Saving a 20% deposit is one of the biggest challenges for many home buyers in Australia. Between rising property prices and the cost of living, reaching that goal can feel out of reach—especially for first-time buyers. The good news? A 20% deposit isn’t always necessary. With the right support and strategy, you could get into the market sooner than you think. 

Understanding Low Deposit Home Loans 

A low deposit home loan generally means you’re borrowing more than 80% of a property’s value—so your deposit is less than 20%. Many lenders now offer loans with deposits starting from as little as 5%, especially if you meet specific eligibility criteria. 

While these loans may come with additional costs like Lenders Mortgage Insurance (LMI), they can also open the door to homeownership faster, particularly when supported by government initiatives or a guarantor. 

Your Options in Australia 

There are several ways to enter the property market with a small deposit: 

• LMI-Backed Loans: These allow borrowers with less than 20% deposit to access finance by covering the lender’s risk through insurance. 

• The First Home Guarantee: Part of the Federal Government’s Home Guarantee Scheme, this lets eligible first-home buyers purchase with as little as 5% deposit—without paying LMI. 

• Guarantor Loans: A close family member can use the equity in their home as security, reducing or even eliminating the need for a deposit. 

Each of these options has pros and cons, so it’s important to get expert advice before committing. 

What You Still Need to Qualify 

Even with a low deposit, lenders will expect you to meet other criteria. You’ll typically need: 

• A steady income and stable employment. 

• A clean credit history and solid score. 

• Evidence of genuine savings and good money habits. 

• The ability to comfortably manage repayments. 

Lenders want to see that even with a higher loan amount, you’re not overextending yourself financially. 

Risks and Considerations 

Low deposit loans can make homeownership more accessible—but they do come with risks. A smaller deposit means a larger loan, more interest over time, and possibly LMI. And if property values fall, you may owe more than the home is worth (negative equity). 

That’s why it’s essential to get a clear picture of the total costs and long-term impact before you proceed. 

Conclusion 

Yes, you can absolutely get a home loan with a low deposit—and at Your Loan Connect, we’re here to guide you through every option. Whether it’s a government scheme, LMI-backed product, or guarantor-supported loan, we’ll help you understand what’s possible and what’s best for your financial future. 

Ready to buy with less? 

Talk to our team for a personalised low deposit loan assessment.