 10 years)
- Have a minimum 5% genuine savings
- Buying a property under the price cap
- Buying the property to live in it.
Two applicants don’t have to be a couple, friends or family can team up, which is handy for siblings or a parent/child duo.
From 1 Oct 2025, the expansion removes income caps and increases price caps; check the live page to confirm what’s in force on your contract date: https://www.housingaustralia.gov.au/support-buy-home/property-price-caps
“Can I rent it out later?”
Short answer: not while the guarantee applies. The scheme is for homes you live in. If you move out or rent it, you may breach ongoing eligibility and the guarantee can be withdrawn. Your lender can require LMI (or other costs) from that point. Moral: tell your lender early if life changes (interstate opportunity / new partner / new baby) so you can plan a compliant refinance path. Also watch state-based stamp duty or grant residency rules – many require you to move in within 12 months and live there for a minimum period (e.g., NSW is 12 months continuous).
Why first-home dentists should care
LMI on big-city loans can be tens of thousands depending on price and deposit. Dodging that keeps cash free for any works you want to do to the premises (or, sensibly, an emergency fund). Depending on how much you have saved, the scheme may enable you to fund the deposit and pay off your HELP debt – securing you with more borrowing capacity.
With caps rising, more stock qualifies. It still pays to run the numbers though as low deposit loans magnify interest rate moves. The downside is that easier access to the market can nudge up prices at the margin, especially if supply lags. Make sure you really know your numbers, the 5% deposit scheme is a great way to help you get on the property ladder but not a hall pass to over borrow.
Interactions with the Bank of Mum and Dad
If you were looking to help family members into the property market, then then the 5% deposit scheme could be an option. There are two ways that you could potentially assist. One is to gift all or part of the 5% deposit amount to help them get on the property ladder sooner. It is worth checking with your lender first as some banks effectively recognise gifts as eligible savings but others require you to build up savings over time.
If some or all of the 5% has been saved, then other potential options would be to gift the transfer duty amount (if the purchase price is over the threshold) or to gift repayment of any HECS/HELP loans as having these repaid allows for much larger servicing calculations.
If you do choose one of these options, make sure to document the agreement carefully and make sure that you factor this gift into your overall estate planning.
What to be aware of
The downside of the scheme is that many vendors will be factoring in a price uplift with more potential buyers in the market. This means you still need to have tight control on your serviceability, especially if you are leveraged at 95%. Interest rate changes make a big difference and if you haven’t had large surpluses historically to save, then make sure you factor this into what you can borrow.
Where to start
- Meet with your bank/broker early to determine whether you qualify for the scheme (and can register your place) and how much you can borrow.
- Run your own cashflows to ensure that you can make the monthly requirements based on your pre-approval and still have sufficient cash to pay your other obligations (including tax and PAYG instalments).
- Ensure your documentation is in order. If you are operating under an ABN the banks will require recent tax returns, BAS and evidence that your tax payments are up to date.
- Check the relevant transfer duty amounts and whether you qualify for any concessions on these. Transfer duty can be a substantial expense and you’ll need to factor this into your available cash.
Before you sign
The 5% scheme is a terrific assistant to get you into the property market earlier. It won’t fix cashflow or future-proof a too-big loan. However, if used wisely (with a clean spending plan and an adult conversation about buffers), it’s a powerful way to turn “someday” into settlement day.
Author
Elissa Lippiatt, Director
Ecovis Clark Jacobs
Disclaimer
This article is for general information purposes only and is not financial advice. Readers should seek advice from a qualified professional to ensure any strategy is appropriate to their circumstances. All data is current at the time of publication, but subject to change.