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!

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low deposit home loans

Low deposit home loan comparisons on Mozo - last updated 14 August 2022

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  • PAYG Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    3.29% p.a. variable
    3.33% p.a.

    Low variable rate. Ideal for new home buyers or refinancers. Unlimited additional repayments. Unlimited free redraw. Application completely online. Optional 100% offset can be added for $120 p.a.. 20% deposit required.

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  • PAYG Investor Loan

    Investment, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    3.64% p.a. variable
    3.68% p.a.

    Low variable rate. Ideal for investors buying or refinancing. Unlimited additional repayments. Unlimited free redraw. Application completely online. Optional 100% offset can be added for $120 p.a.. 20% deposit required.

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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.

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Home loan resources

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

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. 

How can I find a suitable low deposit lender in my state or territory?

If you’re looking for a low deposit home loan, you could be better suited to a lender local to your area. Lenders in local areas can be quicker as they are more familiar with the areas they cover. Having a local lender allows you to work face to face with lending professionals removing any uncertainty and potentially poor customer service.

Additionally, having access to a wealth of local knowledge is a great asset and something you might want to tap into. Below we have a list of local low deposit providers for each state. 

Sydney and Greater NSW

For buyers based in Sydney, there are plenty of options available for lenders offering low deposit home loans. Here are some lender options:

  • Bank of Sydney

  • Macquarie

  • AMP Bank

  • Aussie Home Loans

  • Qudos Bank

  • Teachers Mutual Bank

  • Unity Bank

  • UniBank

There are also regional NSW low deposit lending options available:

  • Greater Bank
  • Macquarie Credit Union
  • Hume Bank
  • Coastline Credit Union
  • Newcastle Permanent
  • Orange Credit Union
  • Illawarra Credit Union
  • Regional Australia Bank
  • Southern Cross Credit Union
  • The Mutual Bank

Melbourne and Greater Victoria

For buyers based on Melbourne, there are options available for low deposit lenders local to you. These include:

  • Bank of Melbourne

  • Bank of Australia

  • Australian Unity

  • Bank First

  • BankVic

  • FreedomLend

  • OneTwo

  • Well Home Loans

For buyers in regional Victoria, here are a few low deposit lenders: 

  • Bendigo Bank

  • BankWAW

Brisbane, Gold Coast, and Greater Queensland

For buyers located in Brisbane and the Gold Coast, there are local low deposit lenders available to you, including:

  • Bank of Queensland

  • firstmac

  • Auswide Bank

  • Great Southern Bank

  • ME

  • MOVE Bank

  • QBANK

  • RACQ Bank

  • Suncorp

  • Virgin Money

  • Reduce Home Loans

For low deposit lenders in regional Queensland, check out:

  • Heritage Bank

  • Queensland Country Bank

  • The Capricornian

South Australia

For buyers in South Australia, local low deposit lender options include the following:

  • BankSA

  • Adelaide Bank

  • Beyond Bank

  • Credit Union SA

  • People's Choice

  • Tic:Toc Home Loans

Western Australia

For buyers in Western Australia, local low deposit lender options include the following:

  • Unibank

  • Bankwest

  • Goldfields Credit Union

  • P&N Bank

Tasmania

For buyers in Tasmania, local low deposit lender options include the following:

  • Bank of us.

  • MyState Bank


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

Mortgage House Home Loan
Overall 1/10
Senior Broker or Clown?

Supposedly under a “senior broker,” he was incompetent from start to finish. He wrote on our documents that we were “divorced” and put a loan through twice. Possibly for the kickbacks. Not sure how many divorced ppl apply for a loan together. He made errors when it came to balancing our accounts. If we have no credit cards, how can we be spending more than we earn? He submitted a loan as though my husband and I were separate parties. As a result we were rejected from one of the big 4 banks. We have a mark now on our record because of this clown. He sent us emails about “land tax” that did not even apply to us. I emailed him to query emails he sent through which did not make any sense. Did he even read the application? We told him we had a savings account for the kids schooling. We told him what it was for several times, and it still appeared on the final contract as a question mark. When I asked him to remove it as it had been clarified, he told me I had to “pay their legal fees to have it removed.” One mistake after another. He claimed he put time and effort into our loan. The time he put into the loan was to correct all his own mistakes. (Took 4 months). We have no credit cards, no loan and own everything outright. He took so long that I had to push back the contractor who was waiting for the job. Our loan was approved by nab in 1hr in the end. They treated us with kindness and respect. I think the mortgage broker should be held accountable for leaving us with a bad credit record which stays on our account for 7 years. When I questioned him about all his errors, he said “we were not worth his time” and that he was not “making any money from us.” He cunningly said this on his mobile so it could not traced back to him. He tried to blame my husband and I for not filling out the paperwork. No integrity. Red flag for Mortgage House. If you are going to be in customer service, you need to be able to manage people without being rude. Mortgage house and this senior broker I have reported to AFCA! Don’t be deceived by the line of “we will return your application fee” at anytime. This was also a lie, which the senior broker spouted over and over again, only to find out he had lied about that too. My only regret is not recording the abuse I received from the “Senior Broker” so I could send it to AFCA. I would not even speak to my dog the way he spoke to me. He was angry that I had called him out on the lies and incompetency and did not have the decency to admit it. Their contract is 95 pages, so beware. It’s a red flag.

Read full review

Supposedly under a “senior broker,” he was incompetent from start to finish. He wrote on our documents that we were “divorced” and put a loan through twice. Possibly for the kickbacks. Not sure how many divorced ppl apply for a loan together. He made errors when it came to balancing our accounts. If we have no credit cards, how can we be spending more than we earn? He submitted a loan as though my husband and I were separate parties. As a result we were rejected from one of the big 4 banks. We have a mark now on our record because of this clown. He sent us emails about “land tax” that did not even apply to us. I emailed him to query emails he sent through which did not make any sense. Did he even read the application? We told him we had a savings account for the kids schooling. We told him what it was for several times, and it still appeared on the final contract as a question mark. When I asked him to remove it as it had been clarified, he told me I had to “pay their legal fees to have it removed.” One mistake after another. He claimed he put time and effort into our loan. The time he put into the loan was to correct all his own mistakes. (Took 4 months). We have no credit cards, no loan and own everything outright. He took so long that I had to push back the contractor who was waiting for the job. Our loan was approved by nab in 1hr in the end. They treated us with kindness and respect. I think the mortgage broker should be held accountable for leaving us with a bad credit record which stays on our account for 7 years. When I questioned him about all his errors, he said “we were not worth his time” and that he was not “making any money from us.” He cunningly said this on his mobile so it could not traced back to him. He tried to blame my husband and I for not filling out the paperwork. No integrity. Red flag for Mortgage House. If you are going to be in customer service, you need to be able to manage people without being rude. Mortgage house and this senior broker I have reported to AFCA! Don’t be deceived by the line of “we will return your application fee” at anytime. This was also a lie, which the senior broker spouted over and over again, only to find out he had lied about that too. My only regret is not recording the abuse I received from the “Senior Broker” so I could send it to AFCA. I would not even speak to my dog the way he spoke to me. He was angry that I had called him out on the lies and incompetency and did not have the decency to admit it. Their contract is 95 pages, so beware. It’s a red flag.

Price
1/10
Features
1/10
Customer service
1/10
Convenience
1/10
Trust
1/10
Less
Mare, New South Wales, reviewed 3 days ago
NAB Home Loan
Overall 9/10
Good customer service and home loan rates

The online banking and app is really user friendly and easy to use. Customer service is good, when I call I always get to speak to an advisor quickly and am not waiting on hold for a lifetime.

Read full review

The online banking and app is really user friendly and easy to use. Customer service is good, when I call I always get to speak to an advisor quickly and am not waiting on hold for a lifetime.

Price
8/10
Features
8/10
Customer service
9/10
Convenience
10/10
Trust
9/10
Less
Kathleen, New South Wales, reviewed 3 days ago
ANZ Variable Rate Home Loan
Overall 9/10
Like I said as above very happy with Kifayat Hussa

Kifayat Hussain is home loan manager at ANZ Dandenong branch. He is a very calm professional banker. Very knowledgeable and helped us a lot in every need. He is always available if we have questions . W9 t hesitate to recommend him.

Read full review

Kifayat Hussain is home loan manager at ANZ Dandenong branch. He is a very calm professional banker. Very knowledgeable and helped us a lot in every need. He is always available if we have questions . W9 t hesitate to recommend him.

Price
9/10
Features
9/10
Customer service
9/10
Convenience
9/10
Trust
9/10
Less
Maria, Victoria, reviewed 3 days ago

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