Low deposit home loans
Low Deposit Home Loans: Buy Property Sooner Without Waiting Years to Save 20%
You do not need a 20% deposit to buy in Australia. You need to know which door is open to you.
Saving a traditional 20% cash deposit in today's property market can feel like trying to hit a moving target. As home values rise, the time it takes to save tens of thousands of dollars often leaves buyers stuck paying rent while prices keep climbing further out of reach.
The good news is that you do not need a 20% deposit to buy a home or an investment property in Australia. Depending on your income, your eligibility for government schemes, and how the loan is structured, you may be able to enter the market with as little as a 5% deposit, or 2% if you are an eligible single parent.
I have spent more than 20 years in financial services, including 14 years inside a major Australian bank in executive roles. I know the exact thresholds credit underwriters use when they assess a higher loan to value ratio application.
At Prowest Financial Solutions, we help clients right across Australia work through low deposit options, government guarantees, Lenders Mortgage Insurance waivers, and family guarantor structures, so you can buy with confidence rather than hope.
The low deposit dilemma: LMI or wait and save
When your deposit is under 20% of the purchase price, lenders class the application as higher risk. Usually that means paying Lenders Mortgage Insurance (LMI).
It is worth being clear about what LMI actually is. It is a one-off fee that protects the lender, not you, if you default on the loan. That said, paying LMI is not automatically a bad outcome. It is often the bridge that lets you buy today instead of waiting three to five years while prices continue to climb.
Strategies to reduce or avoid paying LMI
- Government guarantee schemes: Eligible first home buyers can use the Australian Government guarantee to purchase with a 5% deposit and no LMI.
- Professional LMI waivers: Doctors, lawyers, accountants and certain other professions can borrow up to 90% of the property value with the LMI fee waived in full.
- Family guarantor loans: Using equity in a parent's property to secure the 20% gap can let you borrow up to 100% of the purchase price plus costs, with no LMI.
- Tiered LMI discounts: Choosing lenders on our 40+ panel that offer heavily discounted LMI at the 85% and 90% thresholds.
Not sure which of these you actually qualify for? That is a twenty minute conversation, not a research project.
Check your deposit optionsCompare
Low deposit pathways compared
Four routes into the market, each with a different trade-off. The right one depends on your profession, your family situation, and the property you are chasing.
| Strategy | Minimum deposit | LMI payable | Key advantage | Main limitation |
|---|---|---|---|---|
| Government guarantee scheme | 5%, or 2% for eligible single parents | No | Avoids thousands in LMI without needing family backing | Subject to property price caps that vary by location |
| Family guarantor loan | No cash deposit required | No | Borrow up to 100% plus stamp duty and keep your savings intact | Requires a family member willing to offer equity as security |
| Professional LMI waiver | 10% | No | Sharp rates and no LMI for eligible occupations | Restricted to a defined list of qualified professions |
| Standard low deposit with LMI | 5% to 10% | Yes, and it can usually be added to the loan | Gets you into any property quickly, with no price caps | Adds to your loan balance and to total interest paid |
Government scheme eligibility, property price caps and place limits are set by Housing Australia and change from time to time. Treat the summary above as a starting point and let us confirm the criteria that apply to you at the time you buy.
Genuine savings and gifted deposits
When you apply for a low deposit home loan, lenders look closely at where your money came from, not just how much of it there is. Most will want evidence of what the industry calls genuine savings.
| Deposit source | How lenders treat it |
|---|---|
| Genuine savings | Savings accumulated in an account over three months or more, term deposits, shares, or First Home Super Saver funds. Demonstrates financial discipline, and is what most lenders prefer to see. |
| Non-genuine savings | Cash gifts from family, an inheritance, a tax refund, proceeds from a property sale, or a work bonus. Still usable, but it changes which lenders will look at you. |
| Alternative policy lenders | If your deposit is a gift or otherwise non-genuine, we work with lenders on our panel that accept a clean rental ledger over six to twelve months in place of genuine savings. |
Deposit coming from family? There is a right way to document that, and it matters.
Check your eligibilityHow it works
How we get low deposit loans approved
Higher loan to value applications get stricter scrutiny from bank underwriters. We build the file to tick every risk box before it goes anywhere near submission.
01
Genuine savings audit
We verify your deposit history and structure gifted funds or rental history so they satisfy lender policy.
02
Scheme and waiver check
We test your profile against government scheme caps, professional waivers, and guarantor options to find the cheapest route in.
03
Servicing presented cleanly
We make sure your income, living expenses and existing debts are presented the way higher loan to value servicing requires.
04
Approval and valuation
We secure pre-approval and arrange upfront valuations, so an under-valuation does not ambush you close to settlement.
Questions
Frequently asked questions about low deposit home loans
Can I add the LMI premium to my home loan?
Yes. Most lenders let you add the LMI fee to the amount you borrow, up to a maximum total loan to value ratio that is typically around 98%. That means you do not have to find the insurance cost in cash at settlement, though you do pay interest on it over the life of the loan.
What upfront costs should I budget for besides the deposit?
Alongside your cash deposit, budget for state stamp duty unless you are exempt as a first home buyer, conveyancing and legal fees, building and pest inspections, and the lender's own setup charges. We will give you a full figure early so nothing lands as a surprise.
Am I eligible for the Australian Government guarantee scheme?
Broadly, you need to be an Australian citizen or permanent resident aged 18 or over, buying an eligible residential property under the price cap for your area, and living in it yourself. You also need to be a first home buyer, or not have owned property in Australia for the past ten years. Criteria and caps are set by Housing Australia and do change, so it is worth confirming your position before you start looking.
Can I get a low deposit loan for an investment property?
Yes, though investment lending is generally capped at a 10% deposit, so 90% of the property value, and LMI still applies. Government guarantee schemes are for owner-occupiers and do not extend to investment purchases.
Where to from here
Ready to buy sooner than you thought?
You do not need to wait years to save a 20% deposit before taking your first or next step into property. In most cases the question is not whether you can buy, it is which pathway costs you least to get there.
Bring your real numbers and we will look at them together, with no obligation and no credit check just to have the conversation.
Level 28, 140 St Georges Terrace, Perth WA 6000
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Monday to Friday, 9am to 5pm
Where to from here
Start with a straight answer.
One short conversation is usually all it takes to know where you stand and what your options actually are. Nothing to fill in first, no obligation at the end of it, and if the answer is no, I will tell you that and what would need to change.
Monday to Friday, 9am to 5pm. Perth CBD, or by phone and video anywhere in Australia.