You can buy a home in Australia without saving for a traditional deposit. Most standard home loans require a deposit of at least 5% to 20% of the property value, which can take years to save.
No deposit home loans are designed to help you enter the property market sooner. While they may not be for everyone, understanding how these loans work can fast-track your homeownership.
What Is A No-Deposit Home Loan?
A no deposit home loan, often called a 100% home loan, allows you to borrow the entire purchase price of the property without an upfront deposit.
Instead of a deposit, there are other ways you can get approved for a 100% home loan.
How Can You Buy A House With No Deposit?
You can buy a house with no deposit by getting a no deposit home loan. These loans replace the need for a deposit with alternative forms of security or financial backing.
Here are some common ways you can buy a house with no deposit:
A Guarantor Home Loan
A guarantor home loan involves an immediate family member using the equity in their own property as security for your mortgage. You can borrow up to 105% of the property’s value, covering the purchase price and extra costs such as stamp duty.
Besides requiring no deposit, you don’t have to pay Lenders Mortgage Insurance (LMI), which saves you thousands of dollars.
LMI is usually applicable when borrowing more than 80% of the property value. With a guarantor loan, even when the Loan-To-Value (LVR) is 100%, you don’t have to pay any LMI.
The key requirements for a guarantor loan are:
- The guarantor must be an immediate family member (typically a parent).
- They must have enough usable equity in their own home.
- They must be willing to provide a limited guarantee.
- They must obtain independent legal and financial advice before approval.
As you build equity in your new property and pay down the loan, the guarantor can eventually be released from the agreement.
For a full breakdown of eligibility, read our guarantor home loan guide.
Use an equity as a deposit
If you already own property in Australia, you can use your accumulated equity to fund a new purchase. This is a popular option for current homeowners who want to upgrade, invest, or buy a second property without dipping into their savings.
You can use your existing equity as a deposit by refinancing. In some cases, lenders may even offer a cash rebate to refinance. We can value your property for free and let you know if this option is available to you.
Who Qualifies For A No Deposit Home Loan?
First home buyers, as well as investors and second home buyers, qualify for a no-deposit home loan. Since you’re borrowing 100% of the property value, lenders will need proof that you are financially stable and can make repayments.
| Criteria | Guarantor Home Loan | Using Equity |
|---|---|---|
Who is eligible? | Typically, first-home buyers or those re-entering the property market | Existing homeowners or investors with usable equity |
The security asset | A family member’s home (usually parents) | A property you already own in your own name |
Maximum borrowing | Up to 105%, which includes the purchase price and other costs like stamp duty and fees | Up to 80% (to avoid LMI) |
Credit history | Flawless. Banks will not risk a 100% loan on someone with a spotty credit file | Standard. Since you already have an asset, minor issues may be overlooked |
Not required. The guarantee often replaces the need for a 3-6 month savings history | Not required. The equity itself is considered your savings. | |
Employment | Most lenders require you to be past your probation period (3-6 months) | Most lenders require you to have at least 6-12 months of stable employment |
Legal requirement | The guarantor must get independent legal and financial advice | Standard conveyancing and mortgage registration required |
Location restrictions | You must be buying in a major town, capital city, or regional centre. Unusual or high-risk locations are heavily scrutinised | You must be buying in a major town, capital city, or regional centre. Unusual or high-risk locations are heavily scrutinised |
You can use our no deposit loan calculator to find out which options you qualify for. Each option might have different eligibility criteria for approval.
What Are The Pros and Cons of No Deposit Home Loans?
Getting a home loan without a deposit has massive benefits, but it also carries unique risks. For example, borrowing 100% of a property’s value increases your Loan-to-Value Ratio (LVR), which lenders view as high risk.
Here is a quick comparison of the advantages and disadvantages of no deposit home loans:
| Pros of no deposit home loans | Cons of no deposit home loans |
|---|---|
Buy sooner: Get into the property market without spending years saving a 20% deposit. | Stricter criteria: Lenders apply rigorous serviceability and credit history checks. |
Save money: Even when you have 0% deposit and are borrowing over 80%, you don’t have to pay LMI | Over-borrowing risk: Higher loan amounts lead to higher monthly repayments and financial stress. |
Investment growth: Invest earlier to take advantage of long-term property capital growth. | Negative equity risk: If property values drop, you owe more than the home is worth. |
How To Apply For A No-Deposit Home Loan
Applying for a 100% home loan is more complex than a standard mortgage. It’s recommended to take the help of an expert mortgage broker so you apply with the right lender and avoid damaging your credit score with rejected applications.
To apply for a no deposit home loan with Home Loan Experts:
- Get a free assessment: After you fill out the enquiry form, your broker will review your income, credit score, and whether you have a viable guarantor or sufficient equity.
- Gather documentation: Your broker will help you collect proof of income, bank statements, ID, and all required paperwork for your guarantor.
- Secure pre-approval: We will negotiate with the lender to secure pre-approval, giving you a clear budget and borrowing power.
- Find your property: Once pre-approved, you can search for a home that meets your needs and the lender’s location and property type criteria.
- Formal approval and settlement: We handle the final paperwork and liaise with your guarantor’s legal team to finalise the loan. At the time of settlement, the lender will provide the funds, and you will be ready to move into your new home.
No Deposit? No Problem. We’ll Help You Get Approved
We connect you with lenders who accept no-deposit home loans, saving you time, hassle, and guesswork.
Just fill in your details below and we’ll match you with lenders who specialise in no-deposit home loans.
What Are The Best Alternatives To No Deposit Home Loans?
If you don’t have a guarantor or equity in a property, there are other low-deposit home loan alternatives that require as little as 2% to 5% deposit.
- Government schemes: The Australian Government 5% Deposit scheme helps home buyers with a minimum deposit of 5% (and even 2% for single parents) to buy a property sooner. Even when you’re borrowing over 80%, LMI is not applicable.
- Using super: You can make voluntary contributions under the First Home Super Saver Scheme (FHSSS) that can be later used as a deposit for your first home.
- Gifted deposit: A gifted deposit is a lump-sum cash amount given to you by your parents with no expectation of repayment. Many lenders accept this as your deposit, allowing you to borrow up to 95%. However, you have to demonstrate at least 5% in genuine savings.
- High LVR loans: Borrowing over 80% is possible with some lenders, but the biggest risk is that LMI may apply, especially if the LVR is above 90%. Some lenders might waive LMI under certain conditions.
- Personal loan as a deposit: You can technically use a personal loan to fund a 5% deposit, allowing you to borrow the remaining 95% as a mortgage. However, lenders heavily restrict this. You must have a very high income, excellent credit, and little existing debt to afford both loan repayments simultaneously.
- Vendor finance: Under a vendor finance arrangement, the seller (vendor) acts as a lender and allows you to buy the property in instalments, with interest. You make payments directly to the vendor, not to a lender. Interest rates are quite high under this arrangement, so this option must be considered carefully.
Helpful Tip
We currently have a lender offering up to 98% (inclusive of LMI) with just a 2% deposit plus costs.
This offer is available to owner-occupiers and investors, and it’s not limited to first-home buyers.
Want to know if you’re eligible? Call us on 1300 889 743 and we’ll walk you through it.
FAQs
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