Your selected home loans
Lock in a low 2 year fixed rate with the Mozo award winning Home Lender of the Year. Available for live-in borrowers with just a 10% deposit required. Free extra repayments (up to 20% in fixed period), free redraw and partial offset available. $10 monthly service fee. Aussie support centre. Fast approvals. Up to 6 free offset accounts (T&Cs apply).
Read reviews and learn more about Bendigo Bank home loans
Go to siteLock in a low 2 year fixed rate with the Mozo award winning Home Lender of the Year. Available for live-in borrowers with just a 10% deposit required. Free extra repayments (up to 20% in fixed period), free redraw and partial offset available. $10 monthly service fee. Aussie support centre. Fast approvals. Up to 6 free offset accounts (T&Cs apply).
Read reviews and learn more about Bendigo Bank home loans
Go to siteGet the security of a competitive fixed rate home loan for 2 years with IMB. Get up to $4,000 cashback (T&Cs apply). Up to 12 months repayments in advance without penalties. Free Internet and Mobile Banking redraws (T&Cs apply). Up to a 30 year loan term. Split loan available. No offset account.
Read reviews and learn more about IMB Bank home loans
Go to siteGet the security of a competitive fixed rate home loan for 2 years with IMB. Get up to $4,000 cashback (T&Cs apply). Up to 12 months repayments in advance without penalties. Free Internet and Mobile Banking redraws (T&Cs apply). Up to a 30 year loan term. Split loan available. No offset account.
Read reviews and learn more about IMB Bank home loans
Go to site
Read reviews and learn more about HSBC home loans
Get online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.
Read reviews and learn more about Bendigo Bank home loans
Go to siteEnjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
Read reviews and learn more about HSBC home loans
Your selected home loans
Home loans come in many shapes and sizes, start comparing here based on your needs.
Search the Mozo Database
Browse all home loans in Mozo's comparison database
The standard for home loan deposits in Australia is 20% of the property’s purchase value, but for those struggling to save for their first deposit, it’s possible to opt for a low deposit home loan.
With a low deposit home loan you only pay around 5-10% of the property’s value, instead of the typical 20% deposit.
Low deposit home loans have some drawbacks, including higher interest rates, stricter lending criteria and the added expense of lenders mortgage insurance (LMI) in some cases.
The upside of a low deposit home loan is that it gets you on the property ladder sooner, which may be particularly helpful for first home buyers, or anyone looking to get ahead of potentially rising property prices.
A low deposit home loan means you’ll have a high loan-to-value ratio (LVR). Your LVR refers to the amount of money you need to borrow in proportion to the property’s value.
Lenders typically want you to have a home deposit of at least 20%, which gives you a loan-to-value ratio of 80%. If your LVR is more than 80%, it’s likely you’ll be deemed a riskier borrower and may need to pay a higher interest rate.
This is important to keep in mind with low deposit home loans – if you’re taking out a mortgage with an LVR of more than 80%, you might pay more interest in the long run. You may also need to pay lenders mortgage insurance.
Low deposit home loans of under 20% generally require you to pay lenders mortgage insurance.
It’s a type of insurance that protects the lender if you’re no longer able to meet your home loan repayments, but it’s a cost the lender passes on to you.
The cost of LMI will depend on the amount you’re borrowing and your LVR.
There are ways to avoid paying lenders mortgage insurance, such as government home loan grants that can waive the cost of LMI you’d typically have to pay, even if you have a deposit as small as 5%.
Other ways to avoid paying lenders mortgage insurance include asking a family member about going guarantor on your home loan or using a substantial cash gift.
Lenders mortgage insurance can be paid in a one-off instalment, but it’s often lumped into the overall cost of your home loan so you pay it off over time. While this spreads out the cost over time, it means it will also accrue interest.
LMI doesn’t protect you if you can’t meet your mortgage repayments, so you would need to take out income protection or mortgage protection insurance to cover you in case of illness. injury or redundancy.
A low deposit home loan can be a helpful way of getting into the property market, but higher interest rates and LMI are added expenses that can be a deterrent.
However, if you’re a first home buyer in Australia, you may be eligible for First Home Owner Grants (FHOGs) or other first home buyer schemes.
With the First Home Guarantee, for example, the Australian government acts as your guarantor. This means the government provides additional security by adding to your home loan deposit.
Keep in mind that the government’s home loan schemes are kept to participating lenders, so you’ll need to check that your mortgage provider is participating. Income limits also apply and not everybody is eligible.
If you’re looking to get into the property market now, whether as an investor or first time home buyer, here are some advantages to getting a low deposit home loan:
While a low deposit home loan can be useful for borrowers looking to get on the property ladder early, there are some drawbacks that you should consider:
You can estimate your repayments with Mozo’s free home loan repayments calculator.
Just plug in your loan amount and term and our calculator will instantly tell you what your monthly repayments will be so that you can begin budgeting.
The application process for a low deposit home loan can involve a fair amount of preparation. Generally, you should check you have your documentation in order, such as:
It’s a good idea to do your research for the loan you’re looking to get, as there are other costs associated with a home loan such as stamp duty and legal fees.
Yes, there are various lenders that will allow you to take out a home loan with a deposit as low as 5% (which gives you a 95% loan-to-value ratio).
According to the Mozo database, borrowers with a low deposit will be able to pick between a variety of big banks, credit unions and online lenders, though the interest rates on offer vary greatly.
Low deposit home loans usually come with the same features as standard home loans, but they tend to have higher interest rates and stricter lending criteria.
Low deposit home loans can come with the standard fees you’d pay for with a typical home loan, including application, property valuation, settlement and service fees.
You may also need to pay lenders mortgage insurance (LMI), unless you’re eligible to buy through a government home loan grant.
Crunch the numbers with our range of home loan calculators! See all calculators
Learn what you need to know about home loans and money management in our helpful guides. See all
Get the latest on property market trends, interest rates, and lending news from Mozo's expert writers. See all
We compare home loans from the following well-known lenders and many more... SEE MORE HOME LOAN LENDERS
When my husband sold his business he got a large cash transfer and Bendigo bank couldn’t track the money The man said we should wait 24hours We were like we are not leaving till you find out where in your system it is They found it within the hour Also they have a lot of online banking outages which can be frustrating when you are shopping We are actually going to open another account with another bank and put some money in for when they go down
Read full reviewWhen my husband sold his business he got a large cash transfer and Bendigo bank couldn’t track the money The man said we should wait 24hours We were like we are not leaving till you find out where in your system it is They found it within the hour Also they have a lot of online banking outages which can be frustrating when you are shopping We are actually going to open another account with another bank and put some money in for when they go down
Great for Qantas points, you get 100,000 Qantas points on the anniversary of your home loan. The interest rates are also very good too and competitive.
Read full reviewGreat for Qantas points, you get 100,000 Qantas points on the anniversary of your home loan. The interest rates are also very good too and competitive.
Easy to deal with Local branches Supportive service
Read full reviewEasy to deal with Local branches Supportive service
More home loan reviews