Buying your first home is exciting, but saving for a deposit can feel impossible. What if you could get a mortgage without a deposit? It sounds too good to be true, but there are ways to buy a home with little or no savings upfront. Let’s explore your options.
1. What Is a No Deposit Home Loan?
A no deposit home loan means you borrow 100% of the property’s price without putting down a deposit. In Australia, most banks require a 20% deposit, but some lenders offer alternatives if you don’t have savings.
2. Ways to Get a Mortgage Without a Deposit
a. First Home Guarantee (FHBG)
The First Home Guarantee (previously known as the First Home Loan Deposit Scheme) helps eligible first-home buyers purchase with as little as a 5% deposit. The government acts as a guarantor, so you don’t need to pay Lenders Mortgage Insurance (LMI).
Who is eligible?
First-home buyers in Australia
Australian citizens or permanent residents
Income limits apply ($125,000 for singles, $200,000 for couples)
Must live in the home (not for investors)
b. Guarantor Loan
A guarantor loan allows a family member (usually parents) to use their property as security for your loan. This means you can borrow 100% of the home’s value without a deposit.
Pros:
No need for a cash deposit
Avoid LMI costs
Get a better interest rate
Cons:
Your guarantor is responsible if you can’t repay the loan
It could affect their financial situation
c. First Home Owners Grant (FHOG)
Each state offers grants to help first-home buyers. For example, in Tasmania, eligible buyers can get up to $30,000 to put towards their home.
Find out more about grants in Tasmania, Western Australia, or check out other states on the FHBA .
d. Lenders Mortgage Insurance (LMI)
If you can save at least 5% of the home’s price, you might still get a loan by paying Lenders Mortgage Insurance (LMI). LMI protects the lender in case you default on the loan, but it allows you to buy a home sooner.
How does LMI work?
You pay a one-time fee (it can be added to your loan)
The lower your deposit, the higher the LMI cost
Some lenders allow first-home buyers to borrow up to 95% with LMI
e. Using Superannuation (First Home Super Saver Scheme – FHSSS)
The First Home Super Saver Scheme (FHSSS) lets you use your superannuation to help buy a home. You can withdraw up to $50,000 of your voluntary super contributions for your deposit.
3. Pros and Cons of No Deposit Home Loans
Pros:
Buy a home sooner instead of waiting to save a deposit
Take advantage of first-home buyer grants and incentives
Use a guarantor or government support to reduce loan costs
Cons:
Higher loan repayments since you borrow more
More risk if property prices drop
Potential LMI costs if no government support is used
Guarantor risk if they help with your loan
4. Steps to Apply for a No Deposit Home Loan
Check your eligibility – See if you qualify for grants, FHBG, or a guarantor loan.
Speak to a mortgage broker – They can help find lenders that offer no deposit loans.
Get your documents ready – Proof of income, ID, and credit history.
Find a guarantor (if needed) – Ensure they understand the risks.
Apply for pre-approval – Get a lender to approve your loan amount.
Choose a property – Stay within your budget to avoid financial stress.
Finalise your loan and buy your home!
5. Tips for First-Home Buyers in Australia
Check state grants – Each state has different first-home incentives.
Improve your credit score – A good score increases loan approval chances.
Start saving early – Even small savings help reduce loan costs.
Compare lenders – Some banks are more flexible with deposit requirements.
Get financial advice – A mortgage broker can guide you to the best option.
Conclusion
While getting a mortgage without a deposit is challenging, it’s possible with the right approach. Whether through the First Home Guarantee, a guarantor loan, or first-home buyer grants, there are ways to get into the property market sooner.
Want to learn more? Check out the First Home Buyers Grant Tasmania page to explore your options!
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