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How to buy a home with no deposit

If you aren't able to save the standard 20% for your home loan deposit, a no deposit home loan with a guarantor might be an option

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You need to have a family member who owns their own home and can use it as security to cover your deposit. Banks won't give you a normal home loan with no deposit. You could save up a 5% deposit, but if this isn't feasible you may still get into the property market with a guarantor loan. It's not an option for every borrower. Read on to learn more about no deposit mortgages and start comparing loans.

Comparison of 90-95% max LVR home loans that allow guarantors

Data indicated here is updated
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
P&N Bank & Home Loan Intro Rate
2.74%
3.18%
$0
$0 p.a.
95%
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
2.54%
2.56%
$0
$0 p.a.
80%
Up to $4,000 refinance cashback. A competitive variable rate loan from St.George. Refinancers borrowing $250,000 or more can get $4,000 cashback (Other terms, conditions and exclusions apply).
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
2.29%
2.72%
$0
$8 monthly ($96 p.a.)
95%
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
Bankwest Complete Home Loan Package Variable - $200k to <$750k LVR ≤80% (Owner Occupier, P&I)
2.73%
3.18%
$0
$395 p.a.
80%
A low variable rate loan with a 100% offset account and package discounts.
P&N Bank Fixed Home Loan - 2 Year (LVR ≤ 80%, Owner Occupier)
2.19%
3.57%
$395
$0 p.a.
80%
Enjoy protection from changing interest rates with a 2 year fixed rate loan.
Bank of Melbourne Basic Home Loan - Special Offer (Owner Occupiers, P&I) LVR above 60% up to 80%
2.54%
2.56%
$0
$0 p.a.
80%
Up to $4,000 refinance cashback
A competitive variable rate loan from Bank of Melbourne. Refinancers borrowing $250,000 or more can get $4,000 cashback (Other terms, conditions and exclusions apply).
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How does a guarantor no deposit home loan work?

Guarantor loans are loans which allow your parent or close family member to guarantee a portion of your loan using their property as security. Following the global financial crisis (GFC), these loans are the only way to buy a home with no deposit.

What happened to 100% home loans?

In most cases a no deposit guarantor home loan is the same as a regular home loan. This means that you can compare most types of loans, including those with fixed or variable rates. Other features offered include extra repayment options, offset accounts, redraw facilities and more. The way the guarantee works is also simple. Let's use an example to show how it would work.

Dan's no deposit home loan

Dan wants to buy a property worth $500,000, and has a very small deposit. His parents agree to become guarantors for his loan, and guarantee 20% of the property purchase, which is $100,000. Dan uses his own small deposit to pay for the other upfront costs associated with purchasing the property, while his parent's guarantee serves as the deposit.Dan's parents are responsible for the portion of his loan they guarantee. This means if Dan failed to make his repayments and ultimately defaulted on his loan, his parents would be liable for $100,000.

Dan works hard paying off his loan, and in five years, has paid $100,000 from his loan. At this point, he applies with his lender to remove his parents as guarantors from his loan, and they're no longer responsible for him in the event he defaults on his loan. Because he didn't have to pay LMI either, Dan also saved as much as $15,000 if he had saved up a deposit of 5%.

Who can be a guarantor and how

What should I look for in a no deposit home loan?

Choosing a no deposit home loan is similar to choosing a standard home loan since the features are the same. You'll want to look at the rates, fees and features. However, you'll also want to compare each lender's policy on guarantors.

All lenders will have different terms and conditions concerning who, what, where and how your guarantor is going to fund your loan. Some lenders also impose restrictions on no deposit or guarantor home loans and this type of mortgage may not be available for self-employed borrowers. Make sure you read all the fine print to match your personal and financial situation with your guarantor.

You'll also want to ask about your lender's approval process. When you apply for a no deposit home loan, the approval process can be lengthy and more difficult compared to that of a traditional mortgage application, because the lender will need to evaluate the security and financial situation of your guarantor.

Some alternative types of deposits

What if you can't find a guarantor for your home loan? You could look at some alternative ways of supplying a deposit.

Personal loan as deposit

Most lenders require at least 5% genuine savings, which means they will want to see evidence that your deposit comes from a pattern of saving. Some lenders, however, offer home loans without genuine savings. If you have a high enough income to afford two loan repayments and have good credit history, you may be able to get a personal loan to cover the cost of a home loan deposit. However, taking out a personal loan will impact your home loan borrowing capacity.

Monetary gift or windfall

If you've received a large monetary gift or have come into some money as a result of a windfall, you may be able to use this money as a home loan deposit. While you could seek out a lender that doesn't require genuine savings, if you hold money in your account for three to six months most lenders will consider it genuine savings.

Equity

If you already own a property, you can use the equity in your property as a deposit for another property. Equity is the difference between the amount your property is worth and the amount you owe on your home loan. Most lenders will let you use up to 80% of the equity in your property as a deposit, and some will allow you to use up to 95% if you pay lenders mortgage insurance (LMI).

Low deposit home loans

If you can't find anyone to serve as a guarantor, you'll need to save a deposit. Fortunately, many lenders offer loans with as little as a 5% deposit. This will see you paying LMI, but you'll also be able to get into the housing market quicker. You can compare low deposit home loans in the table below.

Data indicated here is updated
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
CUA Achieve Variable Home Loan - $500k+ (Owner Occupier, P&I)
2.55%
2.60%
$600
$0 p.a.
95%
Home buyers can get a competitive, low-fee variable rate plus a 100% offset account. Low deposit option available. Eligible new home buyers with low deposits can apply for the First Home Loan Deposit Scheme with this lender and avoid LMI costs. Eligible refinancers can get a $2,000 pre-paid credit card when they switch to CUA.
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
2.29%
2.72%
$0
$8 monthly ($96 p.a.)
95%
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
Greater Bank Great Rate Discount Variable with Family Pledge Home Loan - Up to 110% LVR
2.68%
2.69%
$0
$0 p.a.
110%
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, QLD and ACT only.
IMB Budget Home Loan - Special LVR  ≤90% (Owner Occupier, P&I, NSW and ACT borrowers only)
2.78%
2.84%
$449
$0 p.a.
90%
NSW and ACT customers only. You can get an interest rate discount for a limited time with this competitive variable mortgage.
Macquarie Bank Basic Home Loan - LVR ≤ 90% (Owner Occupier, P&I)
3.04%
3.04%
$0
$0 p.a.
90%
Borrow up to $750K with an LVR ≤ 90% and pay no application fee.
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More guides on Finder

  • 100% Home Loans

    Borrowing 100% of a property's value is still possible with the help of a guarantor.

  • Guarantor Home Loans

    If you have been struggling to save for a home loan deposit, a family member could help you buy your property by acting as a guarantor.

Home Loan Offers

Important Information*
Logo for Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)

Up to $3,000 refinance cashback. A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.

Logo for St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)

Up to $4,000 refinance cashback. A competitive variable rate loan from St.George. Refinancers borrowing $250,000 or more can get $4,000 cashback (Other terms, conditions and exclusions apply).

Logo for Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I
Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I

A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan.

Logo for UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate
UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate

Take advantage of a low-fee mortgage with a special interest rate of just 2.49% p.a. and a 2.49% p.a. comparison rate.

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10 Responses

  1. Default Gravatar
    BrianAugust 16, 2016

    I want to get loan of ksh.10000 to start my small business.How can you help me? and where can i borrow this money from?
    please kindly help me.
    Thank you.

    • Avatarfinder Customer Care
      ElizabethAugust 16, 2016Staff

      Hi Brian,

      You’ve come through to finder.com.au, an Australian financial comparison service, and unfortunately the lenders we have available for comparison can only consider you for a loan if you are currently residing in Australia. You may need to find a lender in Kenya to start your small business.

      Sorry I couldn’t be of more assistance,

      Elizabeth

  2. Default Gravatar
    AndrewJune 9, 2016

    I have over 20% deposit but don’t have the savings history to back it up. We satisfied all other criteria but that one and was subsequently denied.

    Any help would be appreciated

    • Avatarfinder Customer Care
      MarcJune 14, 2016Staff

      Hi Andrew,
      thanks for the question.

      Some lenders will require evidence of genuine savings. The definition of genuine savings can vary depending on the lender, but for many lenders they will want to see evidence of your deposit being in a borrower’s accounts for at least 3 months.

      Some lenders may not require this evidence, but may charge a higher interest rate. A good mortgage broker will be able to advise which lender is best for these types of situations.

      I hope this helps,
      Marc.

  3. Default Gravatar
    ZadeMarch 10, 2016

    I want to buy a house and have no deposit, but heard and read about it saying I need 5% still

    • Avatarfinder Customer Care
      BelindaMarch 10, 2016Staff

      Hi Zade,

      Thanks for reaching out.

      Most lenders require you to come up with at least a 5% deposit in order to qualify for a home loan. However, you may want to consider applying for a guarantor home loan if you’re unable to complete the required deposit. A family pledge home loan can increase your borrowing capacity and allow you to avoid paying lender’s mortgage insurance (LMI).

      If in doubt, speak to a mortgage broker to explore your borrowing options and to understand your borrowing power.

      Thanks,
      Belinda

  4. Default Gravatar
    ThabaniMay 17, 2015

    I am looking for a 0% deposit,professional home loan if possible.It would be for a joint account,both parties are registered nurses

    • Avatarfinder Customer Care
      BelindaMay 28, 2015Staff

      Hi Thabani,

      Thanks for your enquiry.

      In most cases, a no deposit home loan is similar to a regular home loan, however you’ll need to find a guarantor to borrow 100% of the property value.

      A list of lenders that offer a maximum LVR of 95% can be found above on this page.

      Please note that due to tighter lending restrictions, 100% home loans are only possible if you use a guarantor.

      Thanks,
      Belinda

    • Default Gravatar
      LeeanneDecember 3, 2015

      We are looking at a property value 384,000 we have no savings or deposit but have a parent guarantor with 40,000 equity is this possible

    • Avatarfinder Customer Care
      MarcDecember 3, 2015Staff

      Hi Leeanne,
      thanks for the question.

      This is possible with some lenders, but as each has their own unique lending policies surrounding guarantors, I would recommend approaching lenders who you’re interested in and then speaking with them directly regarding if they would lend to you. You might also want to consult a mortgage broker, who can recommend specific loans and lenders for your situation.

      I hope this helps,
      Marc.

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