LOW DEPOSIT HOME LOANS
We can help you own your property sooner
If you want to buy your first home, but don’t have lots of savings, our low deposit home loan options can help you. Your deposit is one of the most important considerations. You may have been saving for years, or you may have limited money put aside, at FHBA, we understand that everyone is different. And that is why we have access to a range of products that will suit your personal situation.
Most lenders require a minimum of 5% genuine savings as deposit to purchase your first home. This means you must have the 5% deposit amount in your bank account for a period of time (usually three months) to prove to your lender that you’re able to save. However, at FHBA Mortgages, we understand that you might not always be able to demonstrate genuine savings, or have the full 5% saved. That’s why we work with you and our extensive panel of lenders to find a home loan that’s right for you. We even have access to a number of products that may allow you to get into your new home without genuine savings, or with less than the full 5% deposit.
Whilst this option may come with some costs such as Lenders Mortgage Insurance (LMI) charges (which protects the lender not you the borrower), there are some other avenues in particular states which will allow you to purchase or build your first home without having to pay any LMI. See more below!
HOW IT WORKS?
1ST STEP: CONSULTATION
Complimentary consultation with your FHBA Coach to determine if it suitable
2ND STEP: OPTIONS
Your FHBA Coach will present you a range of low deposit options (if eligible)
3RD STEP: APPLICATION
Your FHBA Coach will submit an application based on your choice of lender/product
4th STEP: APPROVAL
Upon approval, you can now start searching for your first home with confidence
We are proud to showcase various low deposit home loan options as per below:
< 5% IN SAVINGS
There are still some lenders who are willing to lend more than 95% of your purchase price
Various occupations & educational qualifications may qualify for special no LMI loans
LMI is one of the largest costs for low deposit loans, this can be added onto your loan balance
NO LMI LOANS
In some areas of Australia, you may eligible for Government backed loans without LMI costs
WHY LOW DEPOSIT HOME LOANS?
Borrowing 95% is relatively difficult compared to other home loans because you’ll need to meet stricter lender criteria to get approved for a low deposit loan. Each lenders’ policy regarding genuine savings differs slightly so it is a great idea to seek advice from your FHBA Coach / Mortgage Broker first. Lenders mortgage insurance may also be payable.
Low deposit home loans can be quite flexible and tailored to suit your needs. Typically a low deposit home loan suits aspiring first home buyers with the following characteristics:
- Current renters, if you can demonstrate timely rental payments
- Stable Employment, a minimum of 6 months
- A good income, lenders usually require a greater income for low deposit loans
- Clear credit history, a blemish-free credit report is vital
- Minimal Debts, most lenders require minimal existing debt commitments
- Property type, the lower deposit home loans usually have postcode/property type restrictions
Case Study 1: Buying with a deposit of less than 5%
Assuming you are from states such as QLD, SA or WA, where the First Home Owners Grants are more than the $10,000 and there are more first home buyer appropriate homes, this option could be a consideration as you could potentially use the increased First Home Owner Grant to pay for the deposit alongside any other savings you may have, without the requirement of genuine savings.
A small handful of lenders that FHBA Mortgages have access to, will allow the 5% deposit to be made up of your saved funds plus the First Home Owner Grant (FHOG). In a QLD example (within the 2016/17 Financial Year), where a first home buyer is buying an FHOG eligible new home; the minimum deposit required could be as little as $6,000 where a property is purchased for approximately $300,000:
|Type of Cost||Amount|
|Total Deposit Costs||$26,000|
|Less: QLD FHOG||$20,000|
|Total Funds Required||$6,000|
Case Study 2: Buying with a deposit of 5%
Unfortunately, most lenders, even those who allow 95% loans don’t allow the First Home Owners Grant to make up part of the 5% deposit required. The FHOG could still be used to cover the associated costs and a small amount would be returned as part of the settlement or alternatively, a slightly lower loan amount could be borrowed. Usually, the lender will require a minimum of 5% being genuinely saved over a minimum period of 3 months.
If you are looking to buy your first home with a 5% deposit and the property is worth $300,000 then you will need to genuinely save a minimum of $15,000 over a period of at least 3 months, some lenders may request 6 months.
If you haven’t been able to genuinely save over 3 months you still may qualify as there are a small handful of lenders that will now treat your rental payments (if you are renting now) as part of your Genuine Savings calculation.
Case Study 3: Shared Home Loan Structure
There are some Shared Ownership Home Loan Schemes, which are designed to help low to moderate income earners for first home buyers. Depending on your income and household size, the Housing Authority’s will co-own with you up to 40% of a property with you, although some conditions apply. Later, when you can afford it, you may be able to purchase all or part of the Housing Authority’s share. In all cases, these schemes will strongly encourage you to maximise your ownership of a property purchase in the initial instance should your circumstances allow you to.
For example, if you only have a $20,000 deposit, but you require a $30,000 deposit to buy your first home a Shared Ownership Structure can assist by allowing you to give 33% ownership to the Authority, allowing you to purchase the property now, albeit in shared ownership for the foreseeable future.
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Disclaimer: The information on our website including this page is general in nature and should be solely relied upon. It does not take your personal circumstances. The credit license responsible for the mortgage service offered to clients is Mortgage Australia Group Pty Ltd, Australian Credit License (ACL) number 377294, Australian Business Number (ABN) 99 091 941 749. Mortgage Australia Group Pty Ltd is a member of the Mortgage & Finance Association of Australia (MFAA). FHBA Pty Ltd is an authorised credit representative of Mortgage Australia Group Pty Ltd.