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To be eligible, you must have a high income, some savings and less than $10,000 in debt.

Who can qualify?

Although it is always better to save a deposit of your own, it is possible to use a personal loan as part of your deposit to buy a home.

You need to meet the criteria for both a home loan and for a personal loan.

To qualify you must have:

  • A high income to afford both repayments.
  • Little existing debt (car loans, high credit card balances, etc).
  • A clear credit history.
  • Some savings to make up any shortfall.
  • A proven rental history (preferred).

Most lenders do not offer home loans with if you have a borrowed deposit due to genuine savings requirements.

In addition to this many lenders do not offer personal loans if they are being used as a deposit on a home.

Call us on 1300 889 743 or fill in our free assessment form to find out if you can qualify to buy a home.


How much can I borrow?

It is relatively easy to borrow up to $20,000 as a personal loan and then 95% of the value of your property as a home loan.

Borrowing up to $70,000 as a personal loan is possible for high income professionals who do not have much existing debt. If you qualify for such a large loan then it may be possible to borrow 100% and buy a home with no deposit at all.

Borrowing over $20,000 as a personal loan is not suitable for most borrowers. We will only assist you to apply for these amounts if we can see mitigating reasons for why you have not been able to save a deposit yourself. Maybe you saved for a wedding, paid off your car loan, were overseas, have been promoted recently or are paying a fortune in rent.


How much do I need in savings?

There are no hard and fast rules however, lenders don’t like to see someone buying a home with no contribution of their own.

If you are on a very high income then a few thousand dollars may be all that is required whereas if you are on a lower income then you may need to have a 5% deposit.

The reason for this is that when we submit your home loan application they will take your personal loan repayments into account when they calculate your borrowing power for a mortgage. If you don’t have a high income then you can’t afford both the personal loan and home loan repayments.

Many lenders also require you to have 5% of the purchase price in genuine savings or money that you have saved yourself. If you have some savings then we’ll have more banks to choose from and you’ll have enough money to cover other costs such as stamp duty and legal fees.


How does it work?

One of our mortgage brokers will complete a preliminary assessment of your situation. If there is another option available such as a guarantor loan or 95% home loan then we’ll normally recommend those instead.

If we determine that you are suitable for this type of finance and can afford the repayments then we’ll organise a personal loan to fund your deposit.

Once the personal loan is approved we can then can submit your home loan to be pre-approved.  The personal loan may be advanced before the home loan to allow you to put down a deposit when you sign the contract of sale.

You can buy at auction or via a private purchase as long as you have a valid pre-approval. Because you do not have the additional funds required if a valuation comes in low, we recommend that you avoid an auction if possible. It is often better to buy a property with a cooling off period.

Call us on 1300 889 743 or fill in our free assessment form to find out if this is suitable for you.


How much more does it cost?

Using a personal loan will cost you less in interest than you think.

Assuming you borrow $20,000 with a personal loan over 5 years at 14%, you’ll only pay an extra $22 a week in interest than if you borrowed an additional $20,000 over 5 years at a home loan rate of 5%. That works out to be $1,320 more in interest over the 5 years.

The reason is that a personal loan has a very short term and it is only a small part of your total debt. So the higher interest rate doesn’t have as big an effect as it would if your entire home loan is at that rate.

Deposit, a personal loan will make a big impact on your cash flow because the loan term is so short. The reason is that most of your personal loan repayment is paying off the debt, not paying for the interest.

There are some minor additional costs such as establishment fees, monthly fees and, in some cases, early repayment fees if you choose a fixed rate personal loan.

In some cases, we can get your home loan approved with a major lender but it is likely that we may need to use a specialist lender at a slightly higher interest rate. It all depends on the overall strength of your financial position.


How much are the personal loan repayments?

A personal loan with a term of five years will normally cost around $60 / week for every $10,000 that you borrow.

So a personal loan of $20,000 may be quite manageable however a larger personal loan will really eat into your budget unless you have a high income.

Most home buyers who use a personal loan to fund their deposit will try to pay off the personal loan first before they make extra repayments to their home loan. If your home increases in value then we may be able to increase or refinance your home loan to pay out the personal loan altogether.


Are there other options?

We strongly recommend that you consider a guarantor loan before you use a personal loan or read our page on buying a home with no deposit.

Speak to our mortgage brokers by calling us on 1300 889 743 or fill in our free assessment form and we’ll call you back to discuss your options.

  • Zane

    Hi, it’s mentioned here that borrowing over $20,000 is not suitable for most borrowers but high income professionals can borrow up to $70,000. I do consider myself a high income professional and have a perfectly logical reason as to why I couldn’t save. Can you guys help?

  • Hi Zane, we can surely help but we will need the details of your situation first. Please call us on 1300 889 743 or send in your details to info@homeloanexperts.com.au and one of our expert mortgage brokers will contact you soon.

  • Lauren

    Can the personal loan be in my name?

  • Hi Lauren,

    Yes the PL can be in your name. The main thing to consider is if this method of financing is appropriate for you. Typically it is good for someone with a high income, low debts and who has saved part of their deposit but is a little short.

  • Kevin

    Hi , We like to get into the housing market as soon as possible,and considering applying for a PL to cover our down payment . Jointly we earn 157K per annum,however dont have enough deposit to get into the market – can you assist ?

  • Hi Kevin,

    Yes we can assist assuming that:
    – Your don’t have many other debts
    – You have a good credit history
    – That you can afford the personal loan and the home loan

    Usually this works well for people who are willing to buy a lower priced property so that their borrowing power isn’t maxed out. This allows for the personal loan. It also works well where someone has some savings but not enough to get into the market.

    A guarantor loan is a better option so if your family own property in Aus then best to pursue that option first https://www.homeloanexperts.com.au/guarantor-home-loans

  • Tyler

    Can we buy land with a no genuine savings loan?

  • Hey Tyler,

    No genuine savings loans are not available when purchasing vacant land or constructing and also only available for buying a home, not for investment.

  • Lil

    What other no genuine savings options are there?

  • Hi Lil,

    Please check out our no genuine savings loans page for other non-genuine savings loan options such as through a gifted deposit. Here’s the link to the page:
    https://www.homeloanexperts.com.au/genuine-savings/no-genuine-savings-loans/

  • bryan

    I have 3 k in savings,have a 20k credit with bank,need to use 16k for a deposit on 80k home loan with another bank,any ideas ? The bryan

  • Hi Bryan,
    It’s hard to say without seeing the full situation. If you’re buying a home for approx $100,000 then you may find that the location is a problem for a lot of lenders https://www.homeloanexperts.com.au/mortgage-calculators/postcode-calculator/
    Saving at least 5% of the purchase price will help a lot as the lenders that work with remote locations tend to prefer genuine savings. Whereas the lenders for larger towns may not require you to have genuine savings.

  • Rossana Borja

    Hello. I have a question. I am studying fulltime and working fulltime as well. Would my current status as fulltime student and still working fulltime affects the finance approval of our home?? Will i just stop my studies for a while first until the approval of our home finance?

    Please help. Thank you.

  • Hi Rossana,
    Lenders look at your income, employment stability and assets but they don’t consider if you are currently studying. However to make sure you make a responsible decision you should consider two things:
    1. Are you paying fees for your studies? If so then take these into account when working out how much you can afford to borrow.
    2. If you’re working & studying over 60 hours per week in total then this is rarely sustainable in the long term. Don’t burn out!
    Best of luck with your studies and hopefully your new home.

  • Caleb Lee

    Hi!

    I have entered into a contract and have less than 20 odd days to come up with the finance. I have $5000 in savings and have already paid $1000 deposit to the real estate. It’s an investment property (house) at $135,000 in Gatton, QLD.

    I work full time and earn around $35,000 per year after tax. I don’t have anyone who can be a guarantor nor do I have someone who can gift me extra money. I have no debt or credit cards either.

    Is there any way I can do this?

    Blessings,
    Caleb

  • Hi Caleb
    Unfortunately you’d need a higher income for this to work. The combination of the property being for investment purposes, the location and your income would mean that it would be declined. I’d recommend that you save some more money and see if you can increase your hours so that you can qualify in the future.

  • Adam

    I earn $64000 before tax and my partner earns $60000 before tax. My partner has been at her work for 4 months after having our child.
    We havnt been able to save any deposit while we are renting and on one wage. Now that we have 2 good wages i want to get away from renting asap, what options are there ?? We dont have anyone to loan us the money ??

  • A guarantor loan is by far the best option https://www.homeloanexperts.com.au/guarantor-home-loans
    If that won’t work for you then we’d recommend:
    – Save a small deposit approx $5,000 or so. More may be needed depending on if you are eligible for grants, the purchase price and which state you’re in.
    – If you have no debt at the moment then a small personal loan can top up your deposit but it means you’ll need to buy a low priced property as your borrowing power will be reduced.

  • Adam

    How low are you talking we are looking around the $300k

  • That’s potentially ok with a personal loan and your incomes. But you’d need some savings of your own. You can use this borrowing power calculator to work out how much you can afford. You just need to add in the payments of a personal loan as well https://www.homeloanexperts.com.au/how-much-can-i-borrow/

  • Seriously

    Hi,

    We recently sold our house to move up the coast for new jobs and used the proceeds to pay out a truckload of bad debt (credit cards).

    We are left with $25000 in savings. We have moved into a rental property but want to buy our own place again.

    Option 1: buy land for $250,000 and build.

    Option 2: buy existing house in the $550-$650k range.

    My bank is offering me up to $50k personal loan.

    Can I use the 25k and the personal loan as a deposit?

    I earn around $120-$130k and my wife earns about $40k

  • Hi,
    Yes you would likely qualify for a personal loan as a deposit as you have high incomes and some savings of your own.
    Option 2 would be the best option as banks are more conservative with vacant land and construction.

  • Maddy

    Hi,

    Both me and my wife work on full-time permanent government jobs and earn around 180k. We want to enter the property market now and are looking to buy our first home for around 800-850k in ACT. However we have around 45k in deposit at the moment. What are the chances of us getting a home loan approved with a personal loan to cover the rest of the deposit and stamp duty to eliminate LMI.

  • Hi Maddy,
    It’s likely you could qualify as you have high incomes and have already proven that you’re good with your money.
    You wouldn’t be able to eliminate LMI however, a personal loan that large is unlikely to get approved and would likely mean you’d have little funds left to pay your mortgage.
    In most cases a personal loan is used as a small top up to say reduced a 93% loan down to 90% so that the LMI is cheaper.
    Overall a guarantor loan is always a better option than using a personal loan https://www.homeloanexperts.com.au/guarantor-home-loans

  • Tim

    Hi there, looking at getting on the property market witha first home owners grant. The land and property is valued at $525,000 , we can loan up to $830,000.

    We have $10k saved and we are looking at a loan of $20k to get this started.

    Me – full time $78,000
    Partner full time – $55,000

    What are the chanced of rhis going through

    Tim

  • Hi Tim,
    We’d need to know the full details of your situation to be sure but it looks like you are indicatively eligible to use a personal loan as a deposit because you have some savings of your own and a high combined income. I’ll email you with some more questions.

  • Ita

    Hi,
    My husband earns $58000 and I earn $35000 before tax. We are not a first home owners. We’re looking to buy a house for around $400k or less in WA.
    Don’t have any loan at the moment. We have $15k saved and we are looking to get a loan for $15k for deposit.
    Is it possible to get a home loan?
    Thanks.

  • Hi Ita,

    You’re planning on getting a small $15k personal loan and your income seems sufficient so this should not be all too difficult. Lenders will consider your living expenses and credit history too so it’s key to apply with one that can accept a personal loan as a deposit and be flexible.

    We do recommend that you consider a guarantor loan or cash out equity in an existing property to help with the loan before you decide on this option. Please call 1300 889 743 to discuss your personal situation and loan needs with an expert, or simple enquire online and we’ll contact you:
    https://www.homeloanexperts.com.au/free-quote/

  • Steven

    Hi I earn $100,000 a year before tax and my partner $50,000 a year before tax.
    We have $16,000 saved we are entitled to FHOG in Victoria and are looking at a property around 500-550,00 mark would we be eligible for personal loan as deposit. Taking into mind we would be looking to buy after July 1st so there would be no stamp duty costs at all.

  • Hi Steven,
    Your combined income and savings plus FHOG should be satisfactory to the lender though please note that you’ll need to have less than $10,000 in debt for the best chance to qualify. We always recommend our clients to first consider a guarantor loan before this option because it’s cheaper and there are better deals available with this. Please call 1300 889 743 if you’d like to discuss your situation and loan needs with one of our experts. Or simple enquire online and we’ll contact you instead:
    https://www.homeloanexperts.com.au/free-quote/

  • Riddhi Kore

    Hi we are planning to buy a land which will settle in December 2018 and we are planning on taking a small personal loan for the Land deposit. We will repay the loan before applying for the mortgage loan. Will the personal loan affect our mortgage approval?

  • Hi Riddhi
    The main issue will be genuine savings https://www.homeloanexperts.com.au/genuine-savings/ as some lenders require you to prove that you saved the deposit yourself.

    You can likely get around this if you are renting. It must be through a licenced agent, in your name or you and your partner’s name, your rent must be paid on time and you must stay in your current residence for > 12 months (until settlement).

    You should assume you can borrow 90% of the land value at settlement. 95% loans are available but you can’t be sure they’ll be easy to get in 18 months time. So best to play it safe.

  • Dustin

    My wife and I just borrowed in a personal loan $10,000 to buy some property in April. Will this effect our mortgage application in June? We can show where the money came from. We bought property worth $16,000. We paid the difference out of our savings. We quick deeded property to our Builder for collateral who is building our house on said property. We then get the $16,000 credit towards down payment and closing cost. Home will done in June and we will start mortgage process. THANK YOU!!

  • Hi Dustin,
    You’d need to have your entire situation assessed to see if everything would be ok or not. For example if you’re renting then getting a PL is less of an issue, although it is still an issue.
    We can only work with mortgages in Australia so I’d recommend that you talk to a local mortgage broker to see if they can help.

  • kylie

    My partner and i would like to buy house and land worth $300,000. But don’t have a deposit were woundering if we could get a PL for deposit we earn just over $80,000 between us.

  • Hi Kylie,
    A Personal Loan can only be used to top up a small deposit shortfall. It can’t be used for your entire deposit. I’d recommend that you consider a guarantor loan instead https://www.homeloanexperts.com.au/guarantor-home-loans

  • Cath

    My partner and I have around $20000 and want to buy a property for the value of around $250000 in 3 months. I have a job paying $79000 per year and my partner works part time earns $31000 per year. Would we be able to obtain a personal loan for the short fall of the deposit? If so would it be from the same loan provider or a different source?

  • Hi Cath,
    Indicatively you would be eligible. We’d need to see your full details to be sure. I’ll email you and our specialist in this area and you can work with them if you’d like our help.

  • Kath

    My husband and I presently have about $10,000 saved and we are regularly putting more away into our savings. We are not first home buyers. We have around $20,000 in debt which we are focussing on getting rid of. Our combined income is around $250,000 per annum. We have been renting for the last few years with weekly rent of $700. We would love to be paying off our own home instead of paying rent. We would be looking to spend around $700,000. What are our chances? What would be the minimum deposit we would need do you think?

  • Hi Kath
    Without first home benefits and with such a high purchase price realistically you should consider a guarantor loan https://www.homeloanexperts.com.au/guarantor-home-loans
    You would need to save approx $40,000 + before a personal loan could be used to top up your deposit. And then you’d pay LMI as well https://www.homeloanexperts.com.au/mortgage-calculators/lmi-calculator/ however with a guarantor loan you pay no LMI.
    If your parents can’t assist then I’d recommend that you keep saving for now.

  • Vincy Xavier

    Hi, my wife and I earn a combined income of $120000 per annum. We are permanent residents having arrived in Australia in 2015 and hence first home buyers. We have managed to save about $ 20000 so far. We have no debts and have a good rental history. We are looking to purchase a home within 650000 to 750000. Are we eligible for a PL to top up a minimum deposit for a home loan

  • Hi Vincy,
    For a larger purchase like this you can use a PL to top up your deposit but I’d recommend that you save a little more.
    1. Apply for personal loan now as it’s better to apply > 6 months before you buy (but this isn’t always necessary).
    2. Keep saving and when your savings (exclusing personal loan funds) is for 5% of the purchase price then you can buy.
    If you’re planning to buy a new property then the first home owners grant will help and you’ll need a smaller deposit. However we see a lot of overpriced new properties so be careful.

  • Rachael

    Hello, I am looking to apply for a investment property loan (solo) and I currently earn $85k before tax. Currently I do NOT pay rent and expect to stay living at home for another couple of years. I am looking to purchase around $500-550k and have saved $25000 with $8000 debt left remaining in a car loan. Guarantor loan is NOT an option for me, so was wondering if I would be a suitable candidate to apply? After doing some research, I expect to receive a rental income of $400 per week.
    Thanks in advance,
    Rachael

  • Hi Rachael,
    If you’re buying a home then some of our lenders will approve 95% of the property value plus the cost of LMI. Whereas if you’re buying an investment property most lenders will only consider 90%. Borrowing 95% inclusive of LMI is possible from one or two of our lenders for an investment property however the rates can be high.
    What that means is that the deposit size is larger for an investment property. That can mean getting a personal loan is less feasible.
    Assuming you have to pay purchasing costs of 4% and LMI of 3% that would mean you need a personal loan of around $35,000. With your income unfortunately it wouldn’t pass serviceability.
    I’d recommend that you consider some other options:
    – Buy a smaller property, it’s your first one and most people upgrade later on.
    – Keep saving and pay off your car loan. When you’re at $35,000 savings and no car loan then you should be eligible.
    – Buy a smaller property as a home. You’ll need a smaller deposit.

  • Rachael

    Thanks very much for your advice. Do you think if I applied as a first home buyer I would have a better chance, and if I dropped to say 450k? Thanks again

  • Hi Rachel,
    Yes if you buy your first home and reduce the purchase price you’d be in a much stronger position. This would vary depending on the state that you’re in. I’ll email you and cc one of our specialist brokers who can do the assessment for you.

  • Rachael

    Ok that’s great. Thank you :)