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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 loan comparisons on Mozo - last updated 23 October 2021

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    Green Home Loan

    Owner Occupier

    interest rate
    comparison rate
    Initial monthly repayment
    2.08% p.a. variable
    2.36% p.a.

    Great low rate on investment loans when you package with your owner-occupied loan.

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    Budget Home Loan

    LVR <90%, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    2.43% p.a. variable
    2.49% p.a.

    Competitve low interest rate for owner-occupiers with at least a 20% deposit, and no upfront fees. Free extra repayments and redraw. Zero ongoing fees.

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    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.

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    Back to Basics Special

    LVR<90%, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    2.59% p.a. variable
    2.60% p.a.

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

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    Fixed Home Loan Special Offer

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.96% p.a.

    No monthly account keeping fees & No loan establishment fee. Get up to $3,000 cash bonus when you refinance with an eligible Suncorp Bank Home Loan. T&Cs & eligibility criteria apply.

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    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.

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^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.

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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 $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. 

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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

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

Macquarie Home Loan
Overall 1/10
Banks somewhere else, they charge loyalty tax

The banks service has gone down hill. Now they give a 1300 number to ring and the wait times are awful. I've tried to get the bank to match the new customer home loan rate after being a loyal customer for 10 years and they keep refusing to review the rate. They are very poor in responding to emails and are very fast to raise rates when they can. Avoid at all costs.

Read full review

The banks service has gone down hill. Now they give a 1300 number to ring and the wait times are awful. I've tried to get the bank to match the new customer home loan rate after being a loyal customer for 10 years and they keep refusing to review the rate. They are very poor in responding to emails and are very fast to raise rates when they can. Avoid at all costs.

Price
1/10
Features
4/10
Customer service
1/10
Convenience
6/10
Trust
1/10
Less
Tara, Australian Capital Territory, reviewed about 18 hours ago
UBank UHomeLoan - Investor Extra Offer
Overall 1/10
Avoid.

Awful customer service. Very slow to deal with. String you along for a couple of weeks then find roadblocks to progress with loan application. You will loose contracts relying on this bank.

Read full review

Awful customer service. Very slow to deal with. String you along for a couple of weeks then find roadblocks to progress with loan application. You will loose contracts relying on this bank.

Price
5/10
Features
3/10
Customer service
1/10
Convenience
1/10
Trust
1/10
Less
Kris, Queensland, reviewed about 18 hours ago
Westpac Equity Access (Premier Advantage Package)
Overall 1/10
very slow application service. poor customer care

After losing a house i was about to purchase after the cooling off period being extended 3-4 times, purely because westpac weren't on the ball and didn't finish the application for 3 months, i have nothing but bad things to say about them. I would call them everyday asking to talk to someone but constantly being told "this application cannot be escalated any higher" or "i'm not authorised to give you that sort of information" or after being asked to get put through to a manager i would be told " im sorry im not allowed to do that". Each time i called i would be on the phone for at least half an hr before i could actually speak to someone. I lost my 0.25% deposit and i was lucky to get my 10% deposit back just because the vendor and real estate agent were so understanding. This one really made me have my doubts about westpac. But after the first application with them, I thought the 2nd application (for another house I eventually found) would be a lot quicker and easier as they already had all of my information. But that wasn't the case. I am currently in the process of the purchase of new house, and i was supposed to get the keys early this week, until westpac have told us they are not ready to proceed with the purchase (2 months after the offer was first accepted), luckily the vendor is happy to accept a extended settlement date by a week . But I still have my doubts that Westpac will have their shit sorted in time. they still dont give out information and still let you stay on hold for hours per week. I am not confident we will get our 10% deposit back this time and I am absolutely filthy with Westpac and their terrible service. I cannot explain the stress this has put me and my family under and I would not wish this on anyone. Strongly advise looking at any other bank other than westpac

Read full review

After losing a house i was about to purchase after the cooling off period being extended 3-4 times, purely because westpac weren't on the ball and didn't finish the application for 3 months, i have nothing but bad things to say about them. I would call them everyday asking to talk to someone but constantly being told "this application cannot be escalated any higher" or "i'm not authorised to give you that sort of information" or after being asked to get put through to a manager i would be told " im sorry im not allowed to do that". Each time i called i would be on the phone for at least half an hr before i could actually speak to someone. I lost my 0.25% deposit and i was lucky to get my 10% deposit back just because the vendor and real estate agent were so understanding. This one really made me have my doubts about westpac. But after the first application with them, I thought the 2nd application (for another house I eventually found) would be a lot quicker and easier as they already had all of my information. But that wasn't the case. I am currently in the process of the purchase of new house, and i was supposed to get the keys early this week, until westpac have told us they are not ready to proceed with the purchase (2 months after the offer was first accepted), luckily the vendor is happy to accept a extended settlement date by a week . But I still have my doubts that Westpac will have their shit sorted in time. they still dont give out information and still let you stay on hold for hours per week. I am not confident we will get our 10% deposit back this time and I am absolutely filthy with Westpac and their terrible service. I cannot explain the stress this has put me and my family under and I would not wish this on anyone. Strongly advise looking at any other bank other than westpac

Features
5/10
Customer service
1/10
Convenience
1/10
Trust
1/10
Less
Luke, Victoria, reviewed about 18 hours ago
See
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