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!

Low deposit home loan comparisons on Mozo - page last updated September 28, 2020

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  • 2.78% p.a. variable

    2.79% p.a.

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  • 2.79% p.a. variable

    2.81% p.a.

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  • 2.74% p.a. variable

    2.75% p.a.

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  • 2.39% p.a.
    fixed 3 years

    3.08% p.a.

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  • mozo-experts-choice-2020

    2.34% p.a.
    fixed 3 years

    3.67% p.a.

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  • 2.65% p.a. variable

    2.68% p.a.

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*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.

**Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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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 $500,000 you would need a deposit of $100,000. Now, saving up a $100,000 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 becoming rarer 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 or 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 a great deal on your home loan. Our Home Loans Interest Rates page can not only help you find a competitive interest rate, but it 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 this super easy 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.

Or simply head straight to our comprehensive search tool and get a ranking of loans based on price.

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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

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.

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