First Home Buyer Loans: Your Guide to Buying with Little or No Deposit

Note: Preferred industry professionals (doctors, lawyers, accountants, and sports professionals) can often borrow up to 90%-100% LVR with no LMI.

Can I Buy a House With No Deposit?

Yes, buying a house with no deposit is entirely possible. The two most common ways first home buyers achieve this are through guarantor loans and gifted deposits.

How Does a Guarantor Loan Work?

With a family pledge or guarantor loan, a family member uses the equity in their own home as security for your mortgage.

Because the bank has additional security, you can borrow up to 105% of the purchase price. This allows you to cover the property cost plus extra purchasing costs like stamp duty and legal fees.

Furthermore, using a guarantor completely waives the high cost of LMI and often unlocks discounted interest rates.

Can I Use a Gifted Deposit from My Parents?

If your parents cannot act as a guarantor, they can gift you the money for a deposit. Around 60% of first home buyers receive financial help from their parents. Lenders accept gifted deposits, though some may require you to demonstrate 5% in “genuine savings” depending on the loan structure.

What Types of Mortgages Are Available for First-Time Buyers?

When choosing a mortgage, it is crucial to understand how different loan structures impact your repayments and long-term financial goals.

Variable vs. Fixed vs. Split Rate Loans

Variable Rate Loans: Your interest rate fluctuates with the market. These loans offer maximum flexibility, allowing unlimited extra repayments and access to offset accounts.

Fixed Rate Loans: Your interest rate is locked in for a set period (usually 1–5 years). This provides repayment certainty, but limits extra repayments and usually restricts offset account features.

Split Rate Loans: You can divide your mortgage, keeping a portion fixed for certainty and a portion variable for flexibility.

What is the Value of an Offset Account?

An offset account is a transaction account linked to your Principal and Interest (P&I) loan. The money sitting in this account offsets your loan balance, meaning you only pay interest on the difference. For a first home buyer, utilizing an offset account is one of the fastest ways to reduce overall interest and pay off the mortgage sooner.

3 Federal Schemes For First-Home Buyers

Get Information On Available First-Home Buyer Schemes Fill out the form to access an exclusive PDF.

What Government Grants and Schemes Are Available in 2025?

Federal and state governments offer several initiatives to help first home buyers. It is important to look for updated, up-to-date facts, as many legacy schemes have recently changed names and caps.

First Home Guarantee (FHBG)

Formerly known as the First Home Loan Deposit Scheme (FHLDS), the First Home Guarantee (FHBG) allows eligible buyers to purchase a home with just a 5% deposit. The Australian Government guarantees the remaining 15%, meaning you avoid paying tens of thousands of dollars in LMI.

First Home Super Saver Scheme (FHSS)

The FHSS scheme allows you to make voluntary pre-tax contributions to your superannuation to save for a deposit. As of July 2022, the maximum releasable amount was increased to $50,000 (up from the outdated $30,000 cap introduced in the 2017 budget). This is a highly tax-effective way to build your deposit.

First Home Owner Grant (FHOG)

The FHOG is a one-off national grant funded by state and territory governments, ranging from $5,000 to $20,000 depending on your location and property price. It is typically applied to new builds or substantially renovated properties.

Stamp Duty Concessions

Stamp duty is normally one of the largest expenses when buying a home. Fortunately, most state governments offer stamp duty exemptions or significant concessions for first home buyers. Check your local state government website for specific thresholds.

How Do Upfront and Hidden Costs Affect My Budget?

When assessing your budget, you must factor in the upfront and hidden costs of purchasing a property. If you use a 100% guarantor loan, these costs can be rolled into the mortgage. Otherwise, they must be paid out of pocket:

Lenders Mortgage Insurance (LMI): Required if your deposit is under 20% (unless waived via a scheme or guarantor).

Purchase Stamp Duty: A state government tax calculated on the property’s purchase price.

Conveyancing and Legal Fees: Typically ranges between $700 and $1,500 for a standard purchase.

Registration Fees: Government charges (around $200) to register the mortgage and change the property title.

Lender Setup Fees: Some banks charge application or valuation fees, though a good mortgage broker can often get these waived.

How Does Student Debt (HECS/HELP) Impact Borrowing Power?

Yes, having a HECS/HELP debt will reduce your overall borrowing capacity. When assessing your loan application, lenders factor your compulsory HECS repayments into your living expenses and your Debt-to-Income (DTI) ratio.

Even if you have never missed a payment, the compulsory deductions from your payslip reduce your net serviceability. You do not have to pay off your student debt before applying, but you must declare it so your mortgage broker can accurately calculate your borrowing power.

5 Steps to Buying Your First Home

Step 1: Check Your Eligibility

Speak to a mortgage broker to check your eligibility for the FHBG, FHOG, and state-specific stamp duty concessions.

Step 2: Prepare Your Deposit

Save your 5% to 20% deposit in a dedicated account to prove genuine savings, or speak to your parents about structuring a guarantor loan or a gifted deposit.

Step 3: Get a Home Loan Pre-Approval

Pre-approval matters heavily, especially at auction. Because auctions have no cooling-off period, bidding without a pre-approval means you risk losing your 5% to 10% cash deposit if your finance falls through. A pre-approval gives you a clear budget and peace of mind.

Step 4: House Hunting

Begin searching for properties within your pre-approved budget. Be cautious of property types banks consider high risk. For example, many lenders will not finance studio apartments under 50sqm, properties on land larger than 2 hectares, or homes with unusual zoning.

Step 5: Final Approval and Settlement

Once your offer is accepted, your broker will finalize the paperwork, convert your pre-approval into formal approval, and guide you through to settlement day when you receive the keys.

Ready to get into the property market sooner?

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Call us today on 1300 889 743 or fill in our free assessment form to find out exactly how much you can borrow!