These low deposit home loans offer low costs, coupled with a host of features, giving the best overall value.
7+
Great
These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.
5+
Standard
Usually the home loans would offer above average rates. They may still include some competitive features.
0+
Basic
Higher costs and/or fewer features.
How low deposit home loans work
A 20% deposit is the standard when buying property in Australia. But that's a tall order, especially when house prices are so high.
Low deposit home loans are those that only require 10% deposits or even 5% deposits. This means saving less, borrowing more, and buying a home sooner.
But there is a catch. When your deposit falls below 20%, lenders charge you something called a lenders mortgage insurance (LMI) premium. This can add thousands of dollars to your property buying costs.
Is a low deposit home loan the right option for you?
Given how hard it is to save a 20% deposit, many buyers still go for low deposit loans even with the LMI cost added on.
You can enter the market faster when you buy with a low deposit
The lower your deposit, the quicker you can save it. If you're buying a property for $500,000, a 20% deposit is $100,000. A 10% deposit is $50,000 and a 5% deposit is only $25,000.
It's far more realistic and achievable to save up $25,000 than $100,000, so low deposit loans enable you to get on the property ladder sooner.
You can build equity faster and not worry about runaway prices
When property prices are rising fast, the amount required for a deposit grows in tandem. Jumping in early with a small deposit means you don't have to worry. Once you've got your foot on the property ladder, rising prices are good: You now own the asset.
And instead of building up a deposit you're now paying off a debt and building equity.
But low deposit home loans come with more costs
A low deposit home loan means you may have to pay an LMI premium. This cost can range from several thousand dollars into the tens of thousands, depending on your deposit size and the cost of the property.
You may also pay more interest with a low deposit loan, simply because you're borrowing more money.
Here's a simple example of 2 home loans with identical interest rates based on a $800,000 property and a 30-year loan term. The only difference is the deposit size. You can see how this changes both the loan amount (and therefore the repayments) and the LMI premium.
Details
Low deposit
Full deposit
Property value
$800,000
$800,000
Deposit size
$40,000 (5%)
$160,000 (20%)
Loan amount
$760,000
$640,000
LMI costs
$34,982.80
$0
Interest rate (30-year loan)
6.00%
6.00%
Monthly repayments
$4,557
$3,838
Difference in monthly repayments
$719 more
$719 less
In this hypothetical example, the low deposit borrower pays $34,982.80 in LMI premiums upfront, and an extra $719 a month in repayments. This is because they have to borrow more money.
Over the life of the loan this adds up to $139,006 in extra interest. Adding the LMI in, the low deposit home loan works out to be $173,988.80 more expensive.
But that doesn't mean the low deposit option is a bad idea
Choosing a low deposit home loan can still be worth it. You just need to have a clear idea of the costs involved. Plus, you can always minimise the interest charges over time by repaying more of the loan, or saving money in an offset account.
You also need to consider how long it would take you to save a 20% deposit. It could take you years.
No deposit home loans
Most borrowers cannot borrow 100% of their property's value now. Lenders at most will lend you 95% and expect you to save at least a 5% deposit. But there is an exception: a home loan guarantor.
If your parents (or another family member potentially) own a property, they could guarantee a portion of your deposit for you. This means the guarantor is offering their property as security over your home loan. If you can't repay the debt, the lender can sell your home to recover the debt. And they could come after your guarantor's property too.
It's a slightly complicated and risky approach for the borrower (and their parents). But it's a lower risk prospect for the lender and the only true no deposit home loan option left in Australia.
Get creative with your deposit
Another way to get a home loan with a very low deposit is to get creative with how you pull your deposit together.
Parental gift. If your parents are even more generous and financially comfortable, they could gift you the deposit or part of it.
Use a first home owners grant. Many first home buyers can qualify for a grant of $10,000 (check our first home owners grant guide to see if you're eligible). This grant can form part of your deposit.
Boost your savings. This is a hard one (obviously!). But basic saving and budgeting tips are always helpful. You could cut back on your spending, find extra sources of income or try to get more from your existing cash with a high interest savings account or term deposit to earn more interest.
It can be harder to get approved for a home loan with a lower deposit. As a low deposit borrower, you need to ensure that your application paperwork is in order and your everyday spending under control.
Here are some tips to help you get approved:
Check your credit score. Strengthen your chances of success by making sure there are no issues with your credit history.
Check where and what you're buying. Some lenders impose higher lending requirements on apartment purchases in certain postcodes. They might require a 20% deposit or even 30% depending on what you're looking for, and where you want to buy.
Examine your debts and spending. Strengthen your application by paying down debts such as credit cards – and as you repay them, lower the limits to avoid over-spending again. Try to limit your spending as much as you feasibly can before applying.
Talk to a mortgage broker. Mortgage brokers don't just connect you to a lender, they help you find one that is likely to accept your application based on their eligibility requirements. Professional help might be just the thing you need.
Advice from an expert
3 tips for low deposit borrowers from Marissa Schulze, mortgage broker, property developer and director of Rise High Financial Solutions.
Tighten up your spending
The most important thing for applicants of low deposit home loans is to review their living expenses and if they can, to tighten up their spending. Applicants should rein in their spending for the 6 months prior to applying for the loan.
Genuine savings and rental history
Some lenders like to see "genuine savings". That means the applicant has been consistently saving each month or fortnight to build up their savings bucket. If that's not the case and they've been given the deposit as a gift from parents then lenders often want to see that sum of money sitting in the applicant's account for 3 to 6 months before applying.
If the applicant is renting they can actually prove they have good rental history and use that to boost their application in place of genuine savings.
Don't make any big changes between pre-approval and settlement
A common mistake is that buyers get pre-approval and then quit their job or apply for a car loan or increase their credit card limit. People don't realise how that impacts their application. You need to keep your financial and employment situations stable from the time you apply until you settle the loan and move in. Then you can do what you like.
Government support makes low deposit borrowing cheaper
There are now several federal government schemes that allow eligible borrowers to buy homes with 5% deposits. These schemes let you borrow 95% and avoid paying LMI. This means you can avoid quite a big cost associated with a low deposit mortgage.
These are the schemes:
First Home Guarantee. If you're a first home buyer you can use this scheme to buy or build a home with a 5% deposit and avoid LMI.
Family Home Guarantee. Under the Family Home Guarantee, eligible single parents can buy homes with 2% deposits and avoid LMI costs while borrowing the remaining 98%.
Regional First Home Buyer Guarantee. The Regional First Home Buyer Guarantee lets you buy or build a new home in regional Australia with a 5% deposit while avoiding LMI costs.
What's the First Home Guarantee?
The First Home Guarantee is where the federal government acts as a guarantor on your home loan. It secures up to 15% of the property price, meaning you only have to pay a 5% deposit. You won't need to pay lender's mortgage insurance (LMI) either. There are no income limits for borrowers and no limit on the number of borrowers who can take part. However there are other eligibility criteria and property price caps for each state/territory. Check the full guide for all the info.
Find a low deposit home loan in your state or territory
Here's some more information about finding lenders, brokers and government support options for low deposit borrowers in your state or territory.
New South Wales
There are many lenders in New South Wales offering loans with low deposit options, including lenders based in other states.
There are specific regional-based lenders too, such as:
Residents of Victoria's capital can get in touch with a Melbourne mortgage broker who can help you find a low deposit loan.
Queensland
If you're looking to buy in Queensland then you can look at loans from most of the major lenders on the market but also Queensland-based lenders such as:
Another low deposit borrowing option in Queensland is a Queensland Housing Finance Loan. This is a state government scheme for eligible first home buyers and allows you to buy a property with just a 2% deposit.
To qualify, you need to be a Queensland resident with a household income under $141,000 a year with no serious debts and good savings history and credit history.
If you are buying or building a new house or unit valued at under $750,000 you may also qualify for the Queensland First Home Owners' Grant, worth $15,000. While the grant could be used as a deposit the Queensland government advises that "it's best not to count on using the grant as a deposit" because the timing of the payment depends on factors such as your application and the type of property you are building.
South Australia
Here are some lenders based in South Australia who may be able to help you:
Borrowers in Western Australia have access to a unique low deposit home loan called Keystart. This is a low deposit home loan that eligible borrowers can get with just a 2% deposit while avoiding lenders mortgage insurance.
Tasmania
Here are some Tasmanian lenders who have low deposit home loans:
The Northern Territory government and People's Choice Credit Union offer a scheme called HomeBuild Access. This is a low deposit home loan for new homes and the construction of new homes.
To qualify for this loan your income needs to be under a certain limit and there are limits on the value of the property you are buying or building.
The Northern Territory also offers a $10,000 first home owner grant for eligible buyers or builders of new homes.
More questions about borrowing with a small deposit
For the ordinary borrower, 5% is the lowest your home loan deposit can be. And if you have a guarantor you could buy a house with no deposit.
But there is another rare case where you could buy a home with a 2% deposit. If you're a single parent borrower who qualifies for the Family Home Guarantee scheme, you could buy a home with a 2% deposit and support from the federal government.
Not directly. However, first home buyers can use extra super contributions to minimise tax and put it towards a deposit under the first home super saver scheme.
Yes. While not every lender offers home loans for borrowers with 5% deposits, many do. Just look for a home loan with a maximum insured LVR of 95%.
This is a mortgage term that means you can get it with a 5% deposit. But you'll need to pay LMI.
Yes. If you're eligible for a first home owners grant, you can use that to form part of your deposit. Just make sure you are in fact eligible for a grant in your state or territory.
What is Finder Score?
The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.
Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University.
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I own my unit (will rent the unit at $600 a week) and a 3-bed house rented for $360 (all fully paid). I have part pension. I would like to buy a unit near my children. Can I get a loan on my properties, rent, and pension to more than enough to pay for a mortgage?
Which lender should I approach?
Thank you.
Finder
JoshuaMarch 20, 2019Finder
Hi Maria,
Thanks for getting in touch with Finder. I hope all is well with you. 😃
Since you own a few properties, you can opt for a reverse mortgage. This type of loan allows you to borrow equity from your property and spend it on a new home. If this interests you, you can use our comparison table to compare your options. You can compare your options based on the interest rate, application fees, and ongoing fees, to name a few.
Alternatively, you can also check our pensioners home loan guide to learn more about how to get a home loan while you are on a pension. On that page, you will learn more about the considerations when applying for a home loan on a pension, what types of home loans might be available to pensioners, and how to compare home loans, to name a few.
Finally, please speak to a mortgage broker. They have the necessary knowledge and experience to help you explore your options. They will also take into consideration your whole situation before giving advice.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua
DavidMarch 12, 2019
We have almost paid off our home in SE Brisbane (have about $10,000 to go). We are both aged pensioners with no savings as such. We are considering moving to a new place but want to build rather than buy a pre-existing home, as I did 30 years ago. One idea I had was to rent out our existing house and use the rent to pay off the new one if the bank will let us and taking into account what Centrelink says about it. Otherwise we would have to juggle contracts around selling and moving. Can we get a loan to buy a new place before our old one is sold if we go that way? I think they used to be called Bridging Loans?
Finder
JoshuaMarch 14, 2019Finder
Hi David,
Thanks for getting in touch with Finder. I hope all is well with you. 😃
Interesting thoughts and questions you got there, David. As for now, if you are planning to get a loan or what you mentioned, bridging loan, one of the main criteria lenders will look at is your source of income. There are not a lot of lenders who lend money to aged pensioners. However, there are still those who can help. If you want to know how to get a home loan while on an aged pension, please refer to our guide on pensioner loans.
It is true that you can rent out your existing property and the money you earn from it can also be considered by the lender and will increase your chance of getting approved.
Regarding your last question, a bridging loan can be a good option while you wait for your property to be sold. Since your main source of income is coming from Centrelink, you might have limited options. However, you can still give it a try. On the page I just gave you, there are lenders listed that you can compare based on the interest rate, application fee, and monthly payment, to name a few.
Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision. Moreover, check the eligibility requirements as well and consider whether the product is right for you.
Finally, please consider speaking to a mortgage broker. They have the right knowledge and experience to help you explore available options.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua
BeverlyFebruary 17, 2019
I am a Pensioner and have maintained my Bankwest homeloan for 12 years. I now am finding I would like to refinance with a lower interest and am wondering about my chances? I still owe 127,000 and really want to be able to reduce the payments that I make now of nearly $400.00 per month. this doesn’t allow for me to have much left for living!! Hope you can help…. Beverly
Finder
JohnFebruary 18, 2019Finder
Hi Beverly,
Thank you for reaching out to finder.
The page we are on offers an array of lenders that could assist you in refinancing your loan. You may have a side by side comparison done by clicking the “Compare” button up to 4 lenders to see which is the best choice for you. Kindly review and compare your options on the table displaying the available providers. Once you have chosen a particular provider, you may then click on the “Go to site” button and you will be redirected to the provider’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You may also check on the calculator available on the page to see how much your monthly repayment would be based on the figures you enter. Hope this helps!
Cheers,
Reggie
NatalieJanuary 30, 2019
can I still get a loan if im on a pension
NikkiJanuary 31, 2019
Hi Natalie,
Thanks for getting in touch!
It’s helpful to know that given your income will come from a pension, it might limit your success in getting a home loan. As our pensioner home loan page further explains – it is mainly because the pension is lower than the normal income of other applicants who are applying and the income level required. If you have assets and believe you can meet lending requirements, it might be a good idea to discuss your position in person with your financial provider or mortgage broker, as applying online may be difficult if you can’t demonstrate your capacity to repay the loan.
Hope this helps!
Best,
Nikki
JonelleJanuary 17, 2019
Hi there,
My husband and I have been struggling to save enough deposit for our first home as we pay the rent $460/wk. My husband works only while I look after our 3 and 5 years old boys. Couple of banks say we can just only borrow around low 300k for buying a house.
Is there any better way for us to buy our first home as soon as possible? thanks :)
Kind regarts
Jonelle
Finder
JohnJanuary 18, 2019Finder
Hi Jonelle,
Thank you for reaching out to Finder.
Ideally, banks and lenders like borrowers to save at least 20% of a property’s purchase price as a deposit when approving your loan. Apart from checking on lenders who can assist you in purchasing your first home, you may want to check your eligibility for a First Home Owners Grant. If you are eligible for the First Home Loan Deposit Scheme, then you could buy a property with just a 5% deposit. Lenders offering max LVR of 95% are found on our first home buyer loan and 95% home loans page. Hope this helps!
Think you need a 20% deposit to buy a home? Think again. We break down no deposit home loans: how they work, who offers them, and what to watch out for.
Home loan cashback deals can help you refinance to a cheaper interest rate and get a lump sum cash payment. Compare the latest deals and check your eligibility today.
Learn how to compare rates to find the best home loan and start saving money on your mortgage today.
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Tighten up your spending
I own my unit (will rent the unit at $600 a week) and a 3-bed house rented for $360 (all fully paid). I have part pension. I would like to buy a unit near my children. Can I get a loan on my properties, rent, and pension to more than enough to pay for a mortgage?
Which lender should I approach?
Thank you.
Hi Maria,
Thanks for getting in touch with Finder. I hope all is well with you. 😃
Since you own a few properties, you can opt for a reverse mortgage. This type of loan allows you to borrow equity from your property and spend it on a new home. If this interests you, you can use our comparison table to compare your options. You can compare your options based on the interest rate, application fees, and ongoing fees, to name a few.
Alternatively, you can also check our pensioners home loan guide to learn more about how to get a home loan while you are on a pension. On that page, you will learn more about the considerations when applying for a home loan on a pension, what types of home loans might be available to pensioners, and how to compare home loans, to name a few.
Finally, please speak to a mortgage broker. They have the necessary knowledge and experience to help you explore your options. They will also take into consideration your whole situation before giving advice.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua
We have almost paid off our home in SE Brisbane (have about $10,000 to go). We are both aged pensioners with no savings as such. We are considering moving to a new place but want to build rather than buy a pre-existing home, as I did 30 years ago. One idea I had was to rent out our existing house and use the rent to pay off the new one if the bank will let us and taking into account what Centrelink says about it. Otherwise we would have to juggle contracts around selling and moving. Can we get a loan to buy a new place before our old one is sold if we go that way? I think they used to be called Bridging Loans?
Hi David,
Thanks for getting in touch with Finder. I hope all is well with you. 😃
Interesting thoughts and questions you got there, David. As for now, if you are planning to get a loan or what you mentioned, bridging loan, one of the main criteria lenders will look at is your source of income. There are not a lot of lenders who lend money to aged pensioners. However, there are still those who can help. If you want to know how to get a home loan while on an aged pension, please refer to our guide on pensioner loans.
It is true that you can rent out your existing property and the money you earn from it can also be considered by the lender and will increase your chance of getting approved.
Regarding your last question, a bridging loan can be a good option while you wait for your property to be sold. Since your main source of income is coming from Centrelink, you might have limited options. However, you can still give it a try. On the page I just gave you, there are lenders listed that you can compare based on the interest rate, application fee, and monthly payment, to name a few.
Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision. Moreover, check the eligibility requirements as well and consider whether the product is right for you.
Finally, please consider speaking to a mortgage broker. They have the right knowledge and experience to help you explore available options.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua
I am a Pensioner and have maintained my Bankwest homeloan for 12 years. I now am finding I would like to refinance with a lower interest and am wondering about my chances? I still owe 127,000 and really want to be able to reduce the payments that I make now of nearly $400.00 per month. this doesn’t allow for me to have much left for living!! Hope you can help…. Beverly
Hi Beverly,
Thank you for reaching out to finder.
The page we are on offers an array of lenders that could assist you in refinancing your loan. You may have a side by side comparison done by clicking the “Compare” button up to 4 lenders to see which is the best choice for you. Kindly review and compare your options on the table displaying the available providers. Once you have chosen a particular provider, you may then click on the “Go to site” button and you will be redirected to the provider’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You may also check on the calculator available on the page to see how much your monthly repayment would be based on the figures you enter. Hope this helps!
Cheers,
Reggie
can I still get a loan if im on a pension
Hi Natalie,
Thanks for getting in touch!
It’s helpful to know that given your income will come from a pension, it might limit your success in getting a home loan. As our pensioner home loan page further explains – it is mainly because the pension is lower than the normal income of other applicants who are applying and the income level required. If you have assets and believe you can meet lending requirements, it might be a good idea to discuss your position in person with your financial provider or mortgage broker, as applying online may be difficult if you can’t demonstrate your capacity to repay the loan.
Hope this helps!
Best,
Nikki
Hi there,
My husband and I have been struggling to save enough deposit for our first home as we pay the rent $460/wk. My husband works only while I look after our 3 and 5 years old boys. Couple of banks say we can just only borrow around low 300k for buying a house.
Is there any better way for us to buy our first home as soon as possible? thanks :)
Kind regarts
Jonelle
Hi Jonelle,
Thank you for reaching out to Finder.
Ideally, banks and lenders like borrowers to save at least 20% of a property’s purchase price as a deposit when approving your loan. Apart from checking on lenders who can assist you in purchasing your first home, you may want to check your eligibility for a First Home Owners Grant. If you are eligible for the First Home Loan Deposit Scheme, then you could buy a property with just a 5% deposit. Lenders offering max LVR of 95% are found on our first home buyer loan and 95% home loans page. Hope this helps!
Cheers,
Reggie