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As house prices rise, saving a deposit for a home becomes increasingly difficult. Many Australians may be able to service a home loan, but find themselves shut out of the housing market due to an inability to save a deposit.
However, depending on where you live, there could be options for low deposit home loans that help get into the property market faster than traditional options. Here’s a look at the loan programs on offer through state governments around Australia.
If you live in Western Australia and can’t save the deposit required by many traditional lenders, the WA government’s Keystart program might be able to help.
Keystart was established in 1989 to help West Australians who are unable to meet the deposit requirements of mainstream lenders. The scheme provides low deposit home loans to WA residents who fall below an income cap. The loans are available with a 2% deposit in metro areas and a 10% deposit in regional areas. First home buyers can also use the state’s first home owner grant scheme to help fund their deposit.
In spite of carrying a high loan-to-value ratio (LVR), Keystart loans differ from the low deposit home loans traditional lenders may provide because they do not require lenders mortgage insurance (LMI). The loans carry no ongoing fees, and have an interest rate that’s calculated based on the average of the four major banks’ standard variable rate.
The program also has home loans tailored to the needs of specific groups of Australians. In addition to the standard Keystart Home Loan, Keystart also offers an Aboriginal Home Loan, a Disability Home Loan, a Sole Parent Home Loan and home loans for Housing Authority properties and shared ownership arrangements.
Keystart offers a unique finance option called a shared equity home loan. This loan helps finance properties offered by the Housing Authority. The program enables loan recipients to finance part of the price of the property through a Keystart Home Loan, with the Housing Authority contributing a percentage and sharing ownership.
Keystart home loans are available to West Australian permanent residents who meet the following criteria:
Keystart’s website offers a full rundown of products, as well as questionnaires to determine eligibility.
South Australians can increase their borrowing power and reduce the amount they need to save for a deposit by utilising the SA Government’s HomeStart program.
HomeStart was launched in 1989 as a government organisation to help South Australians achieve home ownership sooner. The program enables borrowers to avoid paying LMI, and instead pay a much less expensive loan provision charge. It also offers loans at 97% LVR for certain groups of customers.
HomeStart also has a Repayment Safeguard in place to help borrowers manage repayments. The system sets an initial repayment rate based on what borrowers can afford rather than the loan’s interest rate. HomeStart repayments generally only change once a year, when they are adjusted for inflation.
The program offers a range of home loans for purchasing existing homes, vacant land, building a home or refinancing. Low deposit loans are available for graduates with a Certificate III or IV, diploma, bachelor degree or higher qualification. HomeStart loans can also be combined with other loans to enable home buyers to borrow up to 30% more without increasing their repayments.
To qualify for a HomeStart loan, you must:
Other eligibility criteria may apply for specific loans.
A full rundown of the loans available through HomeStart and the eligibility requirements for each product can be found on the Homestart Finance website.
If you live in Queensland and can afford home ownership, but are struggling to get a loan through a traditional lender, the Queensland Housing Finance Loan may be the answer.
The Queensland Housing Finance Loan is a low deposit home loan to help eligible Queenslanders build or buy a home. The loan has variable or fixed rate options, and requires only a 2% deposit with no LMI. It also carries no monthly account keeping fees.
The loan is structured to help borrowers meet their repayments. Rather than calculating repayments solely on loan size, term and interest rates, the Queensland Housing Finance Loan also takes into account borrowers’ income. Initial monthly repayments start at 30% of the borrower’s income, and will not exceed 35% of their income.
To qualify for the Queensland Housing Finance Loan, you must:
The Queensland Government’s website includes information on the Queensland Housing Finance Loan, including eligibility requirements and how to apply.
The Victorian government allows up to 400 first home buyers on low to average incomes to get home loans if they have saved a 5% deposit.
As a shared equity scheme, the Victorian government will provide part of the deposit (up to 25% of the property's value). The borrower needs a 5% deposit and will repay the remainder of the mortgage. When the property is sold HomesVic will receive a portion of the sale in proportion to the amount of deposit they initially provided.
You can learn more about the scheme here or read up on the concept of shared equity agreements.
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If someone that already resides in a commission home, paying rent. Can the residence buy the property from the department of housing, and apply for the groverment scheme loaned? To buy the property from the department of housing ?
Hi Alison,
Thanks for getting in touch! While we provide a page for government home loans and assistance, your inquiry is very broad and you might need to contact the Dept. of Housing in your state as every state has different rules.
Sorry, I can’t be of help at this time. Feel free to reach back out for further assistance.
Best,
Nikki
Is there a government home loan scheme for single mothers in Victoria
Hi Lyn,
Thanks for reaching out!
We have a page that shows home loans for single parents however these are for Centrelink recipients and you can view it from our home loan options for single parents page.
I suggest contacting Homestart Finance to check if they give loan options for single mothers. The three states above are the only places where government loan options are currently available. If you live elsewhere, such as in New South Wales or Victoria, you may want to check with your state government for any other options that may be introduced over time.
Hope this helps!
Best,
Nikki
Hi,
Are there loans for people in NSW buying in NSW?
Could you please advise.
Thanks
Hi Rosh,
Thanks for your question.
Currently, there are only three states (Queensland, WA and SA) where government loan options are available. If you live elsewhere, such as in New South Wales, you may want to check with your state government for any other options that may be introduced over time.
Cheers,
Anndy
I would like to please find out if I am eligible to apply for the Government’s interest free home loan scheme
I would appreciate your advise and information re above scheme
thanks
Marie
Hi Marie,
Thank you for your question and for contacting finder.com.au we are a financial comparison website and general information service we are not mortgage specialists so can only offer general advice.
Basically, your eligibility for the government loan programs will depend on the state you live in. So it would be best to check your state government whether there will be available loan options for you and if you’re eligible.
Cheers,
May