Low-Deposit Home Loans

Considering Your Options When You Have a Smaller Deposit

Saving a 20% deposit can be difficult in many parts of Australia where property values continue to rise. For buyers without this amount saved, this may present a challenge to entering the market.

If you’re in this position, you might consider exploring low-deposit home loans. These may suit first-time buyers, professionals, or investors who have a smaller deposit and meet specific lender criteria.

How These Loans Typically Work

Low-deposit home loans are generally known as high Loan-to-Value Ratio (LVR) loans. They allow you to borrow more than 80% of a property’s value.

In situations where your deposit is below the usual 20%, lenders may still offer a loan, though you may need to pay Lenders’ Mortgage Insurance (LMI) to offset the lender’s increased risk.

Some financial institutions may offer up to 85% or 95% LVR loans, depending on your income, credit profile, and the lender’s specific policies. To understand your potential eligibility, you can contact one of our reliable mortgage brokers.

What Is the First Home Guarantee?

The First Home Guarantee is a government-backed initiative available to eligible first-home buyers. It is offered through Housing Australia, formerly known as NHFIC.

This scheme provides a limited number of places and may allow eligible applicants to buy a home with as little as a 5% deposit, without paying LMI. The availability and eligibility requirements may change, so we suggest speaking with our brokers to see whether you qualify under current criteria.

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What Lenders May Look For

Low-deposit loans often require a more thorough application assessment due to the higher risk to lenders. While requirements vary, you may be considered if you meet criteria like the following:

Steady Income

Lenders usually review income carefully to ensure the borrower can meet repayment obligations. Consistent, stable income may strengthen your application.

Purpose of the Loan

How you plan to use the funds—whether to purchase a home, refinance, or consolidate debt—can influence how a lender evaluates your application.

Property Characteristics

The type and location of the property can impact the lender’s risk assessment. Properties in high-density zones or areas with fluctuating values may be subject to stricter review.

Credit Conduct

A strong credit history can support your application. If there are minor blemishes, providing a larger deposit might help balance perceived risk.

Documented Savings

Many lenders prefer to see at least 5% of the property’s value saved over time in your own account. This is often referred to as “genuine savings.”

Assets and Liabilities

Some lenders may look at your existing assets—like a vehicle, cash reserves, or superannuation—as part of your financial profile, though these are not typically the main approval factors.

Employment History

Having a long-standing job in a stable industry can support your application. Certain professions, such as those in legal, accounting, or healthcare sectors, may be considered lower risk.

Existing Debts

If your other debts—such as personal loans or credit card balances—are relatively low, this may improve your borrowing capacity. Still, responsible credit behaviour is often just as important as the amount of debt.

Ready to Learn More?

Buying with a smaller deposit can feel overwhelming, but there may be lending options worth exploring depending on your circumstances. Factors like income, employment, and credit history often play a role in what’s available.

Speaking with a specialist can help make sense of your potential options. Our team here at Ausfirst Lending Group offers tailored guidance to help clarify what might be possible.

Want to understand where you stand? Get in touch to talk through your goals and see what paths might be open to you—no pressure, just a helpful conversation.

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Visit Your Local Mortgage Broker on the Sunshine Coast

Whether you're buying your first home, refinancing, or exploring loan options through a trust or SMSF, we’re here to guide you every step of the way. As your trusted Mortgage Broker on the Sunshine Coast, we offer personalised advice tailored to your needs.

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Why Choosing Ausfirst Lending Group?

Backed by extensive experience in the mortgage sector, we provide a one-stop solution for all your lending needs in the Sunshine Coast. Whether you’re buying a new home, refinancing your current mortgage, purchasing an investment property, or seeking commercial loans to get new equipment for your business, our team is here to provide personalised guidance and expert insights every step of the way. With Ausfirst Lending, you’re not just getting a loan—you’re gaining a long-term financial partner.

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FAQs on Low-Deposit Home Loans

Not all lenders offer low-deposit loans. However, both major banks and non-bank lenders may have suitable options, depending on your profile and the property type.

Interest rates vary depending on factors such as your deposit size, profession, income, and credit history. Some borrowers—particularly professionals with stable income—may be able to access competitive rates even with a smaller deposit.

Some lenders may offer home loans between 85% and 95% LVR without LMI, depending on their policies and your eligibility.

Sometimes, a smaller deposit may result in a higher interest rate. However, this depends on the overall application. Strong income, secure employment, and a good credit history could potentially help you access more favourable terms.

Some major lenders do provide low-deposit loans, although this varies by lender and your financial position. We can help assess which lenders may align with your goals and eligibility. In certain situations, you may also be able to access flexible loan features or reduced LMI costs.

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