Rentvesting – buying an investment property while renting where you want to live – is increasingly popular with young Australians facing affordability challenges.
However a common question among first homebuyers is: if I rentvest, do I lose access to any Australian Government schemes that support first home buyers?
The Australian Government is making home ownership more achievable for more people with new and expanded programs that make it easier to get started.
There are three programs designed for:
- first time home buyers
- people re-entering the market, and
- aspiring homeowners across Australia.
The most recent change is the 5% Deposit Scheme.
As of 1 October 2025 – first home buyers can now:
- Purchase a home with a 5% deposit (or 2% for single parents or legal guardians)
- No income limits
- Do not have to pay Lenders’ Mortgage Insurance (LMI) – saving on upfront costs
- No caps on places available – unlimited places
- Wide choice of home types
- Government backing
- Property pricing caps increased – more opportunities and variety!
What this means?
You can purchase a $1M home with $50k deposit!
However – remember you will also have approximately $44,000 of stamp duty and other settlement costs.
Key requirements are that the first home buyer has not owned a home or land in Australia in the last 10 years. This means the property must be intended as the home you live in, not purely for investment purposes.
You can apply on your own or jointly with one other person (partner, friend or family member).
If you buy an investment property through rentvesting, then the property does not qualify for the first home buyer programs because it is not your principal place of residence. Therefore, you will not meet the eligible criteria.
You must also meet your participating lender’s credit policy and loan approval criteria. Even if you are eligible for the Scheme, you may not gain a home loan approval if you do not meet the lending requirements of your participating lender.
However, there are benefits in rentvesting that may be worth considering versus waiting multiple years to save a larger deposit and qualify for the FHG or other grants.
HOW RENTVESTING CAN BENEFIT FIRST HOME BUYERS
- Faster market entry
You can enter the property market sooner by buying an investment property in a more affordable location, often also with a deposit as low as 5%. - You most likely will however, be asked to pay LMI
- Accelerated equity growth
Without being tied to expensive suburbs, rentvestors can select properties in high growth areas with better rental yields (eg, Perth, Adelaide or regional Queensland). This helps build equity sooner than waiting to afford a dream home in an expensive
market. - Tax benefits
Investors can claim deductions on mortgage interest, maintenance, insurance, depreciation and other expenses. Rental income helps cover loan costs and improves cash flow that can free up personal income to save for an owner occupied home. - Lifestyle flexibility
Rentvesting lets you live where you want – close to work, family or entertainment – while building equity elsewhere. You avoid being locked into homeownership in a costly suburb that may not suit your lifestyle. - Strategic stepping stone
Many use rentvesting as a first step. Build equity in an investment property and then apply it as a deposit for a future home to live in. This can be more financially savvy than waiting years to save for a traditional home deposit.
Factors to consider with rentvesting
Eligibility for grants
While rentvesting can accelerate equity building, it means you miss out on some government incentives as mentioned that require the home to be owner occupied.
Costs of investment property ownership:
You remain responsible for mortgage repayments, maintenance, property management fees and other costs – even while renting. Investment loans may also carry higher interest rates.
Tax implications
Rental income must be declared and expenses can be claimed, however it’s important to obtain professional advice on tax impacts.
Property selection
Success depends on choosing properties in growth corridors with strong rental demand and capital growth potential.
The bottom line
Rentvesting is not for everyone, however it offers a flexible, long term property strategy that aligns lifestyle choices with building equity faster than traditional routes.
It suits first home buyers who want to accelerate market entry and equity growth without compromising where they live today.
With expanding government home guarantee schemes and deposit concessions on the horizon, first home buyers should explore all options and seek finance specialists to tailor the best pathway to home ownership.