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Low deposit home loans

Can't save a 20% deposit? You can get a home loan with one as low as 10% or even 5%. Have a guarantor? You might be able to buy with no deposit.

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Compare home loans with low deposit options

$
years
Name Product Comparison Rate Fees Monthly Payment

loans.com.au Green Home Loan
Principal & interestOwner-occupier10% min. deposit

Principal & interestOwner-occupier10% min. deposit
Interest Rate
2.63%
3.05%
  • Application: $0
  • Ongoing: $0 p.a.
$1,812
This loan is only available for borrowers buying a property with a NatHERS energy efficiency rating of 7.0 or higher. Buying a green home? Get a competitive, discounted variable rate and borrow up to 90%.

Speak to a broker about your options

Consultant

Greater Bank Great Rate Discount Variable with Family Pledge Home Loan
Principal & interestOwner-occupier-10% min. deposit

Principal & interestOwner-occupier-10% min. deposit
Interest Rate
2.79%
2.80%
  • Application: $0
  • Ongoing: $0 p.a.
$1,850
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.

Well Money Balanced Fixed Home Loan
Principal & interestOwner-occupier 3Y Fixed10% min. deposit

Principal & interestOwner-occupier 3Y Fixed10% min. deposit
Interest Rate
5.79%
3.45%
  • Application: $250
  • Ongoing: $0 p.a.
$2,641
A low 3 year fixed rate for home buyers. Add a 100% offset account with a $10 monthly fee. Not available for construction purposes.

G&C Mutual Bank Choice Home Loan
Principal & interestOwner-occupier5% min. deposit

Principal & interestOwner-occupier5% min. deposit
Interest Rate
3.24%
3.26%
  • Application: $0
  • Ongoing: $0 p.a.
$1,960
A low variable rate loan for home buyers with unlimited extra repayments and redraw. No ongoing fees. Add an offset account for an extra 0.10% on your interest rate.

Yard Variable Home Loan
Principal & interestOwner-occupier10% min. deposit

Principal & interestOwner-occupier10% min. deposit
Interest Rate
3.13%
3.15%
  • Application: $0
  • Ongoing: $0 p.a.
$1,933
This variable rate home loan is available with a 10% deposit. Optional offset account.

HSBC Home Value Loan
Principal & interestOwner-occupier10% min. deposit

Principal & interestOwner-occupier10% min. deposit
Interest Rate
2.87%
2.88%
  • Application: $0
  • Ongoing: $0 p.a.
$1,870
$3,288 refinance cashback offer
A competitive value home loan with no ongoing fee. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

G&C Mutual Bank Fixed Rate Home Loan
Principal & interestOwner-occupier 1Y Fixed5% min. deposit

Principal & interestOwner-occupier 1Y Fixed5% min. deposit
Interest Rate
4.39%
4.45%
  • Application: $500
  • Ongoing: $0 p.a.
$2,254
Lock in a sharp rate for the first year. Available with a 5% deposit.

Well Money Balanced Variable
Principal & interestOwner-occupier10% min. deposit

Principal & interestOwner-occupier10% min. deposit
Interest Rate
3.27%
3.30%
  • Application: $250
  • Ongoing: $0 p.a.
$1,967
A very low variable interest rate for borrowers with a 10% deposit. Add a 100% offset account for $10 a month. Not available for construction purposes.

loans.com.au Green Home Loan
Interest onlyOwner-occupier10% min. deposit

Interest onlyOwner-occupier10% min. deposit
Interest Rate
2.63%
3.08%
  • Application: $0
  • Ongoing: $0 p.a.
$1,812
Construction loan. This loan is available for borrowers building a home with a NatHERS rating of 7.0 or higher. A competitive variable rate construction loan available to build an energy-efficient home.

Well Money Balanced Fixed Home Loan
Principal & interestOwner-occupier 1Y Fixed10% min. deposit

Principal & interestOwner-occupier 1Y Fixed10% min. deposit
Interest Rate
4.64%
2.81%
  • Application: $250
  • Ongoing: $0 p.a.
$2,321
Owner occupiers can get a sharp fixed rate for the first year, plus an offset account. Available with a 10% deposit.

Well Money Balanced Fixed Home Loan
Principal & interestOwner-occupier 2Y Fixed10% min. deposit

Principal & interestOwner-occupier 2Y Fixed10% min. deposit
Interest Rate
5.34%
3.11%
  • Application: $250
  • Ongoing: $0 p.a.
$2,513
A low fixed mortgage with an optional 100% offset account. Not available for construction purposes.

Well Money Balanced Fixed Home Loan
Principal & interestInvestment 2Y Fixed10% min. deposit

Principal & interestInvestment 2Y Fixed10% min. deposit
Interest Rate
5.54%
3.41%
  • Application: $250
  • Ongoing: $0 p.a.
$2,570
A 2 year investor rate with principal and interest repayments. Optional offset account with a $10 monthly fee. Not available for construction purposes.

Tic:Toc Live in Loan Variable Rate
Principal & interestOwner-occupier10% min. deposit

Principal & interestOwner-occupier10% min. deposit
Interest Rate
2.59%
2.60%
  • Application: $0
  • Ongoing: $0 p.a.
$1,803
A competitive variable rate product with no application or valuation fees offered by a 100% online lender.
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How low deposit home loans work

A 20% deposit is the standard when buying property in Australia. But that's a tall order, especially in cities where house prices have risen so fast.

This is why many people choose low deposit home loans, which only require 10% deposits or even 5% deposits. Low deposit home loans let borrowers buy homes faster, without having to save big deposits.

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. Let's break down the costs and challenges of getting a low deposit loan.

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. Let's look at a basic example using Finder's LMI calculator.

Full vs low deposit home loans
DetailsLow depositFull deposit
Property value$500,000$500,000
Deposit size$25,000 (5%)$100,000 (20%)
Loan amount$475,000$400,000
LMI costs$15,888*$0
Interest rate (30-year loan)2.60%2.60%
Monthly repayments$1,901$1,601
Difference in repayments$300 more

The difference in cost is clear. With a 5% deposit you'll pay $15,888 in LMI on top. Alternatively, you could capitalise this cost onto your loan and borrow the LMI money along with your mortgage, so you don't need to pay the full amount upfront).

With a deposit of just $25,000, you'll also pay $300 more in repayments per month, or $3,600 a year.

You also need to consider how long it would take you to save $100,000 versus $25,000. It could take several more years to save a full $100,000 deposit in the example above, by which time home prices may have increased, meaning you need an even bigger deposit – or you have to pay LMI anyway, as your deposit is now worth less than 20%.

A smaller deposit means less equity, and that can be risky

If you buy a home with a 5% deposit then you start the mortgage only owning 5% of your home. The rest is debt. If you make repayments on the loan, the percentage of debt shrinks and the amount of the property you own grows. This is also called equity.

But what happens if you can't make repayments, or you need to sell the home suddenly? What happens if property prices fall? In these scenarios, owning a tiny part of your home is risky. You could find yourself in negative equity. You could sell the property and end up with nothing.

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.

Here are some suggestions:

  • 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.

Get more tips on saving a deposit for a house

What is the lowest deposit for a mortgage?

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.

This applies to a very limited number of borrowers who qualify for the scheme, of course.

How to apply for a low deposit home loan

It can be harder to get approved for a home loan with a lower deposit. The smaller your deposit, the bigger the risk you are to a lender.

Some lenders may put you on a higher interest rate if your deposit is below 20%. But it may just mean the lender looks more carefully at your mortgage application.

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.

Organise a free chat with a broker now

Advice from an expert

3 tips for low deposit borrowers from Marissa Schulze, mortgage broker, property developer and director of Rise High Financial Solutions.

Marissa Schulze on low deposit home loansTighten 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. Now that really only works for applicants who are actually renting through a property manager. Sometimes applicants renting from a private landlord will find that hard for the bank to accept. The banks trust the feedback from a property manager more than they would from a private landlord.

Don't make any big changes between pre-approval and settlement

Make sure your financial circumstances don't change from the time you apply for finance to at least 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 and move in. Then you can do what you like.

How do I compare low deposit mortgages?

When looking at low deposit home loans, the same basic principles apply for any home loan comparison. The biggest difference is you need to pay more attention to the maximum insured LVR that is on offer.

The main considerations are:

  • Interest rate. With every home loan, a low interest rate means a cheaper home loan with lower repayments. Review and compare the most competitive interest rates available.
  • LVR. Make sure the loan you are looking at has a maximum insured LVR of 90% or higher, if you don't have a 20% deposit saved.
  • Loan type and repayments. Your loan has a purpose: to fund an investment property or your own home. Depending on this purpose, your loan type and repayment type may be principal and interest or interest only.
  • Fixed or variable. You can choose between a fixed home loan rate or a variable rate. Fixed rates offer more certainty but less flexibility. Variable rates can change up or down, but tend to have more features and are less costly to refinance.
  • Loan fees. Most home loans have fees, such as ongoing monthly account keeping fees or annual package fees.
  • Features. Some home loans allow you to make extra repayments or come with an offset account. These features can help you pay less interest and pay off your home loan sooner.
  • Lender. You can get a low deposit loan with a big bank, a small bank, or a lender that's entirely online. Different lenders may be willing to lend you more than others, or may be more accepting of low deposit borrowers. Some lenders don't offer any home loans to borrowers with deposits under 20%.

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.

More guides on Finder

    Home Loan Offers

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    53 Responses

    1. Default Gravatar
      ArmandoSeptember 23, 2019

      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?

      • Default Gravatar
        AshSeptember 23, 2019

        Hi Armando,

        Thank you for contacting Finder.

        Yes, the First Home Loan Deposit 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 can check the FHLDS requirements and how you can apply for FHLDS for more details.

        I hope this helps.

        Please do not hesitate to reach out again to us if you have additional questions.

        Cheers,
        Ash

    2. Default Gravatar
      AndrewAugust 11, 2019

      If pay 20% deposit, does it need to look at income?

      • Avatarfinder Customer Care
        FayeAugust 13, 2019Staff

        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 our guide about applying for a home loan as well as the documents needed for a home loan. Once done, you may refer to the table above to compare low deposit home loans. When you are ready, press the ‘Go to site’ button to apply.

        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

    3. Default Gravatar
      SantoApril 5, 2019

      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

      • Avatarfinder Customer Care
        JohnApril 8, 2019Staff

        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

    4. Default Gravatar
      MariaMarch 19, 2019

      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.

      • Avatarfinder Customer Care
        JoshuaMarch 20, 2019Staff

        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

    5. Default Gravatar
      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?

      • Avatarfinder Customer Care
        JoshuaMarch 14, 2019Staff

        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

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