Securing a Home Loan Without an Initial Deposit 

A no deposit home loan allows you to attain approval for the entire property value without the necessity of an initial deposit. In Australia, the most prevalent zero-deposit option is the guarantor home loan. 

Determining Borrowing Limits 

• Secure up to 105% of the property value with a guarantor, often involving your parents’ home in Australia. 

• Explore up to 100% using the equity in another property. 
• Access up to 95% with the First Home Guarantee. 
• Borrow up to 95% with a gift as a deposit, subject to specific conditions. 
• Consider up to 95% with a personal loan as a deposit, applicable to low-risk borrowers. 
• Explore up to 95% under a shared-equity scheme. 

Factors Influencing Approval 

Lenders typically lean towards approving guarantor home loans due to their low-risk nature as a no deposit option. 

Options for No-Deposit Home Loans 

105% Guarantor Loan 

This top-tier zero-deposit option allows you to borrow 105% of the purchase price without needing personal savings. The loan is secured by guarantors against their property. 

Qualification Criteria: 

• Guarantors must have equity in their property to cover the guarantee. 
• While working guarantors (typically parents) are usually preferred, exceptions may be made for retired guarantors. 
• The guarantor’s property must be in Australia. 

Reasons to Choose a Guarantor Home Loan: 

• For Borrowers: Access the full purchase amount without saving for a deposit, with no need for Lenders Mortgage Insurance (LMI) and often low-interest rates. 

• For Guarantors: Fixed liability, secured by property or a term deposit, with no obligation for scheduled loan repayments. 

Utilizing Equity As a Deposit 

For property owners, some lenders accept home equity as a deposit, eliminating the need for additional savings. In certain cases, lenders may even offer a cash rebate for refinancing. 

Options for Low-Deposit Home Loans 

First Home Guarantee (5% Deposit) 

This nationwide program supports first-home buyers with a deposit as low as 5%, bypassing Lenders Mortgage Insurance.

Gifted Deposit Home Loan (5% – 15%) 

Parents can provide a lump sum as a non-refundable gift, covering a percentage of the purchase price. 

Personal Loan As A Deposit 

While some lenders accept personal loans, it’s not the preferred option due to potential repayment challenges. 

Using Super To Purchase a House 

For those with over $300,000 in superannuation, setting up a self-managed superannuation fund (SMSF) allows the purchase of an investment property. 

Application for a Shared-Equity Scheme 

In a shared-equity scheme, an equity partner contributes to the property purchase in exchange for an interest in the property. 

Pros And Cons Of No-Deposit Home Loans 

Pros: 

• Accessibility without substantial savings. 
• Faster home ownership. 
• Investment opportunities. 
• Potential for government assistance. 

Cons: 

• Stricter eligibility requirements. 
• Limited lender choices. 
• Higher risk of negative equity. 
• Potential for over-borrowing. 

Navigating Approval for a Home Loan Without a Deposit 

Lending Criteria for No-Deposit Loans 

Lenders evaluate credit history, repayment history, location restrictions, property type, stable employment, income, and profession. 

Requirement for Savings? 

• No savings are required for a no-deposit home loan with a guarantor. 
• In other situations, a 5%-10% deposit is typically needed based on the type of borrower: 
• First-home buyers: 5% deposit. 
• Second-home buyers: 10% deposit. 
• Investors: 10% deposit. 
• Building a property/construction: Additional savings may be required for construction financing.