We all dream of owning a home, but with property prices continuing to rise, that dream can feel out of reach—especially if you don’t have tens of thousands of dollars saved for a deposit. While traditional home loans require a deposit of at least 5–20%, some options allow buyers to enter the market with little to no upfront savings.

No-deposit home loans, as the name suggests, provide a way to purchase a property without the usual upfront deposit. These options are particularly appealing to first-time buyers struggling to save, pensioners on a fixed income, and those who don’t have a guarantor to back their loan. But how do these loans work, and are they right for you?

In this guide, we’ll break down the possibilities of buying a home with no deposit, exploring the options and the factors you need to consider before taking the plunge.

 

What Are No Deposit Home Loans?

A no-deposit home loan is a type of mortgage that allows you to purchase a property without needing to contribute the standard upfront deposit, which typically ranges from 5% to 20% of the property’s value. Instead of requiring savings, these loans rely on alternative security measures—such as a guarantor or lender’s mortgage insurance (LMI)—to reduce the lender’s risk.

How No Deposit Loans Differ from Traditional Home Loans

In a traditional home loan, lenders expect borrowers to contribute a deposit before approving a mortgage. This deposit signifies financial stability and reduces the loan amount, making repayments more manageable. However, saving a large deposit can be challenging for many Australians—particularly first-time buyers—especially with rising property prices and increasing living costs.

No-deposit home loans remove the immediate need for savings but often come with additional requirements. Some lenders may only offer these loans if you have a guarantor (such as a family member who offers their property as security), while others might require you to pay LMI to offset the risk of lending without a deposit.

Advantages of No Deposit Home Loans

• Faster Entry into the Property Market-–Without the need to save for a deposit, you can buy a home sooner rather than spending years accumulating savings.
• Potential for Property Growth—Getting into the market earlier means you can start building equity sooner and benefit from property price increases over time.
• Helps Renters Transition to Homeownership – If you’re already paying rent equivalent to a mortgage repayment, a no-deposit loan can help you stop renting and start investing in your own property.

Risks and Considerations

• Higher Loan Amounts and Repayments – Since you’re borrowing the full property price, your mortgage balance—and therefore your monthly repayments—will be higher.
• Lender’s Mortgage Insurance (LMI) – Many no-deposit loans require LMI, which can add thousands of dollars to the overall cost of your loan.
• Stricter Eligibility Requirements – Lenders typically require strong financial stability, a good credit score, and a reliable income to approve no-deposit loans.
• Risk to Guarantors – If you’re using a guarantor, they’re putting their assets on the line, which could be at risk if you default on repayments.

Can I Get a No Deposit Home Loan Without a Guarantor?

Yes, getting a no-deposit home loan without a guarantor is possible, but the options are limited and have stricter requirements. This option may be available only at non-bank lenders.

A guarantor-free loan means you’re borrowing the full property price without having a family member or close relative use their home as security. Because this increases the lender’s risk, they often require alternative measures to offset that risk.

How Do Guarantor-Free No Deposit Loans Work?

Instead of relying on a guarantor, lenders may approve a no-deposit loan under specific conditions, such as:

• Using Lender’s Mortgage Insurance (LMI)—Some lenders allow borrowers to take out a loan for the full property price if they pay for LMI, which protects the lender in case of default. However, this can add a significant upfront or ongoing cost to the loan.
• Demonstrating Strong Financial Stability—Lenders will require proof of stable employment, a high credit score, and a strong savings history to show you can manage repayments.
• Using Equity from Another Property—If you already own a property, you may be able to use its equity instead of a cash deposit.
• Government Grants or First Home Buyer Schemes—Some government programs, such as the First Home Owner Grant (FHOG) or the First Home Guarantee, can help eligible buyers reduce or eliminate the need for a deposit.

No Deposit Home Loans for First-Time Buyers

Saving for a home deposit is one of the biggest challenges for first-time buyers. Rising property prices push the required 20% deposit higher each year. Many are also burdened by high rental costs, making it difficult to save extra for everyday expenses. 

On top of that, the increasing cost of living—including groceries, utilities, and transport—further limits their ability to build a deposit. For those without financial support from family or an inheritance, accumulating enough savings can feel even more out of reach, delaying their path to homeownership.

To ease the financial burden, several Australian government initiatives were created to help first-time buyers enter the market with little or no deposit. While these are not a true no-deposit scheme, they significantly reduce the upfront savings required, making homeownership more accessible.

• First Home Guarantee (FHG)—Previously known as the First Home Loan Deposit Scheme (FHLDS), this program allows eligible buyers to purchase a home with as little as a 5% deposit. The government acts as a guarantor to avoid LMI costs.
• First Home Super Saver Scheme (FHSSS) allows first-home buyers to use voluntary superannuation contributions (up to $50,000) to fund a home deposit, offering tax benefits and accelerated savings.
• State-Based Grants and Concessions—Many states offer FHOG and stamp duty concessions to reduce upfront costs. The eligibility criteria vary depending on location and whether the property is newly built.

Tips to Improve Eligibility for a No Deposit Loan

If you’re considering a no-deposit loan as a first-time buyer, taking the following steps can improve your chances of approval:

1. Maintain a Strong Credit Score—Lenders look for a good credit history, so ensure you pay bills on time and reduce existing debts.
2. Demonstrate Stable Employment-–Having a steady job with consistent income reassures lenders that you can meet mortgage repayments.
3. Show a History of Savings or Rental Payments—Some lenders accept proof of regular rental payments as an alternative to a deposit.
4. Minimise Other Debts—Reducing credit card balances, personal loans, and buy now, pay later debts can improve one’s borrowing power.
5. Explore Government Assistance—Using schemes like the First Home Guarantee can help reduce upfront costs and improve loan approval chances.

No Deposit Home Loans for Pensioners

Securing a home loan as a pensioner can be challenging due to age restrictions, income limitations, and stricter lending criteria. Many lenders prioritise applicants with stable, long-term earnings, which can make approval difficult for retirees or those relying on government pensions. Additionally, pensioners often have fewer working years left to repay a mortgage, leading banks to impose shorter loan terms or require larger deposits. These factors can make traditional home loans more challenging to access, leaving pensioners searching for alternative options.

Available Home Loans for Pensioners

While standard no-deposit home loans may be harder to secure for pensioners, there are alternative options that can help:

• Reverse Mortgages allow homeowners aged 60 and over to borrow against their home equity without making regular repayments. The loan is repaid when the home is sold, the owner moves into aged care, or the estate is settled.
• Seniors Equity Loans—Similar to reverse mortgages, these loans enable older Australians to access home equity to fund retirement, home purchases, or renovations.
• Government Schemes—Some state-based programs offer pensioners assistance with homeownership, including stamp duty concessions and low-deposit options.
• Low-Deposit Loans with Superannuation Income—Some lenders consider superannuation income for mortgage applications, allowing pensioners with stable superannuation withdrawals to qualify for a low-deposit or guarantor-backed loan.

Alternatives to No Deposit Home Loans

If a no-deposit home loan isn’t an option, there are still ways to achieve homeownership with minimal upfront costs. While saving for a full 20% deposit can feel overwhelming, many lenders offer alternatives that require a much smaller deposit or more flexible lending terms.

One option is saving for a smaller deposit—some lenders allow you to secure a home loan with as little as 5% saved. While this still requires some upfront savings, it’s far more manageable than 20%, meaning you can reach your goal faster. You may also be eligible for government grants and schemes, such as the FHG, which can help reduce or eliminate LMI, making your loan more affordable.

Another approach is negotiating with lenders to find a loan structure that works for you. Some lenders offer low-deposit loans if you have a strong credit history, stable employment, or a solid rental payment record. Others provide interest-only loans, allowing you to start with lower repayments while building home equity.

Debt Relief Help at Debt Negotiators

If debt is making it difficult for you to save for a deposit, Debt Negotiators can help. We offer a free debt assessment and a range of debt solutions to help you get back on track financially. Whether you need assistance with consolidating debt, negotiating lower repayments, or creating a structured plan to regain control of your finances, our team is here to support you. Start with a free assessment today, or contact us to explore your options.