Compare Low deposit home loans for November

A low deposit home loan usually means having a deposit of 10% or less of the property's value. Compare low deposit home loan options from a range of lenders from online to well-known bank brands below. 

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Low deposit home loan comparisons on Mozo - last updated 22 February 2024

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  • Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

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    6.09% p.a. variable
    6.11% p.a.

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

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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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Low deposit home loans key information 

So, what does a low deposit home loan look like? In Australia, the standard deposit that you need when purchasing property is 20% of the property's value. This means that if you are buying a property for $500,000 you would need a deposit of $100,000. Now, saving up for a $100,000 deposit is no walk in the park and would take most people several years to achieve.

An alternative option to saving up for this deposit is to take out a low deposit home loan which will only require you to save a deposit of around 5 -10%. 

So, let’s say you’ve only saved up to $50,000 for a deposit—half of what you need for the 20% deposit. By getting a low deposit home loan, that $50,000 would equal to 10% of the property's value meaning that you would be able to jump onto the property ladder earlier than you could have. Just keep in mind that, when starting with a lower deposit, the amount of interest you are paying is larger as well as your loan size—remember, in this scenario, you’re borrowing $450,000 instead of $400,000.

One thing to note is that the lending criteria for home loans have tightened since the GFC, 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 might be a good idea to aim towards snagging a low deposit at 10% of the property's value.

Will I have to pay lenders mortgage insurance?

Unless you have a family or government guarantor, 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 an LVR of 80% or more are required to take out this insurance. The cost for this insurance is added to your home loan amount. How much you need to pay for LMI will depend on the amount you are borrowing and your LVR. Just keep in mind that LMI isn’t transferable.

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 insurance you pay to protect the bank or mortgage lender should you default on your repayments.

Government support for low deposit home loans 

The property market can be pretty competitive, so using a low deposit home loan to get on the property market can be a helpful way of breaking in. That being said, the LMI that you usually have to pay can seem like just another extra expense that you’ve got to contend with. Thankfully, if you’re a first home buyer (or haven’t owned a property in the past 10 years) then you might be eligible for the First Home Guarantee. 

With the First Home Guarantee, the government acts as your guarantor which means that they provide additional security to the loan—essentially, removing the need for you to pay LMI. Keep in mind that the scheme is kept to participating lenders, so you be sure to check that your loan provider actually is a part of the scheme. 

So, what else do you need to know about the First Home Guarantee scheme? First off, it’s for low deposits from 5% up to a standard deposit of 20% and is intended for both individuals and joint applicants. It’s important to note that if you’re an individual earning over $125,000 or a joint applicant with a total equalling over $200,000, you won’t be eligible for the scheme. 

What are the Advantages of low deposit home loans?

If you’re a borrower who’s looking to get into the property market now, whether an investor or first time home buyer, then you’ll be interested to know about some of the advantages that come with getting a low deposit home loan. Some of these include:

  • Less time saving for a deposit: Low deposit home loans can make homeownership accessible to people who have not been able to save a deposit. This is particularly beneficial for first-time home buyers who may struggle to save while also paying rent.

  • Get on the property ladder sooner: A low deposit home loan has the potential to let borrowers get their home faster than they may otherwise have gotten had they saved for the full 20% deposit.

  • Hold more money back: With a lower initial deposit, you may be able to maintain a substantial emergency fund which—when combined with an offset account or extra repayments—can lead to 

  • Government schemes: If you’re a first time home buyer, chances are you may be able to get your low deposit loan backed by the government which usually means an exemption from paying lenders mortgage insurance (LMI).

What are the Disadvantages of low deposit home loans?

While a low deposit home loan can be useful for borrowers who are looking to get on the property ladder early, there are some drawbacks that you should consider.

  • Lower equity: One downside to having a low deposit is that you’ll be starting with a lower equity which means that there’s a larger loan and, therefore, your regular repayments could be larger than they otherwise would be at a 20% deposit.

  • Higher Interest Rates: As a lower deposit is viewed as more risky by the banks, home loan providers will generally require that borrowers pay higher interest. 

  • Lender's Mortgage Insurance (LMI): If you have a deposit of less than 20% of the property's value, you will usually be required to pay Lender's Mortgage Insurance. This is a one-off fee that protects the lender, not the borrower, if you can't repay the loan. However, if you then this you likely won’t have to pay LMI.

How can I work out what my repayments will be?

We've made working out your repayments as simple as possible with our handy mortgage 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. 

What does the home loan application process look like?

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:

  • Identification (driver's licence, passport, etc.)

  • Proof of income

  • Liabilities (such as debts)

  • Credit score  

It’s also a good idea to make sure that you 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. 

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

If you’re looking for a low deposit home loan, 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. 

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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.The Capricornian

  • MyState Bank

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Comparing low deposit loan interest rates

If you are planning on purchasing a home with a small deposit, then finding the right home loan is essential. Because, while buying a low deposit does mean you could be paying a higher interest rate, it doesn’t mean you still can’t get a deal on your home loan. Our home loans interest rates page is 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.

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JP Pelosi
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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.

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Was going to leave the bank for better rates. Retention office made contact with us and provided interest rates much lower than all other banks. Now, I make contact annually direct to the retention office to try and get a better deal. Easy to deal with, contact was immediate by either phone or email. Initial set up of homeloan in branch was easy and Westpac employee was extremely helpful and genuinely wanting to help.

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