In Australia, securing a home loan without a deposit might seem impossible, but it is achievable with the right approach. While saving for a deposit is the traditional method, there are several ways to purchase a property with no deposit required. Here’s a guide on how to get a home loan with no deposit in 2025.
1. Guarantor Loan
A guarantor loan is one of the most common ways to buy a home with no deposit. In this scenario, a family member (usually a parent) offers their property as collateral for the loan, which acts as a security for the lender. By doing so, the lender reduces its risk, allowing you to borrow 100% of the property value.
- How it works: The guarantor uses their own home as security for the loan, which means they’re responsible for the loan if you default.
- Benefits: This option allows you to borrow the full purchase price of the home without needing a deposit.
- Eligibility: Your family member must have enough equity in their property to act as a guarantor, and they must be willing to take on the responsibility of the loan.
2. First Home Loan Deposit Scheme (FHLDS)
The First Home Loan Deposit Scheme is a government initiative that helps eligible first-time buyers purchase a property with just a 5% deposit. The government acts as a guarantor for up to 15% of the loan, eliminating the need for Lender’s Mortgage Insurance (LMI).
- How it works: The government provides a guarantee, allowing you to secure a loan with only a 5% deposit and no LMI costs.
- Benefits: You can buy your first home sooner and save on LMI, which can be a significant cost.
- Eligibility: There are income and property price caps, and the scheme is available only to first-time buyers. Additionally, you must meet specific criteria related to your income and the property’s location.
3. Family or Personal Loan for Deposit
Another option is to borrow the deposit from a family member or friend. This could be in the form of a personal loan or a gift. If your family members have the financial means, they may lend you the money required for the deposit, enabling you to borrow the full purchase price.
- How it works: You take out a personal loan or receive a gift from your family or friend to cover the deposit. This amount is then used as your contribution to the home loan.
- Benefits: It eliminates the need for a traditional deposit and allows you to purchase a property sooner.
- Eligibility: You will need to prove to the lender that you have the capacity to repay the loan, and your family or friend’s financial situation must be assessed if they are lending you the money.
4. No Deposit Home Loans
Some lenders offer no deposit home loans, which allow you to borrow 100% of the property’s value. These loans are not common and typically come with higher interest rates and stricter lending criteria. Lenders may require additional documentation, such as proof of stable income and a strong credit history.
- How it works: You borrow the full purchase price of the property, with no deposit required.
- Benefits: You don’t need to save a deposit and can purchase a home sooner.
- Eligibility: Lenders are more likely to approve this type of loan for borrowers with excellent credit and a stable income.
5. Use of Equity from Another Property
If you already own another property or have significant equity in one, you may be able to use this equity as a deposit for your new home. This is known as equity borrowing and allows you to leverage the value of your existing property to secure a loan for your new home.
- How it works: The equity in your existing property is used to secure the loan for the new property.
- Benefits: No deposit is needed, and the value of your current home works in your favor.
- Eligibility: You must have enough equity in your current property to cover the full deposit for the new home.
Conclusion
Buying a home in Australia with no deposit is possible through various options such as guarantor loans, government schemes, borrowing from family, and using equity from an existing property. Each option has different eligibility requirements and risks, so it’s essential to consider your financial situation carefully and speak with a mortgage broker to determine the best approach for you. By exploring these options, you can take the first step toward homeownership even without a traditional deposit.