How to get a home loan with only 5% deposit

Rates and Fees verified correct on October 21st, 2016

A low deposit home loan allows you to borrow money for your upcoming property purchase with only a 5% deposit.

Low deposit home loans can be a good way to enter the property market for those who haven’t saved up enough for a normal deposit. With a low deposit loan, you are only required to have a 5% deposit, which is much lower than the regular 20% deposit required. These types of loans are very suitable for first-home buyers who want to enter the property market quickly. They’re also ideal for those who are on tight budgets and who struggle to make savings every month.

It’s important to note that these loans will often incur Lender’s Mortgage Insurance (LMI) which is an insurance premium that protects the lender, not you, if you default. As a borrower, you’ll need to consider whether the cost of this insurance, which runs into the thousands, is worth taking out so you can buy your property sooner.

Rates last updated October 21st, 2016
Loan purpose
Offset account
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Product nameInterest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier)
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.85% 4.23% $0 $395 p.a. 95% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier)
Enjoy a fixed home loan with discounts on rates and other NAB products.
3.75% 4.87% $0 $395 p.a. 95% Go to site More info
Heritage Bank Discount Variable Home Loan - Special Rate Offer (Owner Occupier)
A discounted interest rate home loan with no monthly fees.
3.79% 3.80% $600 $0 p.a. 95% Go to site More info
CUA Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier)
A fixed home loan with no ongoing fees and flexible repayments options.
3.96% 4.61% $600 $0 p.a. 95% Go to site More info
ME Bank Flexible Home Loan Fixed - 3 Year Fixed Rate (Owner Occupier)
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.69% 4.62% $0 $0 p.a. 95% Go to site More info
NAB Base Variable Rate Home Loan - Owner Occupier (P&I)
A competitive no frills home loan with no application fees for a limited time. 250,000 Velocity Frequent Flyer point offer, conditions apply.
4.10% 4.14% $0 $0 p.a. 95% Go to site More info
NAB Tailored Fixed Rate Home Loan - 3 Year Fixed (Owner Occupier)
Flexible fixed rate home loan which will allow you to take a break from repayments if you're ahead of scheduled repayments. 250,000 Velocity Frequent Flyer point offer, conditions apply.
3.99% 5.04% $600 $8 monthly ($96 p.a.) 95% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Years Fixed (Owner Occupier)
A fixed rate loan which allows extra repayments, and charges a low application fee.
3.69% 4.76% $0 $0 p.a. 95% Go to site More info
IMB Essential Home Loan - LVR > 80% (Owner Occupier)
Enjoy a 100% offset account and no monthly fees.
4.31% 4.33% $0 $0 p.a. 95% Go to site More info
CUA Fixed Rate Home Loan - 3 Year Fixed (Owner Occupier)
Pay no ongoing fees and lock in your rate for 3 years to organise your budget.
3.99% 4.56% $600 $0 p.a. 95% Go to site More info
NAB Tailored Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier)
A fixed rate home loan with the ability to lock the interest rate at the time of loan approval for up to 3 months. 250,000 Velocity Frequent Flyer point offer, conditions apply.
3.85% 5.12% $600 $8 monthly ($96 p.a.) 95% Go to site More info
ANZ Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier)
Lock in your rate for 2 years with an interest only option.
3.90% 5.06% $600 $10 monthly ($120 p.a.) 95% More info
Westpac Flexi First Option Home Loan - 3 Years Introductory Special Offer (New Owner Occupier, P&I)
A limited time deal for new owner occupiers. Advertised rate includes 1.03%p.a. discount for the first two years.
3.89% 4.19% $0 $0 p.a. 95% More info
St.George Fixed Rate Advantage Package -  2 Year Fixed Rate (Owner Occupier)
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,000 cash back available for refinancers, conditions apply.
3.75% 5.03% $0 $395 p.a. 95% More info
Commonwealth Bank Wealth Package Fixed Home Loan - 2 Year Fixed (Owner Occupier)
Fee free extra repayments available during the fixed term. $1,250 cash back offer for refinancers. Conditions apply.
3.84% 4.97% $0 $395 p.a. 95% More info
Beyond Bank Basic Variable Rate Loan - (Owner Occupier)
Enjoy 100% offset account with redarw facility and borrow up to 95% LVR with low monthly service fee.
4.40% 4.57% $445 $11 monthly ($132 p.a.) 95% More info
ING  DIRECT Orange Advantage Loan - $150,000+ (LVR > 90% Owner Occupier)
A fully featured home loan with an offset account and discounts available.
4.65% 4.86% $0 $199 p.a. 95% More info
Commonwealth Bank Standard Variable Home Loan - Owner Occupier
Standard variable home loan with a low doc option for self-employed borrowers.
5.22% 5.37% $600 $8 monthly ($96 p.a.) 80% More info
5.19% 5.25% $600 $0 p.a. 80% More info
5.40% 5.56% $990 $10 monthly ($120 p.a.) 95% More info
Citibank Fixed Rate Loan - 2 Year Fixed Rate (Owner Occupier)
A 2 year fixed home loan with a low interest rate.
4.19% 4.74% $399 $8 monthly ($96 p.a.) 90% More info
ANZ Breakfree Home Loan Package  - $250,000 up to $499,999 (LVR >80% Owner Occupier)
Pay no application fee with 100% offset account with redraw facility and borrow up to 95% LVR.
4.81% 4.91% $0 $395 p.a. 95% More info
3.99% 3.89% $0 $0 p.a. 95% More info
4.64% 4.69% $500 $0 p.a. 95% More info
St.George Basic Home Loan - Promotional Rate (Owner Occupier, P&I)
A no frills loan with a competitive rate and a maximum LVR of 95%.
3.98% 3.99% $0 $0 p.a. 95% More info
Westpac Rocket Repay Home Loan - Principal and Interest
The Westpac Rocket Repay Home Loan lets borrowers to own their home sooner with a 100% offset to save on interest.
5.29% 5.43% $600 $8 p.a. 95% More info

How does a 95% home loan work?

Low deposit home loans work by giving you a home loan with a minimal required deposit (typically 5% of the loan value). Typically, the lender can approve a loan amount of up to 95% of the property value. This percentage is referred to as the loan to value ratio (LVR). In order to get a home loan with a low deposit approved, some lenders may require you to have a guarantor. This is someone (usually your parents or other close family member) whose property is used as the security for the loan in case you default. Typically with these loans, the fees and charges tend to be higher because of your lack of deposit and security.

Things to consider


A 95% home loan sounds great for those who don’t have a deposit ready, but there are some things to keep in mind before applying for one. Aside from the raw property value itself, there are other payments you will need to make, such as stamp duty. This means that typically you will need to provide more than 5% of the initial property value for your deposit. It’s important to keep this in mind when forming your 5% deposit.

Also, remember that borrowing more money means your repayments will be much higher. This is because you’re borrowing a larger amount of money so your repayments are also higher. As mentioned, this type of home loan tends to attract higher fees as well to compensate for your deposit and risk.

You must also keep in mind the interest you will have to pay. The more money you borrow, the more interest you will have to pay on your loan amount. Interest can be quite a large cost to bear over the life of a loan.

Finally, you need to consider if you can afford this home loan. You will be required to make monthly repayments and if you can’t save up enough for a deposit, making repayments may be a struggle.

Features of low deposit home loans

95 per cent home loans are very similar compared to other home loans because of the deposit required. Other than the deposit, these home loans can typically include many of the following features:

  • Offset accounts. With some 95% home loans, your financial provider may give you the option to have an offset account. This is a transaction account that will be opened up and linked to your home loan and the money in your transaction account will be offset daily against your home loan. This will assist you in reducing your end balance.
  • Additional repayment flexibility. These kinds of home loans typically allow you to make additional repayments. This means you can make repayments above and beyond the minimum monthly repayments that you must make. This helps you to pay off your loan quicker and avoid interest.
  • 25-30 year loan term. Like a regular loan, a loan which requires only a 5% deposit will also come with a 25-30 year loan term.
  • Redraw facilities. These home loans typically also allow you to redraw. This means you can redraw additional repayments you’ve already made when you need the money. Your money won’t be locked up in repayments and you can still access your funds.

How to compare home loans

  • Fees. As mentioned, low deposit home loans typically have higher fees and charges. Look for a loan with minimal additional fees to avoid excessive costs. A key fee to look out for is the Lender’s Mortgage Insurance fee which you will be required to pay. This is a fee charged by the bank’s insurer for lending you money above the recommended 80% of the property value level.
  • Interest rate. Interest is the biggest payment you will have to make (aside from actually paying back your loan). When you do your comparisons, make sure you look out for a loan with a low interest rate. Also decide prior to comparing if you’re after a fixed or variable interest rate and compare loans accordingly.
  • Flexibility. Flexibility is extremely important when selecting home loans, especially for first-home buyers. Look out for a loan that offers you flexibility in repayments and the opportunity to redraw. For example, if a loan allows you to make flexible fortnightly repayments instead of only monthly repayments, this can be a good way to help you reduce your loan amount quicker.
  • Restrictions. The less restrictions your home loan has, the easier it will be for you. Look out for a home loan that gives you freedom in regards to payments, withdrawals, paying fees etc.

How to apply for home loans on

To apply for a home loan with, simply use the comparison table on this page and once you have chosen a loan, click ‘Go to Site’. To be eligible for 95 percent home loans, you typically need to meet the following requirements. You must:

  • Be at least 18 years of age
  • Be a permanent Australian resident
  • Have a good credit history
  • Have a good employment history
  • Have savings/assets. If you can demonstrate where your 5% deposit will come from, this will help your chances. Also, having some strong assets in your name will also ensure you have a better chance of being successful when applying for this type of loan.

Once you meet the above criteria, you are ready to proceed with your application. It’s important to ensure you have the following information and documents ready:

  • Proof of identification
  • Employment details
  • Financial details

To kickstart your homeownership dreams with a low deposit, a 95% home loan is a good option to consider. Compare the home loans available and apply for yours today using

Marc Terrano

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at Talk to him to find out more about home loans.

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