Low deposit home loans comparison

Low Deposit Home Loans

Rates and Fees verified correct on October 27th, 2016

With the right lenders, it's still possible to buy a home with a low deposit

There are some lenders out there willing to accept applications from people who only have a small deposit saved. This is great news for first home buyers, but also for those on a tight budget who can't manage to save the huge deposit amounts some banks want to see.

Compare home loans with 5%-10% deposit

Rates last updated October 27th, 2016.

ME Bank Flexible Home Loan Fixed - 2 Year Fixed Rate (Owner Occupier)

ME Bank have lowered their 2yr fixed Flexible Home Loan to 3.69%

September 2nd, 2016

ME Bank Flexible Home Loan Fixed - 3 Year Fixed Rate (Owner Occupier)

Interest rate now 3.69%

September 2nd, 2016

HSBC Home Value Loan - Resident Owner Occupier only

Application fee waived for Resident Owner Occupier only.

September 19th, 2016

View latest updates

Jodie Humphries Jodie
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Product nameInterest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
IMB Discount Split Home Loan - Owner Occupier
Discounted rates when you split your rate into fixed and variable portions.
3.64% 4.82% $445 $6 monthly ($72 p.a.) 95% Go to site More info
NAB Choice Package Home Loan - 3 Year Fixed (Owner Occupier)
Receive discounts on interest rates with the Choice Package. 250,000 Velocity Frequent Flyer point offer, conditions apply.
3.89% 4.84% $0 $395 p.a. 95% Go to site More info
HSBC Home Value Loan - Resident Owner Occupier only
Enjoy the low variable rate with $0 ongoing fee and borrow up to 90% LVR.
3.55% 3.57% $0 $0 p.a. 90% 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
NAB Choice Package Home Loan - 1 Year Fixed (Owner Occupier)
A low interest rate home loan with flexible repayment options. 250,000 Velocity Frequent Flyer point offer, conditions apply.
3.99% 4.98% $0 $395 p.a. 95% Go to site More info
CUA Fixed Rate Home Loan - 3 Year Fixed (Owner Occupier)
Enjoy a competitive three year rate with ability to make repayments in advance.
3.99% 4.56% $600 $0 p.a. 95% Go to site More info
NAB Tailored Fixed Rate Home Loan - 1 Year Fixed (Owner Occupier)
Enjoy a low rate fixed home loan with the ability to borrow up to 95% of the property value. 250,000 Velocity Frequent Flyer point offer, conditions apply.
4.09% 5.27% $600 $8 monthly ($96 p.a.) 95% Go to site More info
IMB Budget Home Loan - LVR > 90% (Owner Occupier)
A budget home loan that has no ongoing fees and you can borrow up to 95% LVR.
4.29% 4.34% $445 $0 p.a. 95% Go to site More info
NAB Defence Force Home Loan - Variable Rate
A discounted home loan for any current or previous serving member of the Defence Force.
4.45% 4.58% $0 $395 p.a. 95% Go to site More info
ME Bank Flexible Home Loan Fixed - 2 Year Fixed Rate (Owner Occupier)
No application or ongoing fees and a competitive 2 year fixed rate.
3.69% 4.72% $0 $0 p.a. 95% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier)
A fixed rate package loan with flexible repayments options. 250,000 Velocity Frequent Flyer point offer, conditions apply.
3.75% 4.87% $0 $395 p.a. 95% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 3 Years Fixed (Owner Occupier)
Split your loan for free with one of the lowest fixed home loan rates.
3.79% 4.68% $0 $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 Choice Package Variable Rate - $250k to $749,999 P&I (Owner Occupier)
A bank home loan that allows you to borrow up to 95% LVR.
4.40% 4.79% $0 $395 p.a. 95% Go to site More info

Why do you need a deposit?

Some banks insist on seeing that the deposit amount you have is genuinely saved. This means they want to see evidence of regular savings deposits going into a savings account towards building up your deposit over time. Usually, they'll ask to see your savings account statements to verify this.

Lenders want to ascertain what level of financial responsibility you have before you get into such a large, long-term debt. After all, if you can manage to pay your living expenses and still find the discipline to put money aside each week, they have more confidence that you'll do the same thing when it comes to paying back your mortgage payments on time.

How much deposit do you need?

One of the biggest traps many home buyers fall into is saving a big enough deposit to purchase a home, but they completely forget to put aside enough money to cover the rest of the fees and charges associated with buying a home.

For example; your bank may ask that you have a 5% deposit. This means you'll need to put down at least 5% of the purchase price of the home, while they lend you the remaining 95% of the price.

So if you buy a house for $300,000 you will need a $15,000 deposit.

Did you know?

Borrowing 95% of the property value means that you will need to pay a Lender's Mortgage Insurance fee. This is a fee that your bank's insurer charges them for lending you money above the usual safety threshold of 80% of the property price. You only need to pay this fee once. Unfortunately, it can often add thousands of dollars.

Some banks will let you capitalise your Lender's Mortgage Insurance (LMI) fee on the top of your mortgage amount. So they'll lend you 95% of the purchase price of your new home, plus an additional 2% to cover the LMI fee.

There are also government fees and charges to account for. When you buy a home you will need to pay stamp duty. This is calculated differently for each state, so it's worth checking on a good stamp duty calculator how much you're likely to pay based on the amount you're paying for your home.

Don't forget to add in things like legal fees, conveyancing fees and transfer fees to your total. Find out the true cost of buying a property here.

First home buyers may be able to get a little assistance here with the First Home Owner Grants helping to cover those fees.

Can anyone 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 applies.

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.
credit histor

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.

There are some job roles and industries where banks may consider approving your loan after only being in your job a short time. These can include nurses or paramedics, who are required to study for three years prior to gaining an employment contract. Those years of study, plus an ongoing contract can sometimes be strong enough to sway a credit assessor to approve your loan even if you've been employed less than 12 months.

You won't get your loan application approved if you're still on probation with a new employer, so it's best to wait until your probation has ended.

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.

Genuine savings

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.

If you're in a high income job and you're buying your second home, the bank will want to see that you have started to build up equity in your home and that you don't have all your credit cards maxed out. They want to see that you've been putting your income to good use wherever you can.

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. If your outstanding debts add up to more than 7% of the purchase price of your house, you simply won't get approved.

Instead, work on getting your debts under control. Pay down those credit card balances and close any unnecessary accounts. The banks will be fine if you still have one or two remaining. Pay off any unsecured personal loans you have. The car loan will also be acceptable, as long as it's not a huge debt amount.

Remember, when the bank considers whether you'll be able to afford your new mortgage, they take your after-tax income amount and then they deduct all the payments you make on your current debts. Then they take away an extra amount to cover your living expenses and bills. The amount remaining is how much they think you have left to pay your mortgage.

So if you can reduce any unnecessary debts before you apply, you suddenly strengthen your application, as you've freed up your income from the burden of all those repayments.

Do no deposit loans still exist?

Not so long ago it was very possible to borrow the entire purchase price of a home. The home loans used for this were called No Deposit home loans. These allowed you to buy a home without having to save a deposit at all.

When the property market was still strong and lending policies were quite lenient, banks were happy to lend you the entire amount. However, these types of loans don't exist any longer. Banks would rather see that you've saved a deposit.

What many banks don't tell you is that it's still possible to borrow 100% of the purchase price of your home without having any savings. You just need to be creative about how you do it.

Gifted deposit

If you have generous parents and they're willing to extend you a gift to act as your deposit amount, you might be able to get away with a very small history of genuine savings.

You see, 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. The bank will let you borrow the remaining 90% you need, but don't forget that you still need to pay stamp duty and other government fees and charges on top of that as well. Have you received a gift of money for a deposit?

Guarantee from parents

If your parents own their home and they are happy to act as guarantors on your mortgage, you should find you can 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.

This is the easiest way to buy a home with little savings. 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

It's surprising how many people who already own their home believe they still have to save a deposit to buy another home, such as an investment property. Yet 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.

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Related Posts

HSBC Home Value Loan - Resident Owner Occupier only

Enjoy the low variable rate with $0 ongoing fee and borrow up to 90% LVR.

ME Bank Basic Home Loan - LVR <=80% Owner Occupier

A low variable rate loan with no application or ongoing fees.

CUA Fresh Start Basic Variable Home Loan - Owner Occupier

A basic mortgage available only to customers who switch their everyday banking to CUA.

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13 Responses to Low Deposit Home Loans

  1. Default Gravatar
    Jason | August 17, 2016

    HI, Which lenders will take A 5% deposit and also let you put the LMI on top of that?

    • Staff
      May | August 17, 2016

      Hi Jason,

      Thank you for your question.

      On this page, you can actually compare a range of loans in the market with only 5% deposit.

      As for the LMI, we only have limited information about this but usually, LMI will be taken out by a lender when they allow you to take out a loan with a higher LVR, say 95%. Also, as LMI is not automatically applied for, you must organise it with the application to the loan.

      Seeking a professional advice from a mortgage broker would also be best as they’ll be able to take all your circumstances into account and offer you a range of lending options.


  2. Default Gravatar
    kylie | March 26, 2016

    What sort of grants are available to first home buyers? How do u go about applying for them and how can u apply them to your deposit?

    • Staff
      Belinda | March 29, 2016

      Hi Kylie,

      Thanks for reaching out.

      We have a first home owner grant (FHOG) guide which outlines the grants and concessions available for first home buyers in each state and territory.

      To be eligible for the FHOG, you must satisfy a range of criteria but generally you must be aged 18 years and over, at least one applicant must be a permanent resident or Australian citizen and all applicants cannot have previously owned a residential property in Australia.

      If you believe you’re eligible for the FHOG in your state, then you can visit your state government department for details about how to apply. Generally, you can apply through a FHOG approved agent or through the Office of State Revenue (OSR).

      All the best,

  3. Default Gravatar
    Louise | February 15, 2016

    My husband and I had our home we were paying off. We then borrowed and invested in a company that built units and the directors fraudulently siphoned off any profits and went into liquidation. We were left with a huge debt and chose to sell our home, become debt free and pay out the investment loan. We lost around $220,000 dollars. Now my husband is a pensioner 67years old and I have a regular income of $490 per fortnight. Is there any way we could go for a loan and start again. There are houses around $140,000 in our area. I am 63

    • Staff
      Marc | February 16, 2016

      Hi Louise,
      thanks for the question.

      Unfortunately it’s difficult for me to give you an answer without looking at all of your personal situation, including your assets, other debts and credit history. You might wish to consult a mortgage broker to find out what options may exist for you, as they will take into account all aspects of your application before suggesting a lender and loan.

      Sorry I couldn’t be of more help,

  4. Default Gravatar
    judy | February 11, 2016

    do lenders allow you to use the first home owners grant as part of the deposit

    • Staff
      Marc | February 15, 2016

      Hi Judy,
      thanks for the question.

      Yes, some lenders will allow you to use your grant to form part of your deposit.

      I hope this helps,

  5. Default Gravatar
    pauline | October 13, 2015

    We are over 55 and looking to buy our first home, however we do not have a deposit at this stage and have about $50000 in debt and paying off some of the smaller debts and have no defaults. My husband has been in the same job for 8 yrs and I work casual.
    Would we be considered by any lender for a mortgage

    • Staff
      Marc | October 14, 2015

      Hi Pauline,
      thanks for the question.

      Unfortunately Australian lenders will generally require a deposit of at least 5% of the property’s value for a borrower to qualify for a home loan, unless the borrower has a guarantor who can use the equity in their property to guarantee the deposit or a portion of it for the borrowers.

      I hope this helps,

  6. Default Gravatar
    Rebecca | June 9, 2015

    daughter has ability to quickly repay mortgage of $185,000 at weekly repayments of $250 but only has $6000 savings towards deposit. What does she do

    • Staff
      Belinda | June 11, 2015

      Hi Rebecca,

      Thanks for your enquiry.

      On this page, you can compare a range of lenders that offer the ability to borrow 95% loan to value ratio (LVR).

      Your daughter might be interested to learn more about guarantor loans which could help with her deposit.

      It is advisable that she speaks with a mortgage broker to discuss her options.


  7. Default Gravatar
    Luke | July 31, 2013

    This site is great.

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