Low Deposit Home Loans in Australia: How to Buy With Less Than 20%
Compare low deposit home loan options in Australia — from 5% deposit schemes to professional LMI waivers. Learn how to buy sooner without paying thousands in Lenders Mortgage Insurance.
You don’t need a 20% deposit to buy a home in Australia. Multiple pathways now exist for buyers to enter the market with 5%, 10%, or even 2% down — many without paying Lenders Mortgage Insurance (LMI). The challenge is knowing which option suits your situation and which ones cost you more in the long run.
This guide compares every low deposit home loan pathway currently available, including the true costs, trade-offs, and how to avoid the LMI bill that comes with most of them.
What Counts as a Low Deposit Home Loan?
Any home loan where the deposit is less than 20% of the property value is considered low deposit. In lending terms, this means a loan-to-value ratio (LVR) above 80%.
Common low deposit tiers:
| Deposit | LVR | Typical LMI Cost ($750K Property) |
|---|---|---|
| 15% ($112,500) | 85% | ~$5,500 |
| 10% ($75,000) | 90% | ~$14,000 |
| 5% ($37,500) | 95% | ~$32,000 |
The lower your deposit, the higher the LMI premium. At 95% LVR, LMI alone can exceed $30,000 — a significant cost on top of stamp duty, legal fees, and moving expenses.
But LMI is not inevitable. Several pathways eliminate it entirely, even with a small deposit.
Low Deposit Options That Avoid LMI
1. Professional LMI Waivers
The most powerful low deposit option for eligible borrowers. Certain lenders waive LMI for professionals in recognised fields, allowing you to borrow up to 85%, 90%, or even 95% of the property value with no LMI charged.
Eligible professions include doctors, lawyers, accountants, engineers, nurses, teachers, IT professionals, and more. Most lenders require a minimum income of $150,000 (individual or household), though thresholds vary by profession and lender.
Why it’s the strongest option:
- No property price caps
- No place limits or annual quota
- Works for owner-occupied and some investment properties
- Available on subsequent purchases, not just first homes
- Saves $8,000 to $40,000+ depending on LVR and loan size
If you’re in an eligible profession, check your eligibility here — 60 seconds, no credit check.
2. First Home Guarantee (FHBG)
The Australian Government’s First Home Guarantee lets eligible first home buyers purchase with as little as a 5% deposit without paying LMI. The government guarantees the difference between your deposit and 20%.
Since October 2025, the scheme has been expanded significantly:
- Unlimited places (previously capped at 35,000/year)
- Higher property price caps — $1.5M in Sydney, $1.3M in Melbourne
- Broader eligibility — anyone who hasn’t owned property in the past 10 years
- No income cap for the guarantee component
Related schemes include the Family Home Guarantee (2% deposit for single parents) and the Regional First Home Buyer Guarantee.
Limitations: First home buyers only (or 10+ years since last ownership). Owner-occupied purchases only. Property must fall within the price cap for your area.
3. Guarantor Loans
A family member uses equity in their own property to secure part of your loan. The lender treats the combined security as sufficient, so LMI is not required — even with a 0% deposit in some cases.
Most guarantor arrangements allow borrowing up to 100–105% of the property value, covering the purchase price plus stamp duty and costs.
The trade-off: The guarantor’s property is at risk if you can’t service the loan. Independent legal advice is mandatory. Most borrowers release the guarantor once they reach 80% LVR through repayments and property growth (typically 2–5 years).
4. Lenders With Higher LMI-Free Thresholds
Some lenders waive LMI for all borrowers up to 85% LVR, not just professionals. If your deposit is 15–19%, this could save you thousands without needing a professional waiver or government scheme.
These offers aren’t always widely publicised. A mortgage broker can identify which lenders currently offer this for your loan profile.
5. Shared Equity Schemes
Shared equity providers (such as OwnHome or state government programs) fund part of your deposit in exchange for a share of the property’s value. Because the bank lends you less, your LVR drops below the LMI threshold.
Trade-offs: You don’t own 100% of the property. The equity partner shares in capital growth. Some schemes charge ongoing fees or require repayment within a set period.
Low Deposit Options Where You Pay LMI
If none of the LMI-free pathways apply, you can still buy with a low deposit — you’ll just pay Lenders Mortgage Insurance on top.
Standard Low Deposit Home Loans (90% LVR)
Most major banks and non-bank lenders offer 90% LVR loans to borrowers with a 10% deposit. LMI is charged unless you have a professional waiver or guarantor.
At 90% LVR on a $750,000 property, expect LMI of approximately $12,000–$18,000.
95% LVR Loans
Fewer lenders offer 95% LVR loans, and the LMI cost is substantially higher. On the same $750,000 property, LMI at 95% LVR reaches $28,000–$38,000.
Some borrowers accept this cost to enter the market sooner, particularly if property prices are rising faster than they can save.
Is Paying LMI Worth It?
In some cases, yes. If property in your target area is growing 5–8% annually and you’re 2+ years from saving 20%, the price increase may exceed the LMI premium. But run the numbers carefully — use the LMI calculator and factor in higher interest rates that sometimes apply to high-LVR loans.
How to Compare Low Deposit Home Loans
Not all low deposit loans are created equal. When comparing options, look beyond the deposit requirement:
Interest rate: High-LVR loans sometimes carry rate premiums of 0.1%–0.5% above standard rates. Over 30 years, even 0.2% adds up to thousands in extra interest.
LMI cost: Is LMI waived, or are you paying it? If paying, is it capitalised into the loan (which means you pay interest on the LMI amount for the life of the loan)?
Restrictions: Some low deposit products restrict features like offset accounts, extra repayments, or redraw facilities.
Ongoing fees: Annual fees, package fees, and early exit fees vary widely.
Lender flexibility: Can you refinance easily once you build equity? Will the lender release a guarantor without penalty?
Which Low Deposit Pathway Suits You?
| Situation | Best Pathway | Deposit Needed |
|---|---|---|
| Professional (doctor, lawyer, nurse, engineer, etc.) | Professional LMI waiver | 5–15% |
| First home buyer | First Home Guarantee | 5% |
| Parents have property equity | Guarantor loan | 0–5% |
| Deposit at 15–19% | Lender with 85% LMI-free threshold | 15% |
| None of the above | Standard loan + LMI, or shared equity | 5–10% |
The professional LMI waiver offers the broadest flexibility — no price caps, no place limits, and available on repeat purchases. If you work in an eligible profession, it should be your first consideration.
Frequently Asked Questions
Can I get a home loan with no deposit in Australia?
Yes, through a guarantor loan. A family member uses their property equity as additional security, which can cover your entire deposit plus purchasing costs. Some arrangements allow borrowing up to 105% LVR.
What is the minimum deposit for a home loan in Australia?
The absolute minimum is 2% through the Family Home Guarantee (single parents) or certain shared equity schemes. The First Home Guarantee requires 5%. Standard lenders generally require at least 5% genuine savings, though some accept less with additional security.
Do I always have to pay LMI with less than 20% deposit?
No. Professional LMI waivers, the First Home Guarantee, guarantor loans, and some lender-specific offers eliminate LMI entirely — even with deposits as low as 2–5%.
How much LMI will I pay on a low deposit loan?
LMI depends on your LVR, loan amount, and insurer. On a $750,000 property: approximately $5,500 at 85% LVR, $14,000 at 90% LVR, and $32,000 at 95% LVR. Use our LMI calculator for an estimate based on your numbers.
Can first home buyers avoid LMI entirely?
Yes. The First Home Guarantee lets you buy with 5% deposit and no LMI. If you’re also in an eligible profession, a professional waiver gives you additional flexibility. Guarantor loans are another option.
Next Steps
Start with the option that offers the most benefit for your circumstances:
- Check your professional LMI waiver eligibility — free, 60 seconds, no credit check
- Compare deposit options — see pathways for 5%, 10%, and 15% deposits
- Estimate your LMI cost — understand exactly what you’d save by avoiding LMI