Buying property with a smaller deposit is possible,and more common than you think. With rising house prices across Sydney, Melbourne and beyond, low-deposit home loans (sometimes called 95% LVR loans) let you enter the market sooner. Here’s how to secure a home loan with under 20% deposit in Australia.
Understand Lenders Mortgage Insurance (LMI)
When your deposit is under 20%, lenders protect themselves by charging LMI. This one-off premium can be capitalised (added to the loan) or paid upfront. While it increases your overall cost, it unlocks borrowing at 90–95% LVR.
Government Schemes to Reduce Your Deposit
- First Home Guarantee – Allows eligible first-home buyers to borrow up to 95% without paying LMI, backed by the Commonwealth.
- Family Guarantee – Parents can guarantee part of your loan, cutting the need for LMI.
Steps to Secure a Low-Deposit Loan
- Get Pre-Approval Compare home loan rates and get conditional approval so you know your borrowing limit.
- Provide Documentation Payslips, bank statements and identification,plus a clear budget plan.
- Budget for Additional Costs Stamp duty, legal fees, LMI and moving expenses.
- Explore Lender Options Some lenders specialise in low-deposit products; we’ll find the most competitive deal.
Tips for Success
- Demonstrate repayment capacity A stable job, low existing debts and strong savings history reassure lenders.
- Keep spending in check Avoid big purchases or new credit applications before settlement.
- Consider offset accounts Even with a small deposit, an offset account can reduce interest while building equity.
Benefits of Low-Deposit Loans
- Market entry sooner Buy now, ride capital growth.
- Leverage returns Higher LVR can amplify gains,but also losses if prices fall.
- Government assistance Grants and guarantees reduce barriers for first-home buyers.
At The Loan Office, our brokers specialise in low deposit loans. We’ll guide you through
- Assessing your savings and eligibility.
- Navigating LMI and government schemes.
- Securing the best rate and terms.
Ready to make your deposit count? Book a free consultation and let us show you how much home you can afford, even with a smaller deposit.