No deposit home loans: what's really possible, and the cheapest way in

Can you get a home loan with no deposit?

A home loan with no deposit is rare, and not something a lender offers you on your own. CommBank, for example, won't lend more than 95% of the property's value, so on your own you usually need at least 5% of the price, plus money for stamp duty and costs [4].

Two routes come closest to zero. With a family guarantee, a parent's equity stands behind part of the loan: ANZ's and Bankwest's own pages say they'll lend up to 100% of the purchase price that way, and Bankwest adds "plus fees, no LMI" [8]. With Help to Buy, you put in as little as 2% and the government pays part of the price [2].

What this means for you: when people search for a no deposit home loan, most are really asking how to buy with very little saved. That question has five real answers, and Money Brain sets them side by side below, with the rules each one carries.

How to buy a house without a deposit: the five ways in

There are five ways to buy without a 20% deposit, and the right one depends on your price, your income, your job and your family. LMI, lenders mortgage insurance, is the insurance a lender takes out when you borrow more than 80% of the value, and you pay for it.

You can combine some of these, but not all: the 5% Deposit Scheme and Help to Buy can't be used together [1]. More on each in the parts below, and on the scheme against a guarantee, side by side.

Can first home buyers buy with 5% and no LMI?

Yes. Under the Australian Government 5% Deposit Scheme, first home buyers can buy with a 5% deposit and pay no LMI, because Housing Australia guarantees part of the loan to the lender instead [1]. The scheme was called the Home Guarantee Scheme until it was renamed.

The scheme has no income caps, no waiting list and no limit on places. You need to be an Australian citizen or permanent resident, 18 or older, and you mustn't have owned property in the past 10 years [1].

The deposit has a ceiling as well as a floor. It must be at least 5% and less than 20% of the value: if you have 20% or more saved after stamp duty and legal costs, your loan isn't eligible [1].

What this means for you: on a $700,000 home, the scheme takes about $30,000 of LMI off the table (part 19). If your price fits under the cap, it's usually the first route to check. The details are on the First Home Guarantee page.

What price can you pay with a 5% deposit and no LMI?

The 5% Deposit Scheme sets a price cap for each area, and both the purchase price and the lender's valuation must be at or below it [1]. The capital city cap also covers a short list of regional centres: in New South Wales, the Central Coast, Coffs Harbour-Grafton, the Illawarra, the Mid North Coast, Richmond-Tweed, and Newcastle and Lake Macquarie; in Victoria, Geelong; in Queensland, the Gold Coast and the Sunshine Coast. Everywhere else takes the rest-of-state cap [1].

If you're building, the land price plus the build cost must stay under the cap too [1].

Can you buy a home with a 2% deposit?

Yes, two ways. Help to Buy takes a 2% deposit from Australian citizens under its income caps. Single parents and legal guardians can also buy from 2% under the 5% Deposit Scheme, with no LMI [1][2].

Help to Buy is shared equity: the government puts in up to 30% of the price of an existing home, or up to 40% of a newly built one, so you borrow less. You own the home and share some of its value with the government [2].

Your income must be at or below $103,000 if you're single, or $165,000 for single parents and joint buyers. All applicants must be Australian citizens, and there are 10,000 places a year. The home must be at or below a price cap for its location [2].

Help to Buy can't be combined with state shared equity schemes, loans or guarantees, but stamp duty concessions and first home grants still apply [2]. More on Help to Buy, and on single parent home loans.

Government guarantee or shared equity: which fits you?

The 5% Deposit Scheme and Help to Buy can't be used together, so it's one or the other [1]. They solve different problems: the scheme removes the insurance, while Help to Buy shrinks the loan.

What this means for you: if you're under the Help to Buy income caps, the smaller loan can mean smaller repayments and a better chance of passing a lender's borrowing test. The trade is that you share part of the home's value. If you're over the Help to Buy income caps, or a permanent resident rather than a citizen, the 5% Deposit Scheme is the government route to check.

Can family help you buy with no deposit?

Yes. With a family guarantee, a family member offers the equity in their own home as extra security for part of your loan, so you can borrow more with less saved. ANZ and Bankwest say up to 100% of the purchase price, and Bankwest says no LMI [8].

Lenders limit how much of the family home is on the line. Westpac caps a single guarantee at 50% of the guarantor's security, and also takes savings or a term deposit as the security, capped at 20% of the guaranteed loan [8]. NAB also takes a term deposit [8].

Bankwest splits the loan in two: about 80% secured on your new home alone, and about 20% secured on your home and your guarantor's equity together [8].

It's a real commitment for the person who signs, and lenders treat it that way (part 10). More on guarantor home loans.

Can you use a gifted deposit?

Yes, a deposit gifted by family is accepted by lenders when it's a true gift. Lenders usually want a signed letter from the giver saying the money is a gift and doesn't have to be repaid, and they want to see the money in your account before you apply, so they can see where it came from.

A gift is different from a guarantee. A gift leaves the giver's home out of it, while a guarantee leaves the money with your family and puts part of their home behind your loan. Which suits your family is worth thinking through before anyone moves money.

Can you use your super towards a deposit?

Yes, through the First Home Super Saver Scheme. You can make voluntary contributions to your super of up to $15,000 in any one financial year, up to $50,000 in total, and later release them to buy your first home [11].

You must be 18 or older and never have owned property in Australia, including an investment property or vacant land. Your employer's compulsory super doesn't count. Of what you release, 100% of after-tax contributions and 85% of before-tax contributions come back, plus earnings worked out at a set rate [11].

You must ask the Australian Taxation Office for a determination before you own the home, and live in it for at least 6 of the first 12 months [11]. Couples can each use their own savings for the same home. More on the First Home Super Saver Scheme.

How much deposit do you need? 20%, 10%, 5% and 2% in dollars

Here's what each deposit level means on a $700,000 home. Stamp duty and buying costs come on top, unless a first home concession covers the duty (part 15).

With Help to Buy, the government pays up to 30% of an existing home's price or 40% of a new one's, so your loan is smaller than the table shows [2].

Stamp duty and costs: what turns 5% into more

Your deposit isn't the only money you need. Stamp duty, legal and conveyancing fees, inspections and the lender's own costs come on top, and lenders want to see you can cover them. That's what turns a 5% deposit into a larger amount of savings, and it's why approvals fall over when costs weren't counted.

First home buyers often pay less or no stamp duty. Here's what a first home buyer pays in four states on the $700,000 example:

In Western Australia the first home rate is $16.15 for each $100 above $600,000, and stops applying above $800,000 [18]. In Queensland, a $730,000 first home pays $6,555 under the concession, on the Queensland Revenue Office's own example [12]. Queensland's concession also needs you to be a citizen, a permanent resident or a specified foreign retiree [12].

Work out your own with the stamp duty calculator, and see first home grants and duty by state.

No deposit home loans in Perth, the Gold Coast and New South Wales

Where you buy changes three numbers at once: the 5% Deposit Scheme's price cap, the first home stamp duty, and the first home owner grant for a new home. Here they are side by side.

The grants in these four states are paid on new homes (Western Australia also counts a substantially renovated one), so check before you count one towards your deposit [13][15][17][19]. See the Western Australia, Queensland, New South Wales and Victoria guides, and mortgage broking on the Gold Coast.

What does a 95% or 98% home loan really mean?

A 95% home loan means the lender lends up to 95% of the property's value, its LVR, the loan as a share of the value. But lenders count LMI differently. Some include the premium inside the 95%, so your real deposit has to be a little more than 5%. Others let it sit on top [7].

Macquarie's rate card says its 95% maximum includes the LMI added to the loan [7]. Bankwest's rate page shows a band up to 98% "including LMI": that's the loan after the premium is added to a 95% base loan, not a 2% deposit [4].

What this means for you: two lenders that both say "95%" can need different deposits from you. Comparing them on the headline number alone compares figures that aren't the same thing.

How much is LMI on a 5% or 10% deposit?

LMI on a 5% deposit is far more than on a 10% one. Here's what one insurer's published first home buyer rate card would charge [3]:

These are illustrations from one rate card, not quotes. Premiums vary a lot between lenders and insurers, and the card's minimum premium is $1,200 [3].

Can you add LMI to the loan? Usually, yes: the premium is added to the loan, so you pay interest on it too. That's why some lenders count it inside their 95% (part 17).

What this means for you: on a $700,000 home, moving from a 5% to a 10% deposit cuts the premium on this card from about $29,992 to about $16,632. That gap is what the 5% Deposit Scheme, a profession waiver or a guarantee is worth.

When the property, not you, is the problem

Lenders limit high loan-to-value lending on some properties, whoever's buying: certain postcodes, small or high-density units, and unusual properties. The product matters too, as Bendigo Bank's limits show (part 18) [6]. Ask before you fall in love with a property, so the deposit you've planned is the one the lender needs.

Can you get a low deposit home loan with bad credit?

It's harder, because a low deposit and a credit problem are both things a lender weighs as risk. A scheme or a guarantee changes the deposit you need, not the credit check: the lender still assesses your credit history, your income and your debts.

What helps is knowing exactly what's on your file and what each lender will accept before you apply, rather than after. More on bad credit home loans.

Can you use equity as a deposit?

Yes, if you already own property: the equity in it, the value above what you owe, can stand in for a cash deposit on the next one. For a first home buyer, the closest thing is a family guarantee, where a parent's equity does that job (part 9). See using equity to buy an investment property.

How much can you borrow with a small deposit?

The deposit sets how much of the price you need to borrow, but not how much a lender will lend you. That comes down to your income, your debts and your living costs. Banks then check you could still make the repayments if rates were 3 percentage points higher, the buffer set by APRA, the banking regulator [20].

A small deposit can work against you twice: a bigger loan means bigger repayments to pass that test, and LMI added to the loan makes it bigger again. Help to Buy works the other way, because the government's share shrinks the loan (part 7). See how much can I borrow.

When waiting a few months beats every route

Sometimes the best move is to keep saving. If a few more months would take you past a lender's genuine savings test, cover the costs you hadn't counted, or move you from 5% to 10%, the wait can save thousands in insurance (part 19) or open lenders that were closed to you. And close to 20%, LMI disappears altogether.

The other side: prices can move while you save. Whether waiting comes out ahead is a sum on your own numbers, not a rule.

What does a broker cost you?

How a broker is paid, and the rule Money Brain holds against it, is set out in full on its own page: what a mortgage broker costs.

Your first move

You've read the routes and the rules. Now there's one question left: which way in costs you least, at the price you want and with the money you have? That depends on your savings, your income, your job and your family, and it's what Money Brain works out before anything goes to a lender.

When you're ready, the closing section below is the simplest way to start.