10% deposit home loans

It's possible to get a home loan with a 10% deposit. Compare your options and find out how it works.

By   |   Verified by Yvonne Taylor   |   Updated 25th November 2021

Comparing 10% deposit home loans for $450,000.00 over 30 years

Tic Toc Live in Loan Fixed Rate Home Loan

Tic Toc Live in Loan Fixed Rate Home Loan

Interest rate (p.a.)

1.89%

Comp rate^ (p.a.)

2.04%

Max LVR

90.00%

Application fee

$0.00

Monthly repayment

$1,638.64

Total repayment

$589,910.40

Highlights

  • Up to 30 years loan term.
  • No upfront and ongoing fees.
  • Free online redraw on any additional repayments.
NAB Base Variable Rate Home Loan (Investor, Principal and Interest)

NAB Base Variable Rate Home Loan (Investor, Principal and Interest)

Interest rate (p.a.)

2.99%

Comp rate^ (p.a.)

3.03%

Max LVR

95.00%

Application fee

$0.00

Monthly repayment

$1,894.79

Total repayment

$682,124.40

Highlights

  • Flexible repayment options
  • Access to redraw with no fees
  • No early repayment, or ongoing monthly service or annual fees.

Reduce Home Loans Home Owners Dream Fixed - 3 Year Fixed LVR 90% (Owner, Principal and Interest)

Reduce Home Loans Home Owners Dream Fixed - 3 Year Fixed LVR 90% (Owner, Principal and Interest)

Interest rate (p.a.)

2.09%

Comp rate^ (p.a.)

2.26%

Max LVR

90.00%

Application fee

$0.00

Monthly repayment

$1,683.61

Total repayment

$606,099.60

Highlights

  • No ongoing annual or monthly fees!
RAMS Fixed Rate Home Loan Package

RAMS Fixed Rate Home Loan Package

Interest rate (p.a.)

2.09%

Comp rate^ (p.a.)

4.57%

Max LVR

95.00%

Application fee

$595.00

Monthly repayment

$1,683.61

Total repayment

$606,099.60

Highlights

  • Ideal for first home buyers and investors
  • Select from a wide range of fixed-rate periods – 1, 2, 3, 4, 5 and 10 year  periods
  • Deposit up to an additional $30,000 during the fixed-rate period without incurring fixed rate break costs  
Great Southern Bank Accelerate Variable Home Loan (Owner Occupier, Principal and Interest)

Great Southern Bank Accelerate Variable Home Loan (Owner Occupier, Principal and Interest)

Interest rate (p.a.)

3.14%

Comp rate^ (p.a.)

3.19%

Max LVR

95.00%

Application fee

$835.00

Monthly repayment

$1,931.36

Total repayment

$695,289.60

Highlights

  • Get a premium home loan complete with 100% offset.
  • Reach your property goals with a competitive rate.
  • Enjoy $0 ongoing fee and free redraw.
  • Maximum LVR is inclusive of LMI.

Overview

Do you dream of owning your own home, but find it challenging to save up for the standard 20% deposit that lenders ask for?

You are not alone.

In recognising this challenge, and as a way to encourage home ownership, the Australian government offers various grants, concessions and other support mechanisms. You can make use of these to apply for a home loan even if you do not have a deposit amounting to 20% of the property value.

Can I really get a home loan with a 10% deposit?

Yes. There are a number of options you can use to get a home loan approved with a deposit of 10% of your loan value. The 2021 First Home Loan Deposit Scheme introduced by the Australian government has improved your chances. (See details below).

Usually, banks ask for a deposit of 20% of your home loan value in order to avoid paying for the extra expense of LMI. However, there are many lenders that would accept smaller deposits, 10% or even 5% for people who can meet certain conditions.

Lenders Mortgage Insurance

Getting Lenders Mortgage Insurance (LMI) is possible, but an expensive option for those who have saved less than 20% Loan to Value Ratio (LVR) for a deposit. LMI can add thousands of additional dollars on top of your loan amount, but most vendors will approve your loan application with LMI in place. The LMI cost you have to pay depends on your property value, loan amount, deposit amount and the LMI provider.

Remember that getting LMI is a protection for the lender, not you as borrower, in case you are unable to pay back your loan.

If you explore the LMI pathway, consider talking to a mortgage broker first. In most cases your mortgage broker will be able to recommend lenders who are willing to work with borrowers who accept low deposits. Mortgage brokers can also let you know which lenders have more affordable LMI providers.

Finding a guarantor

If you have saved less than the required 20% for a home loan deposit, getting a loan guarantor to sign up is another option for making your home ownership dream a reality. Many lenders would consider approving guarantor home loan applications without the standard 20% deposit.

Most people ask their parents, family members or other trusted parties to become a guarantor. Your guarantor usually has to have equity in their own home and must be willing and able to pay off your loan instalments in case you fail to do so, so it’s not a commitment to be undertaken lightly. Lenders may insist that guarantors seek legal advice before committing.

Government support schemes

Federal, state and territory governments in Australia have a policy of encouraging home ownership. You may be able to qualify for a first home loan grant or other home loan grant, and the various LMI and duty concessions they offer. The Australian government’s 2021 First Home Loan Deposit Scheme, introduced to help first time home buyers, widened your choices significantly.

Check whether you may be eligible for any of these schemes for borrowers buying their first home.

  • First Home Loan Deposit Scheme (FHLDS) is a federal government initiative to underwrite home loans for first home buyers. Open from 1 July 2021 to 30 June 2022, the scheme has 10,000 spots available for approved applicants to get a mortgage, even with a deposit as low as 5%, without paying for LMI. This is an option for you if you are unable to find a guarantor for your home loan. Check out the details at the National Housing and Investment Corporation.
  • Family Home Guarantee (FHG) helps single parents with at least one dependant get a home loan with a low deposit (as little as a 2% of loan amount). Single parents are eligible for the FHG whether they are first home buyers or have previous home purchases. Find out if you are eligible for one of the 10,000 FHG spots open from 1 July 2021 to 30 June 2025.
  • First Home Owner Grant (FHOG) is offered by state and territory governments and is another option open to you depending on where you live. Whether you are planning to buy a newly-built home or an existing one, you may be eligible for a FHOG between $10,000 and $16,000. If you are successful as an applicant, you can add the grant value to your savings to make up the required lender deposit. Visit firsthome.gov.au for your state's details.
  • First Home Super Saver Scheme (FHSSS) enables first home buyers to save up for their home deposit via their superannuation. It is possible to make up to $15,000 in tax-deductible voluntary super contributions each year, towards your home loan deposit. Find out how to use your super to buy a house. Recent changes to the FHSSS can be found at the ATO's First home super saver scheme page.

Learn more about 10% deposit home loans

Commonly asked questions about what's available and how to get approved.

  • FAQs

How can I compare low deposit home loans?

Check the following when you are comparing 10% deposit home loans:

  • Interest rate. Typically, lenders have a higher rate of interest on low deposit (less than 20%) home loans.
  • Interest rate type. Fixed or variable? You may be able to fix the rate on all or part of your loan for the first few years, to give more certainty to your repayment amount.
  • Split loans. Some lenders give you the option of splitting your loan into fixed and variable interest elements.
  • LVR plays a bigger role than usual for borrowers who haven't saved the minimum required 20% deposit.
  • Loan type. Principal and interest basis or Interest-only basis.
  • Repayment period. May range from 5 to 30 years.
  • Offset account. Some lenders offer home loans with offset accounts that reduce interest costs.
  • Extra payment and redraw facilities enable you to withdraw money to the extent of any extra repayments you have made on your home loan. Extra payments also reduce interest costs
  • Loan fees may include application fees, monthly account-keeping fees, annual package fees, extra repayment and redraw fees, penalties for delayed payments, and discharge fees for paying a loan off early.

How do I make sure my home loan application will be approved?

Having less than a 20% home loan deposit narrows down your choice of lender significantly. More conservative lenders with strict lending criteria will not want to work with you. Those who are willing want to minimise the risk in case you are unable to pay off the loan.

Here are some points to strengthen your home loan application when applying with a 10% deposit:

  • Ensure your application is complete and as strong as possible. A rejected loan may adversely affect your credit score.
  • Monitor your credit score. Most banks have a minimum credit score for applying for a home loan.
  • Cut your spending. Get your personal finances in order well ahead of the loan application, to make yourself look financially responsible. Prepare for Household Expenditure Measure scrutiny.
  • Your employment history matters. A stable employment history will increase your chances of being approved. Permanent employees may fare better than casual workers or the self-employed, but there are lenders who will accept applications from these last two types of applicant.
  • Know the lender’s location and property type limits. Some lenders accept only certain types of properties or have geographical limitations on locations. Others may have stricter conditions for apartment purchases.

What do I need to show as a 10% deposit?

The value and type of deposit accepted as a minimum depends on the lender and can vary significantly. Some lenders ask for proof of genuine savings, which usually means that the money must have been in your account for at least three months. Other lenders may accept gifted deposits and other kinds of ‘non-genuine’ savings.

What other costs are there when buying a first home?

Buying a home, with or without a loan, includes a lot more expenses than the amount of your loan deposit. You need to factor in these costs as well when planning to buy a home:

What other government support schemes are available for first home buyers?

Here are some of the options you should explore: