Can I Buy a Home With No Deposit?

Have you been wondering whether you can buy a home with no deposit? The simple answer is, yes, you can. Saving up finances for a home deposit can be quite a hurdle, especially due to the high living costs and ever-rising home loan interest rates. This has made many people turn to the no-deposit home loan option as it is an easier and faster way to own a home. In this article, we will look at the several ways you can buy a home with no deposit. 

1. Guarantor home loan

Getting a guarantor home loan is the best no-deposit home loan option you can get in Australia. Usually, a third party (your parents or family member) allows you to borrow against their home equity. This means the guarantor uses their property as security for your loan. 

With a guarantor home loan, you can borrow up to 105% of the home’s purchase price. This means you will not need a deposit. If you are unable to repay the loan, the liability may fall on your guarantor.

2. First Home Owners Grant (FHOG)

Most states in Australia allow buyers to use the First Home Owners Grant as a deposit for their first home. The grant ranges from $10,000 to $20,000, depending on the state you live in. 

While these grants may not cover the 20% deposit requirement for a home, most banks offer loan-to-value-ratio (LVR) loans of up to 95%. This means that if you use the First Home Owners Grant, you will need a deposit of at least 5%.

how to secure a rental property

3. First Home Guarantee

The First Home Guarantee is another program that helps first-time home buyers acquire their first home with a deposit of at least 5% without having to pay Lenders Mortgage Insurance (LMI). This scheme is for owner-occupiers, which means the house you purchase must be your principal place of residence.

4. Monetary gift

You may receive a monetary gift from your parents, which you do not have to pay back. You can decide to use this gift as a deposit for your home, which means you will be buying your first home without your own deposit.

Some lenders accept these kinds of gifts and consider your loan. Thus, your parents’ monetary gift can pay for the 5% – 15% deposit on your home loan. However, lending requirements differ from one bank to another, hence you may need a ‘gift letter’ showing that the monetary gift is unconditional and non-refundable.

5. Personal loan

Another way you can buy a home without a deposit is by using a personal loan. With a personal loan, you will need a deposit of at least 5% of the property value. However, most lending companies discourage this option because of the pressure of paying a personal loan and a home loan. If you use this option, you must have an income that can cover both loans.

While it may be difficult to buy a home with no deposit, it is not entirely impossible. With so many no-deposit home loan options available, including grants and gifts, you can now own the home of your dreams without a hassle. However, it is crucial to consult a Home Loan Specialist to explore the options available and understand the risks involved before making the final decision.

Enquiry Form