Sketch of a house and some home loan calculations under a coffee cup

Low Deposit Home Loans

A low deposit home loan requires an initial deposit of just 10% or less of a property’s value. This offers first home buyers a chance at ownership when they don’t have enough money saved for a standard home loan.

Remember, you will likely need to buy Lenders mortgage insurance (LMI) if you choose to take out a home loan with less than a 20% deposit. This can be a trade-off for buyers, who on one hand can put down a lower deposit but on the other, must meet an extra ongoing cost that’s paid back over time. Start comparing home loans now!

Fact Checked

Low deposit home loan comparisons on Mozo - last updated 29 November 2021

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Mozo Experts Choice 2021
    Well Balanced

    Owner Occupier, Principal & Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    2.52% p.a. variable
    2.55% p.a.

    A great value low rate home loan for variable owner occupiers. Free extra repayments and free redraw facility. No ongoing fees. Option for a split account available. Up to 90% LVR. Winner of the Offset Home Loan Expert's Choice Award for 2021.

    Compare
    Go to site
    Details
  • placeholder
    Back to Basics Special

    LVR<90%, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    2.54% p.a. variable
    2.55% p.a.

    No monthly account keeping fee. $0 ongoing annual fee. Make additional repayments anytime. Only 10% minimum deposit.

    Compare
    Details
  • placeholder
    Mozo Experts Choice 2021
    Well Balanced

    Investor, Principal & Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    2.87% p.a. variable
    2.90% p.a.

    Low variable rate home loan for Investors up to 90% LVR with no ongoing fees, free extra repayments and redraw facilities. Winner of the Offset Home Loan Expert's Choice Award for 2021.

    Compare
    Go to site
    Details

Want more home loan options?

Compare by home loan type

Browse all 501 home loans in Mozo's comparison database

Search now

^See information about the Mozo Experts Choice Home loans Awards

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

Home loan lenders we compare at Mozo

Save with deals from the following well-known brands and many more...

See all home loan providers

Home loan resources

Views, news, tips and guides to help find the home loan for you.

Home Loan FAQs
Guides & Tips
Home Loan Reviews
Home Loan Calculators
News

Low deposit home loans key information 

In Australia, the standard down payment that you need when purchasing property is 20%. This means that if you are buying a property for $700,000 you would need a deposit of $140,000. Now, saving up a $140,000 deposit is no walk in the park and would take most people several years to achieve.

An alternative option to saving the deposit upfront is to take out a low deposit home loan. These home loans will only require you to have a deposit around 5 -10% instead of the required 20%. In home loan terms, this is often called the LVR, or loan to value ratio, so if you have a 10 percent deposit your LVR will be 90%.

In recent years (post GFC) the lending criteria for home loans has been tightened so it is no longer possible to get a no deposit home loan. Even 5% deposit home loans are relatively rare, so if you are planning on purchasing property it is a good goal to aim for at least having a 10 percent deposit.

Will I have to pay lenders mortgage insurance?

Yes, If you decide to opt for a low deposit home loan you will need to pay lenders mortgage insurance (LMI). All home loans that have a LVR of 80% or more are required to take out this insurance. The cost for this insurance is added to your home loan amount.

It is important to understand that this insurance does not protect you if you can't meet your repayments. You would need to take out mortgage or income protection insurance to cover you in case of illness or redundancy. LMI is an insurance you pay to protect the bank or mortgage lender should you default on your repayments.

How much you need to pay for LMI will depend on the amount you are borrowing and your LVR. The lender will tell you how much this will be.

LMI is also not transferrable so if you move or switch loans you will not be able to transfer this insurance to your new lender or property. You would need to pay this again if you have not yet reached an LVR of 80%.

Comparing low deposit loan interest rates

If you are planning on purchasing your first home with a small deposit, then finding the right home loan is essential. Because while buying your first home does mean you’ll pay Lenders Mortgage Insurance (LMI), it doesn’t mean you still can’t get a great deal on your home loan. Our home loans interest rates page is not only a great place to find a competitive interest rate, it can also help you compare a range of loan features from offset accounts to extra repayments.

How can I work out what my repayments will be?

We've made working out your repayments as simple as possible with our handy repayments calculator. Just plug in your loan amount and term and we'll instantly tell you what your monthly repayments will be so that you can begin budgeting. Otherwise head straight to our comprehensive search tool and get a ranking of loans based on price, or compare options to find the best mortgage for you. 

Picture of JP Pelosi
JP Pelosi
Managing editor

Jean-Paul (JP) Pelosi is an experienced journalist and editor who has contributed to many of Australia's leading media outlets including The Guardian, News.com.au, Domain.com.au, Investment Magazine and ANZ's Bluenotes. He has also edited news and communications for large financial services companies such as CommBank, Suncorp, Allianz and Amex. He loves a well told story and applying his editorial experience to content that readers both care about and enjoy. JP heads up our writing team.

More FAQs about low deposit home loans

Can I get a home loan with a 5% deposit?

Yes, there are plenty of lenders that allow borrowers to take out home loans with a deposit as low as 5% (so a 95% loan-to-value ratio). A quick look in the Mozo database shows that low deposit borrowers will be able to pick and choose between a variety of big banks, credit unions and online lenders, though the interest rates on offer vary greatly. 

Is the First Home Loan Deposit Scheme still available?

The federal government’s First Home Loan Deposit Scheme (FHLDS) is still up and running for first home buyers with low deposits (at least, as of June 2021). 

In short, the initiative allows first home buyers with a deposit between 5% and 20% to take out a home loan to purchase a new or existing property without needing lenders' mortgage insurance. Instead, the government acts as a guarantor for the loan. 

What is LVR? 

Loan-to-value ratio (LVR) is an important term to get to grips with in the world of home loans, particularly if you're planning on taking out a low deposit home loan. That’s because LVR is one of the key metrics used by lenders to determine how ‘risky’ you are as a borrower - the lower your deposit is, the higher your LVR will be, and the riskier you’ll be to lenders.  

Typically, lenders will also charge higher interest rates to borrowers with greater LVRs, but the good news is that as you pay off your loan and lower your LVR, you may be able to switch to a better rate.

Do low deposit home loans have the same features as standard home loans?

There are so many types of home loans available to borrowers these days that you can really cherry pick the features that will best suit you.

Interest rates on low deposit home loans are generally slightly higher and you may find that the borrowing limits are also lower on these loans so before you start property hunting it is a good idea to get an idea of the maximum loan amount available if you do have a smaller deposit.

Other features worth reviewing include:

offset account feature. Having an offset account attached to your home loan can save you a lot of money in interest over the life of your loan. Think of an offset as a bank account and the balance in that account is offset against your loan amount. So say you have $3000 in your offset bank account but you owe $500,000 on your home loan. Instead of paying interest on the full loan amount you will only pay interest on $497,000. This may not seem like a lot but over 25 years this adds up.

extra repayments. Having the ability to make extra repayments will also reduce the interest and the length of your loan term. Lump sums you get from work bonus or at tax time can make a difference but so too will putting an extra $50 each month onto your home loan.

What fees do I need to pay?

You could be up for the following fees depending on your loan choice:

Application fee. This is a fee payable when you apply for a home loan for the lender to assess and process your application. Some lenders waive this fee if you proceed through to settlement.

Valuation fee. You could be charged a valuation fee by the lender for them to value your property. It is important to understand that their valuation may be different to the price you paid for the property or the price given to you by a real estate agent. The lender will base their loan amount off the valuation done by their valuer.

Settlement fee. This is a nominal charge for a bank or lender representative to attend settlement on your behalf and file paperwork.

Service fee. Some loans will have a monthly or an annual service fee. It is important to review this carefully, a $10 a month fee might not sound like much but over a 25 year home loan this adds up to a cool $3000.

Discharge fee. This is a fee payable at the end of the loan term.

In addition to the fees charged by the lender, you may have to pay state or government fees and charges.

Stamp duty calculator. See here if you’ll need to pay stamp duty on your property purchase.

Check out the table above to find the right low deposit home loan for you.

What are the downsides to low deposit home loans? 

While a low deposit home loan may help you get into the property market or your dream home sooner, they’re not without their drawbacks - namely, higher rates and lenders’ mortgage insurance. These are costs you’ll likely need to factor into your budget, so you may want to weigh them up against saving up for a 20% deposit instead. 

While it’s still possible to secure a competitive rate with a low deposit home loan, lenders do tend to charge a premium for mortgages with LVR’s over 80%. And at the end of the day, a higher interest rate will only add to the amount of interest you pay over time.  

As we’ve explained above, LMI is the other main drawback buyers will need to be wary of when contemplating taking out a low deposit home loan. It’s a cost that generally can’t be avoided, and one that can run into the thousands or tens of thousands of dollars.

Home Loan Reviews

MyState Bank Home Loan
Overall 1/10
CONSIDERING CONTACTING A CURRENT AFFAIR PROGRAMME

Have a daughter applying for a home loan single person! Cannot believe understand the crap/delay/frustration/stress/stress and depression she is undergoing through this Organisation! Would not recommend Your Organisationtion - you advertise quick turnover for Loan applications - SUGGEST YOU ADVERTISE SOMEWHAT DIFFERENT - SLOW GO - SLOW PROCESS- SLOW APPROVAL - YOU SHOULD BE HELD ACCOUNTABLE - YOU DEFINITELY DO NOT PREACH WHAT YOU ADVERTISE!!!!! FALSE ADVERTISING COMPLETELY!!!!!!!

Read full review

Have a daughter applying for a home loan single person! Cannot believe understand the crap/delay/frustration/stress/stress and depression she is undergoing through this Organisation! Would not recommend Your Organisationtion - you advertise quick turnover for Loan applications - SUGGEST YOU ADVERTISE SOMEWHAT DIFFERENT - SLOW GO - SLOW PROCESS- SLOW APPROVAL - YOU SHOULD BE HELD ACCOUNTABLE - YOU DEFINITELY DO NOT PREACH WHAT YOU ADVERTISE!!!!! FALSE ADVERTISING COMPLETELY!!!!!!!

Price
1/10
Features
1/10
Customer service
1/10
Trust
1/10
Less
Daphne, Queensland, reviewed 12 days ago
RAMS Fixed Rate
Overall 1/10
Do yourself a favour and go with someone else to g

Absolutely useless bank. Their customer service policies are terrible and make it so difficult to resolve simple queries. I had an agent make mistakes during ID validation meaning I had to go on hold again and explain my situation again to a new person for no reason. What a waste of 20 minutes! Secondly, it’s genuinely easier to switch to a new bank than it is to stay with RAMS and complete a simple change. Why is that the case? RAMS is a bank living in the past and is better of being buried. Do yourself a favour and go with someone else to get better features, better rates and better service!

Read full review

Absolutely useless bank. Their customer service policies are terrible and make it so difficult to resolve simple queries. I had an agent make mistakes during ID validation meaning I had to go on hold again and explain my situation again to a new person for no reason. What a waste of 20 minutes! Secondly, it’s genuinely easier to switch to a new bank than it is to stay with RAMS and complete a simple change. Why is that the case? RAMS is a bank living in the past and is better of being buried. Do yourself a favour and go with someone else to get better features, better rates and better service!

Price
2/10
Features
1/10
Customer service
1/10
Convenience
1/10
Trust
1/10
Less
Manish, New South Wales, reviewed 12 days ago
firstmac Home Loan
Overall 1/10
Very unhappy customer would never never recommend

Misleading information. Pre approved then not pre approved. Offered loan then cancelled. Re financed then had to re finance again. Took up to 6 months with no answer and still no pre approval. Would not recommend at all very unhappy customer.

Read full review

Misleading information. Pre approved then not pre approved. Offered loan then cancelled. Re financed then had to re finance again. Took up to 6 months with no answer and still no pre approval. Would not recommend at all very unhappy customer.

Customer service
1/10
Trust
1/10
Less
Sarah, Queensland, reviewed 12 days ago
See tips
Home loan tips

Whether you’re after the lates home reno trends, money-saving tips or cheapest home loan deals, Mozo’s moneyvators have it covered. Check out our collection of money savvy articles and top tips.

See case studies
Home loan case studies

Find out how you can save on your home loan or learn about loan options for refinancing and investing with this series of helpful case studies and home loan scenarios.

See home loan providers
Home loan providers

Find the right home lender fast. Mozo details all home loan providers along with their home loan products right here so you compare rate, fees and features easily.

See more home loan resources