A low deposit home loan lets you borrow more than 80% of a property's value. This means you can save a 5-10% deposit and borrow the rest. It's a popular option for borrowers looking to buy their first home.
This page has over 20 low deposit home loans to compare and useful information on all the ways you can get these loans.
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The standard deposit size for most lenders is 20% of the property's value. In other words, borrowers need a loan-to-value ratio (LVR) of 80%. Low deposit loans come with an LVR of 90 or 95%. This means you can potentially get a mortgage with just a 5% deposit.
If you're buying an $800,000 property, a 20% deposit is $160,000. A 5% deposit is just $40,000. That's a huge difference.
There must be a catch, right?
There is. If you're borrowing more than 80% of a property's value you will have to pay lenders mortgage insurance (LMI) as well. Depending on how much you're borrowing this can be a significant cost, ranging from several thousand dollars up to 10 or even 20 thousand dollars.
You can capitalise your LMI, meaning you can add this cost into your borrowing amount. But this can affect how much you can borrow. Learn more about LMI and how it affects low deposit loans.
The low deposit trap: Be sure you have cash to cover all your costs
Saving a 5% deposit is much easier than saving a 20% deposit. But you need to make sure you have money saved up to cover all your other home buying costs. This includes LMI, stamp duty, government fees and upfront lender's fees.
Is it harder to get approved for a low deposit home loan?
While the banks might advertise that you can borrow up to 95% of the purchase price of your new home, it's important to realise that lending criteria still apply:
Good credit history. In order to get your loan approved at a high LVR like 95%, you will need to have a clean credit history. This means you should have no defaults showing on your credit report for missed payments on other bills.
Good employment history. You will also need to demonstrate that you have a stable employment history. This means showing that you've been in the same job for at least 6-12 months, or been working within the same industry in a similar role.
Genuine savings. If you can show where your 5% savings amount came from, this will go in your favour. For example, showing your savings account statements with regular deposits going into it will be viewed favourably.
Good asset position. The credit assessor will view your existing assets and consider them in terms of whether you're doing well based on your age and income. For example, if you're a first home buyer and you have 5% savings and a car, this may be considered a positive asset position for your age and income.
Controlled debts. If you submit your home loan application and it shows that you have several credit cards, a car loan and a personal loan all outstanding, it's likely your loan will be declined. Consolidate your debts and pay off the most urgent ones first. Credit card debt is a bigger red flag for a lender than a HECS student debt, for example.
True no deposit mortgages are largely a thing of the past. Most banks won't throw 100% of a property's value at you. But there are some exceptions to this rule. These exceptions could be very useful for borrowers who are having trouble saving a deposit.
Gifted deposit. If you have generous parents with some cash in the bank, they can give you part of your deposit as a gift. If you're able to reduce your loan amount so you're only borrowing 90% of the purchase price, some banks won't ask you to prove that you have genuine savings. This means mum and dad need to come up with 10% of the purchase price and offer it to you as a gift. Learn more about using parental gifts as a deposit.
Guarantee from parents. If your parents own their home and they are happy to act as guarantors on your mortgage, you could borrow 100% of the purchase price of your new home without having any savings. Essentially, the bank takes a guarantee from your parents that is secured by the equity they have in their own property. Just be absolutely sure that you and your parents understand all the implications of guarantorship before you enter into this type of agreement.
Existing property. If you already have equity in your family home, you may be able to use this to secure the purchase for your next property. Effectively, this lets you borrow 100% of the purchase price of your new property without having any savings.
It's possible to take out a personal loan and use that as part of your deposit. For most people it's probably not a good idea. And the lender will still need to see 5-10% in genuine savings.
Using a personal loan for a deposit is a risky idea because these loans have much higher interest rates. You'll have to repay this loan while making mortgage repayments on top. And taking on another debt is a red flag for lenders and may make it harder to get approved.
If you're on a high income and want to buy a home in a hurry this strategy might be worth it. But for most people it's far from wise.
Can I use my super as a deposit?
There are two possible ways to use your super to buy property.
Self-Managed Super Funds (SMSF)
You cannot use money from a SMSF to buy a home. But you can use it to buy an investment property. This can be a good option for people looking to generate income and capital through an investment property but it doesn't help people looking to buy their own home with a low deposit.
First Home Super Saver Scheme (FHSSS)
First home buyers are able take out some of the extra money they've placed in their super funds to use for a house deposit. You can unlock up to $15,000 per financial year to a total of $30,000 maximum and put it toward your deposit.
There are also tax benefits to doing this, as super contributions are generally taxed at a lower rate.
Richard Whitten is Finder's home loans writer. He helps Australians understand the ins and outs of mortgages so they can find lower rates and make smarter property decisions. Richard trained as a high school English teacher at the University of Sydney, but found that mortgage management was more rewarding than classroom management. Before working at Finder he lived in Seoul, where he edited textbooks and ran communication courses for Korean corporations.
Owner occupiers looking to refinance can get one of the lowest rates in the market with this variable rate mortgage. $0 application fee and $0 ongoing fees. Refinancers only.
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We want to buy our first house and we have 5% of the deposit for a house of 450000. We want to know what we must do to enter the government program of the first 10,000 buyers of the year 2020 and not pay the LMI. Could you guide us on how to buy the house to be considered in this program? what to do and how?
Yes, the First Home Owner Scheme can help you to avoid the Lender’s Mortgage Insurance (LMI) as if you only have 5% for the deposit, the government will guarantee you the 15%. You may read this page to know more about the requirements and how you can apply for it.
I hope this helps.
Please do not hesitate to reach out again to us if you have additional questions.
Yes. When you apply for a home loan, most lenders will have to look at your income. They are interested in how much you make and how likely you are able to repay your loan and manage all your obligations every month.
Please review this page to know what to do before applying for a home loan to maximise your chance of approval.
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 can also contact the provider if you have specific questions.
looking to buy a country farmlet between5 to 10 acres with a 4bed dwelling and much shedding , property located in country Victoria and I only have 5% for deposit. Could you direct me to institutions that could provide finance just under $300.000
The page we are on offers lenders that you could reach out to specific to the loan you are requesting but for the property you are looking for you may want to reach out to a real estate specialist who can further assist you in locating that type of property. You may also reach out to a mortgage broker who can assist you in providing lender options. Hope this helps!
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.
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, please go to this page. On that page, you will be able to see a table that lists some of your options. You can use the table to compare your options based on interest rate, application fees, and ongoing fees, to name a few.
Alternatively, you can also check this page 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 us out again.
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?
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 who can help. If you want to know how to get a home loan while on aged pension, please check this guide.
In that guide, how to get a home loan if you’re a pensioner, the considerations when applying for a home loan on a pension, types of home loans might be available to pensioners, and other related topics.
Now, 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. You can learn more about that here. But then again, 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 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 us out again.
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
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!
Thanks for getting in touch! You can apply for a home loan while on pension and you can find providers who may consider your application on this page. It’s helpful to know that given your income will come from pension might limit your success in getting a home loan. As our 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.
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 :)
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. Clicking this link will give you a short quiz that you can take to check your eligibility. It also defines the eligibility requirement state by state. Hope this helps!
I want to buy a home at Douglas point as owner-occupier, I am able to come up with the 5% deposit and the money to cover the fees and stamp duty through the different avenues in which I have money tied up, eg: shares, cars, savings. But need to find a lender who will do the best mortgage deal, for the area as a couple banks in my area say the postcode is in a high risk area and need 20%.
Thanks for getting in touch with finder. I’m sorry to hear that a few banks have rejected your application.
I would advise that you continue comparing your options using our table above. The lenders on our table provide mortgages with low downpayment options. You can then click on the “Go to site” green button to discuss with them your situation and confirm if they can provide you with your needed loan.
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.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Hi my husband & I have purchased a block about 7 months ago and we want to build a house on it but we are not entitled to the first home owners grant and have very little as a deposit what is the best way to go about it thanks
Thanks for getting in touch with finder. I hope all is well with you. :)
It is worth noting that most home construction loan lenders will want at least 20% of the total cost put down as a deposit. This is because your lot is not of great value yet without a building on it.
As this might be the case, it would still be worth checking out our list of home construction loan lenders on this page. On that page, you will see a table that allows you to conveniently compare your options. The table includes interest rates, ongoing fees, and monthly payments, to name a few. Once you find the right one for you, click on the “Enquire now” green button to learn more.
The page that I just shared with you also includes guides and tips on finding the right construction loan for you. So, it is really worth reviewing.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
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While the banks might advertise that you can borrow up to 95% of the purchase price of your new home, it's important to realise that lending criteria still apply:
We want to buy our first house and we have 5% of the deposit for a house of 450000. We want to know what we must do to enter the government program of the first 10,000 buyers of the year 2020 and not pay the LMI. Could you guide us on how to buy the house to be considered in this program? what to do and how?
Hi Armando,
Thank you for contacting Finder.
Yes, the First Home Owner Scheme can help you to avoid the Lender’s Mortgage Insurance (LMI) as if you only have 5% for the deposit, the government will guarantee you the 15%. You may read this page to know more about the requirements and how you can apply for it.
I hope this helps.
Please do not hesitate to reach out again to us if you have additional questions.
Cheers,
Ash
If pay 20% deposit, does it need to look at income?
Hi Andrew,
Thanks for contacting Finder.
Yes. When you apply for a home loan, most lenders will have to look at your income. They are interested in how much you make and how likely you are able to repay your loan and manage all your obligations every month.
Please review this page to know what to do before applying for a home loan to maximise your chance of approval.
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 can also contact the provider if you have specific questions.
I hope this helps.
Kind Regards,
Faye
looking to buy a country farmlet between5 to 10 acres with a 4bed dwelling and much shedding , property located in country Victoria and I only have 5% for deposit. Could you direct me to institutions that could provide finance just under $300.000
Hi Santo,
Thank you for reaching out to Finder.
The page we are on offers lenders that you could reach out to specific to the loan you are requesting but for the property you are looking for you may want to reach out to a real estate specialist who can further assist you in locating that type of property. You may also reach out to a mortgage broker who can assist you in providing lender options. Hope this helps!
Cheers,
Reggie
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, please go to this page. On that page, you will be able to see a table that lists some of your options. You can use the table to compare your options based on interest rate, application fees, and ongoing fees, to name a few.
Alternatively, you can also check this page 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 us 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 who can help. If you want to know how to get a home loan while on aged pension, please check this guide.
In that guide, how to get a home loan if you’re a pensioner, the considerations when applying for a home loan on a pension, types of home loans might be available to pensioners, and other related topics.
Now, 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. You can learn more about that here. But then again, 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 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 us 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! You can apply for a home loan while on pension and you can find providers who may consider your application on this page. It’s helpful to know that given your income will come from pension might limit your success in getting a home loan. As our 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.
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. Clicking this link will give you a short quiz that you can take to check your eligibility. It also defines the eligibility requirement state by state. Hope this helps!
Cheers,
Reggie
I want to buy a home at Douglas point as owner-occupier, I am able to come up with the 5% deposit and the money to cover the fees and stamp duty through the different avenues in which I have money tied up, eg: shares, cars, savings. But need to find a lender who will do the best mortgage deal, for the area as a couple banks in my area say the postcode is in a high risk area and need 20%.
Hi Anthony,
Thanks for getting in touch with finder. I’m sorry to hear that a few banks have rejected your application.
I would advise that you continue comparing your options using our table above. The lenders on our table provide mortgages with low downpayment options. You can then click on the “Go to site” green button to discuss with them your situation and confirm if they can provide you with your needed loan.
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.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
Hi my husband & I have purchased a block about 7 months ago and we want to build a house on it but we are not entitled to the first home owners grant and have very little as a deposit what is the best way to go about it thanks
Hi Donna,
Thanks for getting in touch with finder. I hope all is well with you. :)
It is worth noting that most home construction loan lenders will want at least 20% of the total cost put down as a deposit. This is because your lot is not of great value yet without a building on it.
As this might be the case, it would still be worth checking out our list of home construction loan lenders on this page. On that page, you will see a table that allows you to conveniently compare your options. The table includes interest rates, ongoing fees, and monthly payments, to name a few. Once you find the right one for you, click on the “Enquire now” green button to learn more.
The page that I just shared with you also includes guides and tips on finding the right construction loan for you. So, it is really worth reviewing.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua