No Deposit Home Loans
One of the biggest hurdles to buying a home in Australia is saving for a deposit. The great news is, you might still qualify for a home loan with little or even no deposit. Explore your options today and take the first step towards owning your dream home!
If you’re borrowing more than 80% of a property’s value, most lenders will require you to pay Lenders Mortgage Insurance (LMI). However, there are ways to get approved for a home loan with little to no deposit. Discover your options for securing a loan without a large upfront deposit and start your journey to homeownership today!
What Is A No-deposit Home Loan?
A no-deposit home loan allows you to borrow 100% of the property’s value, meaning no upfront deposit is required. The most popular option for no-deposit home loans in Australia is a guarantor home loan. While most lenders typically require at least a 5% deposit for standard home loans, there are strategies to avoid paying a deposit and still get approved.
These options are available to you when you don’t have a deposit.
105% Guarantor Loan
A guarantor home loan is the best zero-deposit home loan option in Australia. With this type of loan, a guarantor — usually a parent — uses their property as security, allowing you to borrow without a deposit.
Key benefits of a guarantor home loan include:
-
Borrowing up to 105% of the property’s purchase price.
-
No savings required to get started.
-
The guarantor provides a guarantee secured by their property.
This option can help you achieve homeownership sooner without needing a large upfront deposit.
Do You Qualify for a Guarantor Home Loan?
To be eligible for a guarantor home loan, the following criteria usually apply:
-
Equity Requirement: Your guarantor must have sufficient equity in their property to cover the guarantee.
-
Employment Status: Most lenders require your guarantor (typically a parent) to be working. Only a few lenders accept retired guarantors.
-
Property Location: The guarantor’s property must be located in Australia.
For more information, visit our Guarantor Mortgage page to explore this option further and see how it can help you secure a home loan with no deposit.
Why Choose a Guarantor Home Loan?
For Borrowers:
Guarantor home loans are an excellent option for those who don’t have the savings for a deposit. Key benefits include:
-
Borrowing 100% of the property value, plus extra for costs like stamp duty.
-
No need for Lenders Mortgage Insurance (LMI), saving you thousands of dollars.
-
Competitive interest rates, often among the lowest available.
For Guarantors:
Guarantor loans offer a secure way to help loved ones achieve homeownership:
-
The guarantor’s liability is limited to the guaranteed amount, ensuring fixed exposure.
-
The guarantee can be secured against their property or a term deposit.
-
Guarantors don’t make repayments on the loan. The guarantee can be released once the borrower meets bank criteria — typically when their loan is below 80% of the property’s value.
OwnHome’s Deposit Boost Loan
The Deposit Boost Loan is a unique 15-year loan designed to cover the 20% deposit you need to buy your home. With this loan, you can borrow up to 100% of the property value without paying Lender’s Mortgage Insurance (LMI).
This loan is available to first-time home buyers and owner-occupiers, offering a great way to enter the property market with minimal upfront costs.
Do You Qualify for a Deposit Boost Loan?
To qualify for the Deposit Boost Loan, you must meet the following criteria:
-
You are an Australian citizen or permanent resident.
-
You’ve saved at least 2% of the property’s value as savings.
-
You have an excellent credit history.
-
Your income is sufficient to service both the Deposit Boost Loan and the mortgage.
-
You have funds available to cover the starter fee (2% of the property value) and other upfront costs associated with buying a property.
For more details, visit OwnHome’s website and explore how the Deposit Boost Loan can help you get into your first home.
Use Your Equity as a Deposit
If you already own a property, you may be able to use your home equity as a deposit.
-
With sufficient equity, you may not need any savings to purchase your next property.
-
Refinancing allows you to access your existing equity as a deposit.
-
Some lenders even offer cash rebates when you refinance.
Want to know how much equity you have? We can provide a free property valuation right now to help you take the next step towards securing your loan.
How can we help?
Start your application
Pros and Cons of No-Deposit Home Loans
No-deposit home loans offer unique benefits and drawbacks that depend on your financial situation, the current economic climate, and the terms of the loan.
Pros:
-
Accessible Entry to the Property Market: No need for a large deposit, making homeownership possible even with minimal savings.
-
Faster Path to Homeownership: Skip years of saving and purchase your dream home sooner.
-
Investment Opportunities: Start building your property portfolio early and potentially benefit from property appreciation.
-
Potential Government Support: Combine no-deposit loans with first-home buyer grants or incentives to reduce costs further.
Cons:
-
Stricter Eligibility Requirements: Lenders may require an excellent credit score, stable income, and strong financial discipline.
-
Limited Loan Options: Not all lenders offer no-deposit home loans, reducing your choices.
-
Risk of Negative Equity: If property values fall, you could owe more than your home is worth.
-
Over-Borrowing Risk: Without a deposit cap, there’s a temptation to borrow beyond your means, which can lead to financial strain.
Understanding the pros and cons can help you make an informed decision about whether a no-deposit home loan is right for you. Speak to us today to explore your options and take the next step toward homeownership!
How to Get Approved for a No-Deposit Home Loan
To increase your chances of being approved for a no-deposit home loan, you’ll need to meet certain requirements:
01
Good Credit History
03
Timely payment of all existing debts
05
Preferred professions include accountants, lawyers, doctors, vets, nurses, government employees, and teachers
02
Stable employment
04
Buy standard properties located in major towns, capital cities, or regional centres
06
Income must easily service the loan
What Are the Lending Criteria for a No-Deposit Home Loan?
When assessing your application for a no-deposit home loan, lenders consider the following factors:
-
Credit History: You must have an excellent credit score with Equifax. Australian lenders generally won’t approve applications requiring Lenders Mortgage Insurance (LMI) if your credit history isn’t spotless.
-
Stable Employment: Your employment must be stable and ongoing to demonstrate reliable income.
-
Repayment History: All current debts, including credit cards, personal loans, and rent, must be paid on time. A strong repayment history is crucial.
-
Property Type & Location: The property must be a standard type, such as a house, townhouse, unit, or vacant land. Unusual or unique properties are typically not accepted. Most lenders require the property to be located in a major town, capital city, or regional centre. While one lender considers properties anywhere in Australia, most have strict location guidelines.
-
Profession: Lenders favour professionals like accountants, lawyers, doctors, vets, nurses, government employees, and teachers. While being in one of these professions isn’t essential, it can improve your chances of approval due to lower perceived risk.
-
Income: You need a strong income that can easily service the loan. With high Loan-to-Value Ratio (LVR) mortgages, borrowing to your limit is generally not allowed.
Unsure if you'll be approved for a 100% home loan? Give us a call on (03) 9566 7247 or book a free 30-minute discovery call today and find out!
Frequently Asked Questions
How Do I Apply for a No-Deposit Home Loan?
As your dedicated no-deposit mortgage broker, we’re here to guide you every step of the way!
To get started, simply contact us at (03) 9566 7247 or book a free 30-minute discovery call today . We’ll discuss your financial situation to determine if a no-deposit home loan with the help of a guarantor is the right fit for you.
If you're not eligible for a no-deposit loan right now, we can help you prepare to apply for a home loan in the future.
If you're eligible, we can typically arrange an approval over the phone with one of the lenders on our panel.
Years Experience
20+
in Residential & Commercial Banking