Owning a home feels like a dream, but saving for a 20% deposit? That can take years! The good news? You don’t always need that much. With low deposit home loans, you can get into the property market sooner, often with as little as 5%—and in some cases, even 2%!

 So, how do these loans work? Who qualifies? And what should you watch out for? Let’s break it all down.

What Is a Low Deposit Home Loan?

A low deposit home loan is a mortgage that lets you buy a home with a deposit smaller than the usual 20%. Instead of waiting years to save, you can enter the market sooner—great news for first-home buyers struggling with rising prices.

How Much Deposit Do You Need?

Here’s what a low deposit home loan could look like:

1. 5% deposit – This is common for first-home buyers using government schemes.

2. 2% deposit – Some lenders offer this to eligible buyers under special programs.

3. No deposit – Rare, but possible if you have a guarantor (like a family member backing your loan).

Who Can Get a Low-Deposit Home Loan?

Lenders usually check a few key things before approving a loan with a small deposit:
Good Credit Score – Proves you can manage repayments.
Stable Income – Shows you can afford the loan.
Government Schemes – If you're eligible, you might need an even smaller deposit.
Lender’s Mortgage Insurance (LMI) – If your deposit is under 20%, most banks require you to pay LMI (unless using a government scheme).

Government Support for First-Home Buyers

If you’re a first-home buyer in Australia, you might qualify for programs that help with small deposits:

First Home Guarantee (FHBG)

1. Allows eligible buyers to purchase with as little as 5% deposit.

2. The government guarantees part of your loan, so you don’t need to pay LMI.

Family Home Guarantee (FHG)

Helps single parents buy a home with only 2% deposit.

First Home Owner Grant (FHOG)

A cash grant from state governments to help first-home buyers.

Pros and Cons of Low-Deposit Home Loans

Pros

1. Buy a home sooner – No need to wait years to save a big deposit.

2. Enter the market before prices rise – Property values often go up, so buying sooner can be a smart move.

3. Take advantage of government help – You could avoid LMI and save thousands.

Cons

Higher repayments – A smaller deposit means borrowing more.
LMI costs – Unless you qualify for a scheme, LMI can add thousands to your loan.
Stricter lender requirements – Not all banks offer low deposit options.

Is a Low Deposit Home Loan Right for You?

If you’re eager to buy but don’t have a big deposit, a low deposit loan can be a great option—especially with government support. Just make sure you understand the costs, repayments, and eligibility requirements before jumping in.

Need expert help? Visit FHBA to explore your options and start your home-buying journey today!