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Low Deposit Home Loans
Buying with Less Than a 20% Deposit
Don’t have a 20% deposit saved yet? You still have options. We compare the trade-offs between LMI, family pledge and guarantor structures so you can choose the path that suits you best.
Overview
How Low Deposit Lending Works
If you’re buying a home with less than a 20% deposit, the lender takes on more risk — and they manage that risk in one of three main ways. Understanding which way works best for your situation is part of what we do.
The first option is lender’s mortgage insurance (LMI). LMI is an insurance premium you pay (or capitalise into the loan) that protects the lender if you default. It’s not insurance for you — it’s insurance for them — but it lets you borrow up to 95% of the property value without needing a 20% deposit. LMI premiums vary significantly between insurers and LVRs, and we’ll show you the exact dollar cost before you decide.
The second option is a guarantor structure — usually a family pledge from a parent who has equity in their own home. The parent’s property is used as additional security for the portion of the loan above 80% LVR, which means you avoid paying LMI altogether. The guarantor’s exposure can usually be capped to a specific amount, limiting their risk.
The third option is to buy under a specialist lender’s reduced-LMI or no-LMI product for eligible borrowers — typically professionals (medical, legal, accounting, IT) where the lender accepts higher LVRs without standard LMI on the basis of the borrower’s career trajectory.
Key Features & Benefits
Low Deposit Options Compared
Up to 95% LVR with LMI
Borrow up to 95% of the property value with lender’s mortgage insurance capitalised into the loan. Available across most lenders on our panel — the LMI cost varies.
Family Pledge / Guarantor
A parent (typically) provides part of their property’s equity as additional security. You can borrow up to 100% of purchase plus costs without paying LMI. We structure to cap the guarantor’s exposure.
Professional Package (No LMI)
Eligible professionals (doctors, dentists, lawyers, accountants, certain IT roles) may borrow up to 90–95% LVR without LMI under several lenders’ professional packages.
Essential Workers (Reduced LMI)
Some lenders offer no-LMI or reduced-LMI products to nurses, paramedics, teachers, police and firefighters. The lender pool is small but the savings are significant.
Self-Employed Low Deposit
Self-employed borrowers can typically get to 85% LVR on alt doc loans, or 90% on full doc with two years’ financials. Higher LVRs available for borrowers with strong income trajectory.
Up-Front Cost Modelling
We model the total upfront cost — deposit, stamp duty, LMI (if any), legal, settlement — for each option, so you can compare in dollars rather than abstract percentages.
Is This Right for You?
Is a Low Deposit Loan Right for You?
The Process
How We Work Through Low Deposit Options
Deposit & Cost Discussion
We confirm your deposit position, your income type and your eligibility for any professional / essential-worker waivers. This determines the realistic option set.
Side-by-Side Comparison
We model the total upfront and ongoing cost of each viable option — LMI versus guarantor versus a professional waiver — so you can see them in real dollars.
Guarantor Conversation (if relevant)
If a family pledge is on the table, we walk both you and your potential guarantor through the practical implications. The guarantor needs to understand the commitment before we proceed.
Pre-Approval
We obtain pre-approval with the lender best suited to the chosen structure — including pre-clearance of the LMI premium or the guarantor’s property valuation.
Settlement
We coordinate with the lender, the guarantor’s solicitor (if applicable) and your conveyancer to settle. For LMI loans, the premium is paid at settlement and capitalised.
FAQ
Low Deposit Questions
What is lender’s mortgage insurance (LMI)?
LMI is an insurance premium that protects the lender (not you) if you default and the property doesn’t cover the debt. You pay the premium once, at settlement, and it’s usually capitalised into the loan amount. LMI on a $500k loan at 90% LVR is typically $7,000–$10,000; at 95% LVR it can exceed $15,000. The exact amount depends on the loan size, LVR and lender.
How does a guarantor loan compare to paying LMI?
A guarantor loan avoids LMI altogether — saving you the premium — but it puts a portion of the guarantor’s property at risk. The guarantee can usually be capped to a specific amount, so the guarantor isn’t on the hook for the full loan. Whether guarantor or LMI is better depends on the family situation and the guarantor’s risk tolerance. We talk both options through.
Can I borrow more than 95% of the property value?
With a guarantor structure, you can effectively borrow 100% of purchase plus costs (deposit, stamp duty, legals) — the guarantee covers the shortfall. Without a guarantor, 95% LVR is generally the maximum, and only on standard residential security. Some specialist lenders go higher in narrow circumstances.
Will I lose my guarantor’s home if I can’t repay?
Not automatically. If you default, the lender calls in your loan and sells your property first. The guarantor’s property is only at risk for any shortfall on the loan above the value of your property — and only up to the capped amount of the guarantee. Most guarantor losses are avoidable with proper structuring.
When can I remove the guarantee?
Once your loan balance falls below 80% of your property’s value — through repayments, capital growth or both — you can apply to release the guarantor. This is usually 3–7 years after settlement. We help you track this and lodge the release with the lender when you’re ready.
Talk to Outlook About Your Deposit
Free consultation. Tell us your deposit, your income and your situation. We’ll model the realistic options side-by-side and help you decide the right path.
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