Home loans for dentists: buy with 5% down and no LMI

Can a dentist get an LMI waiver?

Yes. A registered dentist can get an LMI waiver at five lender groups. Westpac Group (Westpac, St.George, Bank of Melbourne and BankSA), ANZ and NAB waive lenders mortgage insurance up to 95% of the price, and CommBank and Bankwest up to 89.99%, each on its own conditions [1]. Money Brain checked every one against the lender's own policy.

LMI is insurance the lender takes out when you borrow more than 80% of the price, and you pay for it. LVR, the loan as a share of the property's value, is the number every waiver is written around. On a $950,000 loan at 95% LVR, LMI can run past $43,000 (part 12). The waiver means a dentist doesn't pay it.

Does your registration type matter?

Yes, your registration type matters at ANZ and NAB. The Dental Board of Australia registers dentists as general, specialist, limited, non-practising or student [5]. ANZ's waiver asks for general or specialist registration only, so a dentist on limited or non-practising registration doesn't meet it. NAB asks for AHPRA registration [1].

Keep your registration current through the application. A lapse, even a short one between renewals, can stop a waiver loan at the point the lender checks it.

Can a new graduate dentist get a home loan?

Yes, a new graduate dentist can get a home loan with the waiver, and the income bar is lower than many expect. Westpac Group and ANZ set no minimum income for dentists, so a first-year salary isn't held against the waiver itself [1]. Every lender still checks that your income carries the repayments.

What a new graduate needs most is time in the job. At Westpac, a loan without mortgage insurance needs you to have started and been paid at least once. A mortgage-insured loan needs 3 months in the job, or less than that with 12 months in the same occupation and no gap of more than 2 months between jobs [6]. Westpac's policy doesn't say whether a waiver loan counts as "without mortgage insurance" for this rule, so it's a question we put to the lender for you.

If you start as a contractor rather than an employee, the self-employed rules in parts 7 and 8 apply instead, and they want a longer history.

Associate, contractor or practice owner: how lenders see you

An associate, a contractor and a practice owner are three different applications to a lender, even on the same income. The waiver depends on your registration. What you can borrow depends on how you're paid, and dentistry has three ways.

What this means for you: two dentists in the same practice, on the same billings, can get different answers. The one on payroll shows payslips. The one on a service agreement shows tax returns, and if the agreement is new, there may not be enough of them yet.

Contractor dentists on a service agreement

A contractor dentist on a service agreement is paid a share of billings through their own ABN, and lenders usually read that as self-employed income. So they ask for tax returns and notices of assessment rather than payslips, usually two years of them [7][8]. The waiver itself still turns on your registration, not on how you're paid.

An associate who has just moved from payroll to a service agreement can earn the same and borrow less for a while, because the lender now wants self-employed history. If a move like that is coming, it's worth knowing which order to do things in.

The full rules for contractors and business owners are on self-employed home loans.

Can a self-employed dentist borrow on one year of tax returns?

Sometimes, but almost always at 80% of the value or less, which is a 20% deposit. NAB considers a single year's financial statements at 80% or less [9]. One lender's one-year pathway for 11 listed professions names medical professionals and pharmacists, but not dentists [7].

What this means for you: the one-year routes mostly sit at a 20% deposit, where there is no LMI to waive. A self-employed dentist with one year of figures is usually choosing between a bigger deposit now and the waiver once a second year is lodged.

Lenders also set how old your figures can be. MyState doesn't accept tax returns or financials more than 18 months old when you apply, and doesn't take draft returns [10]. Late in a financial year, a dentist whose newest return isn't lodged can fall outside a rule like that without noticing.

How add-backs change a practice owner's number

Add-backs can move a practice owner's assessed income by tens of thousands of dollars. An illustration, not a client file, using the rules in part 9. A practice shows a net profit of $300,000. It claimed $90,000 in depreciation on equipment, a one-off legal bill of $10,000, and $15,000 of super above the compulsory amount.

Depreciation is capped at 20% of $300,000, so $60,000 is added back, not $90,000. The legal bill and the extra super are added back in full. The income a lender would start from is $385,000, not the $300,000 on the return. Each lender's own list differs, so the real figure depends on which lender you use.

Buying into a practice while buying a home

Buying into a practice and buying a home is one decision, not two, and it's the real situation for many dentists. Any loan you're personally on for the practice, its fit-out or its equipment counts against what you can borrow for the home, and so does a guarantee you sign for the practice's company.

The order matters. Buy the home first and the practice lender sees a larger personal debt. Buy into the practice first and the home lender may want to see a full year of your new income before it counts it. Work out both loans on one page before you sign either contract.

Practice debt also counts toward your debt-to-income ratio, which is where ANZ's waiver steps down from 95% to 90% (part 16).

What the waiver is worth, in dollars

The waiver is worth the LMI you'd otherwise pay, and at dentist loan sizes that is a large sum. Here's what LMI would cost, from one insurer's published rate card [4]. At Westpac Group, ANZ or NAB a dentist borrowing 95% doesn't pay the 95% column. At CommBank or Bankwest, where the waiver stops at 89.99%, the saving is close to the 90% column.

These are illustrations from one rate card, not quotes. Your premium depends on the insurer, the loan and the lender.

What this means for you: on a $1,000,000 home, going from 90% to 95% adds about $19,400 of LMI without a waiver, for $50,000 more of borrowing. With a waiver at Westpac Group, ANZ or NAB, that step costs nothing in LMI, which is why the 5% deposit is worth taking seriously.

5% or 10% deposit: which lenders fit?

With a 5% deposit, three lender groups waive LMI for a dentist. With a deposit of just over 10%, five do. That matters because the lender with the waiver isn't always the lender with the best fit for your income or your plans.

A 10% deposit keeps you inside ANZ's waiver even if your debts reach 6 times your income. CommBank and Bankwest waive up to 89.99%, so they need a deposit of just over 10%.

Do dentists get a cheaper interest rate?

None of the waiver policies Money Brain read sets a special interest rate for dentists, so this page doesn't print one. The waiver is about LMI, not price. CommBank's waiver comes inside its medical package, which has its own cost to weigh (part 14) [1].

Rates change far more often than waiver policies. The rate worth comparing is the one each lender offers on your loan, at your LVR, on the day you apply.

How much can a dentist borrow?

How much a dentist can borrow comes down to three things: what a lender counts of your income, your debts, and your living costs. Banks then check you could still make the repayments if rates were at least 3 percentage points higher, the buffer APRA expects [13].

Your debt-to-income ratio, or DTI, is your total debts as a multiple of your gross income. It matters twice for dentists. APRA limits each bank's new home lending to people whose debts are 6 or more times their income to 20% of that lending [13]. And two waivers draw their line at the same number: ANZ's steps down from 95% to 90% at 6 times, and CommBank's 94.99% investment waiver needs debts no more than 6 times income [1].

What this means for you: a dentist earning $250,000 reaches 6 times at $1,500,000 of debt, and practice loans you're personally on count toward it. See how much can I borrow.

Bigger loans: where each lender's limit sits

At dentist price points, the size limits in a waiver can matter as much as the LVR. Westpac Group, NAB and Bankwest each set one in the policies we read.

A loan above Bankwest's $2 million step needs a deposit of just over 15% there to stay inside the waiver. Above the limits, the same lender may still lend, with LMI or a larger deposit.

Can you go interest-only with the waiver?

At some lenders. Westpac Group allows interest-only that converts to principal and interest at the same 95% [1]. ANZ allows interest-only on an investment loan to 95% while your debts are under 6 times your income; its 95% for a home is principal and interest [1]. CommBank and Bankwest waive LMI on principal-and-interest loans only [1].

Interest-only lowers repayments for a while, and suits some investment plans. It also means the loan doesn't fall while you pay it. See interest only or principal and interest.

Dentist first home buyer? The waiver or the 5% Deposit Scheme

A dentist buying a first home has two ways to buy with 5% and no LMI, and they suit different buyers. The waiver is a lender's own policy. The 5% Deposit Scheme is the government guaranteeing part of the loan in place of LMI [11].

What this means for you: a dentist buying above the area's price cap, or planning to rent the home out later, will usually find the waiver the better fit. A hygienist or therapist the waivers don't name can still use the scheme.

Help to Buy, where the government takes a share of the home's value, is open only on incomes up to $103,000 alone or $165,000 together, and can't be used with the 5% Deposit Scheme [11][12]. See the 5% Deposit Scheme and Help to Buy.

Buying an investment property as a dentist

Some dentist waivers carry over to investment loans. ANZ goes to 95% on an investment, interest-only included, while your debts are under 6 times your income. NAB goes to 90% on an investment, against 95% for a home. CommBank reaches 94.99% for an investment purchase under its medical package, with debts no more than 6 times income. Bankwest applies the same limits to an investment as to a home [1].

Bank First's waiver is for first home buyers only [3]. Once you own one property, the order you buy the next ones in decides whether you can keep going. See using equity to buy an investment.

Part-time, or on parental leave

An employed dentist can buy while working part-time or on parental leave. At Westpac, permanent part-time pay counts as base pay, using the lowest base rate and hours on your payslips unless there's a reason they vary [6].

On leave, Westpac can use your return-to-work pay, base pay only, with a letter from your employer giving your return date, your hours and your pay. Every child counts as a dependant, including one not yet born. If your first repayment falls before you return, you'll need savings that cover the gap, on top of the money for the purchase [6].

These are rules for employees. A contractor or practice owner on leave is read from their returns, so the timing of a leave year matters.

What does a broker cost you?

How a broker is paid, and the rule Money Brain holds against it, is set out in full on its own page: what a mortgage broker costs.

Your first move

You've read the rules. Now there's one question left: which lender, for the way you're paid, at the price you want? That depends on your registration, your structure, your practice debts and your deposit, and it's what Money Brain works out before anything goes to a lender.

When you're ready, the closing section below is the simplest way to start.