What Are Low Deposit Home Loans and How Do They Work?

For many Australians, saving for a home deposit is one of the biggest hurdles to homeownership. Low deposit home loans are designed to help buyers enter the property market without having to save a large deposit. Typically, these loans allow you to purchase a home with as little as 5% deposit, making it an appealing option for first-time buyers.

In this post, we’ll explain how low deposit loans work and the eligibility requirements. We’ll also discuss the role of lenders mortgage insurance (LMI), which is usually required for borrowers with less than a 20% deposit. LMI can increase your overall loan cost, so it’s important to weigh the benefits of getting into the market sooner versus the extra expense.

We’ll also look at government schemes that can help reduce or eliminate the need for LMI, such as the First Home Loan Deposit Scheme, where the government acts as a guarantor. This can make low deposit loans more affordable for eligible buyers, allowing you to secure a home with lower upfront costs.

Find out if you qualify for a low deposit home loan and get expert advice from our mortgage brokers.