Thinking of buying a home but struggling to save a deposit? Don’t worry — with the help of a trusted mortgage broker in Brisbane, you may still be able to get a mortgage without a deposit. In this guide, we’ll cover everything you need to know about how no deposit home loans work, the costs and risks involved, and eligibility requirements, so you can make an informed decision and explore all available options.
Let’s dive in.
Table of Contents
What Is A No Deposit Home Loan?
A no deposit home loan is a mortgage that allows you to buy a home without saving a traditional deposit.
It’s designed for people who want to enter the property market sooner, rather than later. You can access the property ladder without waiting years to save a large upfront payment.
Who Can Benefit?
No deposit home loans suit a range of buyers, including:
- First-home buyers: Ideal for those buying their first property who lack a substantial deposit.
- Buyers with equity in another property: You may leverage existing property to secure a home loan without deposit.
- Professionals with steady income: Lenders favour applicants with reliable employment and manageable debt.
Key Points to Know
- These loans allow homeownership faster, even if your savings are low.
- Interest rates and fees may be slightly higher compared to traditional loans.
- Lenders often require lenders mortgage insurance (LMI) to protect themselves.
1. Guarantor Loan
This is the best and most recommended way to get a no deposit loan.
A guarantor is someone with an existing property who is willing to take on the legal responsibility should the borrower not be able to make their loan repayments.
A guarantor home loan allows you to lend up to 105% of the property you’re purchasing. It also means that you don’t need a deposit.
With a guarantor home loan, typically 80% of the loan is secured against the property you are purchasing, while the remaining portion (up to 25%) is secured against the guarantor’s property. In other words, the bank will give you an 80% loan against the property you are buying, and the remainder goes on the guarantor’s property.
The borrower will then make repayments to both facilities, with the guarantor only coming into play should the borrower default. However, the guarantor’s liability is limited to the portion they have guaranteed – 25% – and would become responsible for this portion should the borrower be unable to meet their commitments.
Most people who take out this loan structure opt to use their parents as guarantors to access a higher loan amount. So, mum and dad’s property would have a second mortgage registered on their property.
However, the value of the security needs to be big enough so that their current loan’s LVR is 80% or lower. This means that the guarantor needs to have enough equity in their property to use it as security for your loan. Therefore, it is important for your guarantor to get legal and financial advice to make sure this is suitable for them because, in a worst-case scenario, the guarantor’s property could be at risk in a foreclosure situation. So, do get that advice and make sure it is suitable.
Please call our team on 1300 088 065 (or +61410000689 if you’re overseas) or fill out our online assessment, and one of our Mortgage Brokers will give you a call to discuss your home loan options.
What are some of the benefits of a guarantor loan for borrowers?
- You’ll be able to get a home loan without a deposit and be able to waive Lenders Mortgage Insurance (LMI) because the bank is taking a second property from your parents as security for your mortgage. This is one of the main benefits of having a guarantor.
- You can still qualify for a lower ongoing interest rate. The additional security offered by your parents means that you are a lower risk to the bank than someone borrowing 95% of the property value. So, if your job history, income and credit score are all acceptable to the bank, you could be an ideal borrower!
- You can borrow up to 105% LVR to help cover stamp duty and conveyancing costs.
- The guarantor only remains until you have paid a certain loan amount. Generally, this is about 20% of the loan.
What are the downsides of a guarantor loan?
Really the only downside is that a family guarantee loan is mostly a short-term strategy, as you ultimately want to remove your parent’s property from your loan within 2 to 5 years of buying your new home. It comes down to how your property value is going and how much of your loan you have paid down.
Read More: See how much you’d save in LMI.
2. First Home Owners Grant
In some states, you may qualify for the First Home Owners Grant, which means you might be able to access up to $15,000 towards your new home.
If you are in Queensland and you signed a contract to buy a brand new home or build a new house between 30 November 2023 and 30 June 2026, you are eligible for $30,000. However, if you signed the contract before that you are eligible for $15,000 towards buying or building a new house, unit or townhouse valued at less than $700,000.
In New South Wales, if you are a first-home buyer and are buying a newly built house, the government can give you $10,000. But the house has to be worth $750,000 or less.
In Victoria, if the home is worth $750,000 or less, you can get up to $10,000, and if the home is in regional Victoria, you can get up to $20,000.
But can you use this first home owner grant as a deposit? Yes, you can! Many lenders are willing to consider these grants as a deposit, which means you are essentially buying your home without having to save up for a deposit.
Banks in Australia offer up to 95% loan-to-value ratio (LVR) loans, meaning you will need at least a 5% deposit if you use the First Home Owners Grant.
The First Home Owners Grant differs from state to state, so find out what the eligibility requirements for your state are. With this grant, you can only buy a residential property, and you have to move into the home within a year and then live there for 6-12 months.
Read More: Take the First Home Owners Grant Eligibility Test
3. Gifted Funds
The banks generally require an 8% to 10% deposit. So, if your parents are happy to give you a cash gift for this deposit amount, it would be enough to help you get into your first home!
Sometimes, depending on the gift amount, the person gifting you the deposit can sign a form that says it’s non-refundable and that they’re giving you the gift forever.
In order to have these funds considered as a deposit, the bank would need a signed letter from the gift giver. Here’s an example wording of what would need to be included in that letter.
“I acknowledge and pledge this gift as 100% non-refundable. The funds are gifted for purchasing a house, in which I do not have any financial benefit or interest. I will not be residing or living in the home. “
But…the banks look at a few other things when allowing a gift.
- They might want to see your rental history to make sure that you have a history of making regular repayments on time.
- It always helps if you have a little of your own savings, which can be used towards the purchase. These are known as genuine savings.
4. Partnering With Someone
You can partner with someone and come up with an arrangement that works for both of you – this is called a joint venture. For example, the other person can put up the deposit, and you can make the repayments for a period until you have ‘paid back’ the deposit and then you can start sharing the repayments.
Partnering with someone usually helps in the case where that person has a deposit saved up but has very little borrowing capacity. By joining forces with someone who has the borrowing capacity but no deposit, both will be able to enter the property market sooner. It’s a win-win situation.
For example, if your partner pays a $50,000 deposit upfront and the loan repayments are $2,000, you can repay the full $2,000 until you get to $50,000. In other words, you will make the first 25 repayments. After that, you and your joint venture partner can start paying $1,000 each towards the loan repayment.
There are so many different arrangements you can make. For example, your partner can put down the $50,000 deposit, and if you are a handyman, you can do $50,000 worth of renovations on the property.
So, yes, a joint venture is another way you can buy a home without a deposit.
5. A Property Syndicate
If you add a couple more people to the joint venture, it becomes a property syndicate. Or you can just join a syndicate that’s already there. That way, you would need to invest very little on your part, and it might help you buy without a deposit.
But be very careful about joint ventures and syndicates, as there is the potential of being cheated. Make sure you do your due diligence and find out everything about the syndicate you are joining. Also, make sure to get a lawyer or conveyancer to take a look at your contracts before signing.
6. Owner’s Finance
Owner’s finance can allow you to buy a house with no deposit.
How?
With owner’s finance, you owe the seller and not the bank. Normally, if you are buying a home through the bank, the bank gives the seller $500,000, and then you pay the bank back over time—usually 30-40 years.
But in the case of owner’s finance, you can agree with the seller that you will pay them for the property over a certain number of years. So you actually owe the seller and not the bank. In this case, even though you technically own the property, the seller will keep the title deeds. Once you have finished paying them for the property, you can get the title deed.
Although it is very rare to find sellers who would agree to this, it is possible.
However, with owner’s finance, you can’t really take 30 years to pay it back. So bear in mind that your repayments will be way higher than a regular loan. But it all depends on what you and the seller agree on.
With owner’s finance, you will still have control of the property—you can live in it or rent it out if you want. You can even renovate it. So remember that with owner’s finance, you don’t owe the bank, but you owe the original owner of the property, and you can buy the home with no deposit.
7. Medical Professionals
If you are a medical professional, you could qualify for specialised lending, where you may be able to borrow up to 100% of the value of your home.
The way it works is that the loan would be split into 2:
- The first loan offered is just a normal home loan and can be paid off over 30 years. This first portion would make up 90% of your loan.
- The remaining 10% would be offered as a term facility and must be repaid within 5 – 10 years, depending on the bank’s assessment.
Not all lenders offer this type of lending. This is highly specialised lending, so depending on which role you have in the medical profession, this option may not be available to you. But you may qualify for other home loan benefits as a medical professional.
8. Advantageous Purchase
This strategy is so rare that we’ve only seen it once in the past decade.
An advantageous purchase is where you buy a home for significantly less than its market value. It typically occurs when a property is sold due to a dispute, divorce, deceased estate, bank repossession and many other reasons. In this case, the home is sold fast and without the necessary due diligence to ensure it is sold for the market value.
Ordinarily, banks will lend based on the lower purchase price or valuation. But with an advantageous purchase, the gap between the valuation and purchase price is so large, greater than 20%, that the banks can use the valuation to lend against accordingly. This means you could borrow 100% of the purchase price.
9. First Home Loan Guarantee Scheme
This scheme allows you to buy a home with a 5% deposit without having to pay Lenders Mortgage Insurance. This is because the government acts as a guarantor to secure the remaining deposit to get you to 20%.
However, there are some things to consider with this scheme:
- Some lenders want you to have at least a 5% deposit as genuine savings. Although this is not a zero deposit, it is way lower than a 20% deposit.
- Only a limited number of home buyers a year are chosen. Your chances of getting it are quite low.
- The scheme is also run as some sort of a lottery, which further reduces your chances of getting it. However, at Hunter Galloway, a few of our clients have managed to get the grant.
- If you are single, you have to be earning no more than $125,000, and if you are a couple, your total income should not be more than $200,000 a year.
- There are property price caps. So, to be eligible for the scheme, your property will have to be below a certain value. For example, in Queensland, the property price cap is $700,000.
- You cannot use it to buy an investment property—you have to live in the property.
- The scheme is only open to Australian citizens. So, if you are a permanent resident, then unfortunately, you do not qualify for the First Home Loan Deposit Scheme.
10. Rent To buy
Rent to buy allows you to move into any home with a 2.5% deposit. You essentially buy now and pay later based on a pre-agreed purchase price.
During the period, a portion of your rental cost goes towards your future deposit. When you eventually buy the home, you use the increased equity and the deposit saved over this period.
Rent-to-buy schemes can help some buyers, but they often carry higher costs and risk. Review terms carefully and seek independent advice. If you delve into the details, you’ll see that it’s designed to make the most amount of money from people who aren’t financially literate.
11. Equity
This one doesn’t really apply if you’re a first-home buyer, but it still applies if you’ve got an existing home. You can use the equity in an existing property, and you won’t need a deposit.
This is the fastest way to borrow more money because saving takes time. For example, if you have a property that you purchased three years ago that has increased by $300,000, you can use that $300,000 as equity to purchase the next property.
It’s a great way to expand your portfolio faster without waiting until you have saved the deposit. The only thing you need to look out for is getting into too much debt. So just make sure you do your cash flow and modelling to ensure that you can afford it because you are potentially borrowing 100% on the new property without putting a deposit in, so your repayment is going to be much higher.
12. Property Option
With a property option, you go to the seller and give them a payment of between 1-30% of the property’s value as an option fee. This gives you the option to buy the property from the seller at a later date for an agreed-upon price.
If the value of the property increases, then you can buy the property at the set price but still be able to get full finance for it because the value has increased.
However, if you eventually fail to buy the property, you lose the option fee. This method usually works if the option period is very short and you are offering a very high amount. In this case, you may get away with offering less than 1% of the property value.
The property option route is really ideal if you are a seasoned property investor.
Eligibility Requirements For No Deposit Home Loans
Not every borrower qualifies to buy a house with no deposit. Lenders have strict eligibility rules to reduce risk. Understanding these requirements increases your approval chances.
Minimum Credit Score and Repayment History
Lenders look closely at your credit history. A good credit score and a clean repayment record are essential.
- Late payments or defaults may reduce approval chances.
- Most lenders require a minimum score of around 620–650, depending on the bank.
Stable Income and Profession
Your income stability plays a key role. Lenders favour applicants with reliable earnings.
- Profession matters: Doctors, teachers, and other secure professionals often have higher approval odds.
- Self-employed or irregular income borrowers may need additional documentation.
Genuine Savings vs Gifted Funds
Lenders want proof that you can handle repayments. They assess:
- Genuine savings: Money saved over time shows financial discipline.
- Gifted funds: Family contributions can be acceptable, but documentation is required.
Location and Property Types
To qualify for a home loan without deposit, the property must meet certain criteria.
- Standard houses are easier to finance than apartments or unconventional builds.
- Borrowers usually need to buy in a major city, regional town, or capital area.
Scenarios of Likely Approval
Some borrowers have higher chances of approval without a deposit. These include:
- First-home buyers with stable full-time jobs and decent credit scores.
- Professionals with a gift from family for minor upfront costs.
- Buyers purchasing a standard property in a major city or regional area.
By understanding these requirements, you can approach lenders confidently and secure a zero deposit home loan faster.
Step-by-Step Application Process For A No Deposit Home Loan
Buying a home without a deposit requires careful planning. Follow these steps to make the process smoother and faster.
Step 1. Contact a Mortgage Broker
Start your journey by speaking with a mortgage broker. They simplify the process and find the best loan options.
- Brokers compare multiple lenders to find competitive rates and terms.
- They advise on eligibility, documents, and loan structure.
- Using a broker increases your chances of approval for high LVR loans.
Hunter Galloway is an expert mortgage broker. Contact us on 1300 088 065 or click here to book a free assessment.
Step 2. Pre-Approval Requirements
Next, get pre-approved for your loan to confirm your borrowing power.
- Provide proof of income, payslips, and tax returns.
- Share details of debts, expenses, and assets.
- Include any gifted funds or guarantor documentation if applicable.
- Ensure your credit history is up to date; lenders check repayment records carefully.
Pre-approval allows you to act quickly when you find the right property.
Step 3. Research Properties
Before committing, explore properties that fit your budget and lender requirements.
- Focus on standard houses in major cities or regional centres.
- Check property prices, local amenities, and potential resale value.
- Make a shortlist of properties that meet lender criteria for no deposit loans.
Step 4. Property Valuation & Lender Checks
Once you have a property, lenders assess its value and suitability.
- The bank orders a property valuation to ensure it covers the loan.
- Lenders check local zoning, property type, and potential resale value.
- Some lenders limit no deposit loans to certain property types or locations.
Step 5. Guarantor Approvals (If Applicable)
A guarantor can improve loan terms and may reduce Lenders Mortgage Insurance.
- The guarantor must provide financial documents and proof of ownership.
- Lenders assess the guarantor’s ability to cover repayments if needed.
- Clear communication with your guarantor avoids delays during approval.
Step 6. Final Approval & Settlement
After pre-approval, valuation, and checks, the lender confirms final approval.
- Review the loan contract carefully before signing.
- Arrange insurance as required by the lender.
- Settlement day transfers property ownership and disburses funds.
Tips to Avoid Delays & Common Mistakes
Avoid unnecessary delays by preparing in advance and staying organised. Here are a few tips to follow:
- Submit all documents correctly the first time.
- Respond promptly to lender requests for additional information.
- Avoid making large purchases or changing jobs during approval.
- Keep communication open with your mortgage broker to solve issues quickly.
Following these steps and working with a trusted mortgage broker increases your chances of a smooth, stress-free no deposit home loan application.
What If I Have A 5% Deposit?
You will be able to get a home loan with only a 5% deposit. However, the terms will differ between lenders. If you only have a 5% deposit, this needs to be genuine savings, which means that it’s not just money from your sister selling her car or money you’ve borrowed from your Aunt, as this is considered a gift.
If you have a 5% deposit, you will likely have to pay Lenders Mortgage Insurance (LMI), which can run into thousands of dollars.
Read More: Genuine savings.
Read More: Try the deposit calculator to see how much you could get with your savings.
No Deposit Home Loan Costs, Risks & Considerations
Taking out a home loan without a deposit can help you buy a property sooner. But it comes with extra costs, stricter requirements, and financial risks.
Extra Costs to Expect
Even with no deposit, you may need money for:
- Bank fees, legal costs, and building or pest inspections.
- Higher interest rates compared to standard loans.
- Lenders Mortgage Insurance (LMI) to protect the lender if you default.
- Additional account and settlement fees.
Understanding Repayments
Borrowing 100% of a property’s value means higher repayments. For example, on an $800,000 property:
Loan Amount | LVR | Monthly Repayment | Total Interest (30 yrs) |
$800,000 | 100% | $4,640 | $880,000 |
$640,000 | 80% | $3,710 | $720,000 |
Figures assume 6% interest with principal and interest repayments.
Risks to Consider
No deposit loans increase your exposure to financial risks:
- Negative equity if property values fall.
- Foreclosure risk if repayments are missed.
- Reduced flexibility to handle emergencies or additional investments.
- Overextending yourself if you take multiple no-deposit loans.
Additional Considerations
- Some lenders only offer no deposit loans in capital cities or major regional centres.
- Lender criteria are stricter for no deposit applications. They look closely at income, expenses, and credit history.
- The First Home Loan Deposit Scheme isn’t guaranteed. Saving an 8% deposit is safer if you want certainty.
- For investors, consider strategies like rentvesting to grow your property portfolio without overextending.
Key Takeaways
No-deposit loans let first-home buyers and investors enter the property market sooner. But weigh costs, repayments, and risks carefully. Speak to Hunter Galloway for a personal review to choose the best option for your circumstances.
What Are Some Other Ways I Can Save For A Home Loan?
- First of all, consolidate any debt that you have. This includes credit cards, personal loans, or even Afterpay. The more debt you have, the higher risk as a customer you are. Be aware that even if you don’t actually have any money owing on your credit card, your credit limit will still be considered as debt. If you have any credit cards that aren’t in use, get rid of them.
- Once all your debts are paid, you can implement the 50/25/25 Budget Rule. This is where 50% of your income is spent on essential living expenses, 25% on lifestyle spending, and the remaining 25% on savings.
- Track your goal by using technology to automate your savings. Set up monthly direct debits from your pay into a separate savings account. This will allow for the out-of-sight, out-of-mind mentality to enable you to generate your savings.
At Hunter Galloway, we’re all about budgeting and can tell you the different ways to save for a home loan.
Read More: Find out the steps in buying your first home using The Home Buyers Hub.
Bonus: Can I Use A Personal Loan As A Deposit?
There are many websites and videos out there that are still encouraging people to get personal loans and use that as a deposit.
What’s the problem with getting a personal loan and using it for a deposit? Well, these days, the banks are now more diligent, and they will do their research to find out how you got your deposit. Once they find out you got your deposit from another loan, you can be certain they will deny your home loan application.
Also, personal loans can reduce your borrowing capacity by hundreds of thousands of dollars. Yes, that’s right—making a payment of just $500 or $1000 a month towards a personal loan can reduce your borrowing capacity by hundreds of thousands of dollars.
So, no matter how persuasive the video telling you to get a personal loan is, just don’t do it.
Bonus: Differences Between Loan Features For No Deposit Loans And Regular Loans?
In most cases, you’ll have access to the same features as other home loans. This includes flexible payment packages and waived fees. Often the interest rates are pretty low. However, the most important part is finding a lender that is happy to do a no deposit loan, as this can be difficult sometimes.
Read More: How to find the best home loan in Brisbane.
Bonus: Do I Have To Pay LMI On A No Deposit Loan?
The amount you save for a deposit, and sometimes your profession, will determine whether or not you pay LMI.
As a general rule, If you have less than a 20% deposit, i.e. borrowing over 80% Loan To Value Ratio (LVR), banks consider this a high-risk loan and will apply lenders mortgage insurance.
If you are in certain professions, you could still be eligible for waived LMI with a 90% loan and 10% deposit without needing a guarantor…
Speak to us about this and get a free assessment today to find out about your personal situation.
No Deposit Home Loan Frequently Asked Questions
Can I get a no deposit home loan without a guarantor?
Yes, but options are limited. You may need government schemes, gifted funds, or existing equity. Lenders might also charge higher interest or stricter checks.
How much extra will a no deposit loan cost me?
Costs depend on LVR, lender fees, and potential LMI. Borrowing 100% of a property’s value can increase repayments and total interest significantly.
Can first home buyers use government schemes as a deposit?
Yes. Schemes like the First Home Loan Deposit Scheme or First Home Owners Grant reduce the amount you need to save. Eligibility varies by state.
What documents do I need for a no deposit home loan?
Proof of income, ID, bank statements, and debts. Gifted funds or guarantor documents may also be required.
Can I refinance a no deposit home loan later?
Yes. Refinancing after building equity or improving credit can lower interest, remove LMI, or adjust repayments for better financial flexibility.
How do you know if your home loan will be approved?
Approval depends on income, credit history, expenses, and the property type. Pre-approval gives you an early indication.
How to buy property in Australia with no money down?
Explore no deposit home loans, government schemes, gifted funds, or guarantor options. Speak with a mortgage broker for tailored guidance.
Where is the cheapest place to buy a property in Australia?
Regional towns and outer suburbs often offer lower property prices than major cities. Research local markets before committing.
Can I use a low deposit strategy to invest in multiple properties?
Yes, strategies like rentvesting allow you to buy property with minimal upfront cash. However, ensure your repayments remain manageable.
What are the risks of no deposit home loans?
Higher interest rates, LMI costs, negative equity, and stricter lender checks. Plan carefully to avoid financial stress and overcommitment.
Next Steps And Getting Your Home Loan.
The information on this page is general and should not be considered as advice. Before you act on this information, you must seek independent legal and financial advice.
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