Buying A House With No Deposit

In general, lenders do not offer true ‘no deposit’ home loans.

Some home loans require no deposit but have strict eligibility criteria, including a near-perfect credit record and a very stable work history. Such loans are likely to come with a higher interest rate.

Many lenders offer a 5% deposit home loan, which may be the next best thing to a loan with no deposit. You will almost certainly be asked to pay lenders mortgage insurance with this type of loan. But hey, it could be just what you need to get started in the property market.

Can My Deposit Be From My First Home Owners Grant?

The First Home Owner Grant can usually be used as part of your deposit. However, you will still need to factor in the other upfront costs of buying a home, such as legal fees and moving expenses.

The FHOG is normally paid on settlement if you are buying a brand new home. If you are building a new home, you are likely to receive the FHOG when you make your first progress payment — typically when the slab is laid.

Each state and territory has different requirements for the First Home Owner Grant (FHOG), but some do not offer this incentive for established homes. Read here to find out what’s on offer in your state or territory.

Can My Deposit Be From My Superannuation?

If you want to buy your first home, the First Home Super Saver scheme can help you save a deposit faster. The scheme allows you to voluntarily contribute money to your super and withdraw those contributions later to form part of your deposit.

There are strict rules in place around accessing your superannuation balance before you retire. These rules are designed to ensure that you have enough money to enjoy a comfortable lifestyle when you reach retirement age.

To access your super before your retirement, you must satisfy strict conditions. Speak with a professional such as your accountant about how to satisfy these conditions.

Applying For A No Deposit Home Loan as a First Homebuyer In Australia

When you have a small deposit, speak with your local My LMI broker. We’ll thoroughly understand the conditions different lenders impose for no deposit home loans.

If you would prefer not to meet with a broker, but would like to crunch some numbers and get a rough idea of what your policy might cost, we have calculators that can help you.

Alternative Options For First Homebuyers With No Deposit

If you have limited savings or no deposit, you may be able to find resources by tapping into other sources of money.

If your family members are able and willing to provide a cash gift toward your down payment (and we recognize there are often extenuating circumstances that make this difficult), they could increase your deposit amount.

If your parents own their home and are willing to guarantee part of your deposit, they could be your guarantor. The guarantor need not pay anything, but if their guarantee is worth more than 20% of your home’s value, you may be able to avoid paying lenders mortgage insurance, which can save you a considerable amount.

You may also use a windfall, such as an inheritance or cash gift deposit from family members.

Most lenders require a deposit as proof of your commitment to repay the loan, but some may accept cash gifts under certain conditions. The lender may ask for a statutory declaration, which states that the money is being handed over to you unconditionally.

As a first homebuyer, you may find it difficult to know what choices will suit your needs, but an My LMI Group broker can help you weigh up your options for saving up a deposit and compare rates across a wide range of options.