The Australian Government 5% Deposit Scheme: What It Means for First Home Buyers (and When Medical Professionals Should Think Twice)

For many Australians, saving a 20% deposit is the biggest roadblock to buying their first home. The Australian Government’s 5% Deposit Scheme, also known as the First Home Guarantee, is designed to help eligible buyers enter the property market sooner with a much smaller deposit while avoiding Lenders Mortgage Insurance (LMI).

At Private Finance Brokers, we work with a large number of doctors, nurses and healthcare professionals, along with family and friends referred by them. While most medical clients are generally better off using their industry-specific benefits, this government scheme can be an excellent solution for non-medical buyers who don’t qualify for those perks.

Here’s what you need to know.

What Is the 5% Deposit Scheme?

The First Home Guarantee allows eligible buyers to purchase a property with as little as a 5% deposit, without paying Lenders Mortgage Insurance. The government acts as a guarantor for the remaining portion of the deposit. This is not a cash payment and does not reduce the loan amount.

The scheme is available to eligible first home buyers, including singles, couples and single parents.

The biggest limitation is that strict property price caps apply depending on location.

Property Price Caps by Location

Under the Australian Government 5% Deposit Scheme, maximum property values apply based on where you buy. As at 1 October 2025, the caps for capital cities and designated regional centres are:

Major capital cities and regional centres

• Sydney and NSW regional centres (Illawarra, Newcastle, Lake Macquarie): up to $1,500,000

• Melbourne and Geelong: up to $950,000

• Brisbane, Gold Coast and Sunshine Coast: up to $1,000,000

• Perth: up to $850,000

• Adelaide: up to $900,000

• Hobart: up to $700,000

• Canberra (ACT): up to $1,000,000

• Darwin (Northern Territory): up to $600,000

Regional and other areas

• New South Wales (other areas): up to $800,000

• Victoria (other areas): up to $650,000

• Queensland (other areas): up to $700,000

• Western Australia (other areas): up to $600,000

• South Australia (other areas): up to $500,000

• Tasmania (other areas): up to $550,000

• Jervis Bay Territory and Norfolk Island: up to $550,000

• Christmas Island and Cocos (Keeling) Islands: up to $400,000

These limits are reviewed regularly. We always confirm the exact current limit for your specific postcode before recommending any strategy or lender.

Why Most Medical Professionals Are Better Off Using Industry Benefits

Around 80 percent of our clients work in the medical industry. One of the biggest advantages they receive is access to lending of up to 95 percent without paying LMI, with no property price caps and far greater lender flexibility.

This is a critical advantage in higher-priced markets such as Sydney, Melbourne, Brisbane and many coastal lifestyle areas where quality homes often exceed government limits.

In almost every case, doctors and nurses are financially better off using medical industry lending benefits instead of the Government 5% Deposit Scheme.

Who the Government 5% Scheme Is Best Suited To

The scheme is particularly well suited for:

• Family and friends referred by medical clients

• Buyers outside the medical industry

• First home buyers with strong income but limited deposit

• Buyers purchasing under their local price cap

Avoiding LMI can save buyers tens of thousands of dollars depending on the property price. That money can be far better used as emergency savings, for home improvements, furniture and relocation costs, or as a future investment buffer.

Why Using a Broker Is Essential With This Scheme

Not all banks treat this scheme the same way. Some lenders are considerably stricter than others, particularly when it comes to expenditure analysis and savings behaviour.

1. Transaction and Spending Scrutiny

Many lenders now deeply analyse your bank statements, reviewing daily living expenses, subscriptions, discretionary spending and overall lifestyle habits.

Choosing the wrong bank can result in delayed approvals, reduced borrowing power, or outright declines. An experienced broker knows which lenders are practical and which are overly restrictive.

2. Forced Use of Excess Savings

Some lenders will require you to use any surplus savings if you're purchasing below your borrowing limit. This can leave buyers with no financial buffer at settlement.

At Private Finance Brokers, we structure applications to ensure emergency savings are preserved so our clients remain financially protected after settlement.

Managing Expectations: Current Approval Timeframes Have Changed

Due to the huge popularity of this scheme, bank processing times have significantly slowed.

What once took two to three days for pre-approval now commonly takes two to three weeks.

This delay has caught many buyers off guard and has caused issues when contracts are exchanged too quickly without proper strategy.

How Private Finance Brokers Protect You During Delays

We don’t just submit applications. We actively manage your purchase strategy from start to finish.

We prepare your file thoroughly before submission, place your application in the queue early, and recommend 21-day finance clauses to protect your contract position.

If you secure a property while pre-approval is still pending, we withdraw the pre-approval, convert the application to a formal approval, escalate the file, and secure an outcome within five to ten business days wherever possible.

This ensures contracts are protected and deposits are not placed at unnecessary risk.

The Bottom Line

Medical professionals are almost always financially better off using industry-specific lending with no price caps and no LMI.

Non-medical buyers can benefit greatly from the Government 5% Deposit Scheme.

Price caps vary by location and exceeding them disqualifies buyers from the scheme immediately.

Not all banks assess these loans the same way, and choosing the wrong lender can cost both time and money.

Approval delays are real, but with the right broking strategy they can be managed safely.

Speak With the Experts Before You Apply

At Private Finance Brokers, we specialise in medical professional loans, first home buyer strategy, government-backed lending, complex approvals and bank policy interpretation.

Whether you’re a doctor, nurse, or one of their referrals, we focus on finding the smartest strategy for your situation, not simply the easiest bank to apply with.

Ready to Find Out What You’re Eligible For?

Book your no-cost, no-obligation strategy session today.

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