How to buy a house with no deposit

Many Australians often find themselves in the predicament where after saving for months, or even years, they still lack the savings for that ideal deposit. Saving for a 20% deposit isn’t always a feasible option but having less isn’t the end of the world. If you fall into the category of someone who’s without a deposit but is interested in buying a house, there could still be options available.

Buying a house with a minimal deposit saved

One of the things you should be aware of is that without a significant deposit accumulated, you may appear to lenders as a higher risk applicant. Because of this factor, lenders will need to exercise their due diligence to understand your financial situation and this may include scrutinising your financial situation and records accordingly. 

Below are four options that might be worth considering should you find yourself wanting to buy a house but lack a deposit or only have a small amount of savings. 

Low deposit home loan

Some lenders will allow you to borrow up to 95% of your home’s value, but only if you meet their strict criteria. Think about this option if you have an immaculate credit history, a stable job, and a high enough income to enable you to meet the repayments.   

Guarantor home loan

In past times, no deposit home loans were a possibility. Sadly, this isn’t the case anymore and you’ll need to explore other avenues to get the loan you want. 
Try looking into a guarantor loan if you have family members who are willing to help you by offering their property as additional security to your new home loan. Again, your job stability, credit history and income level will be important considerations for any lender. 

Take out a personal loan for a deposit

While some Australians may receive a financial gift or an inheritance from family that they can use towards a deposit, many won’t find themselves in this situation. If this is the case, you may wish to find a lender that will give you a home loan if you take out a personal loan with them to fund a deposit. This isn’t the easiest method out there and you’ll need to make sure you have a high enough income to cover repayments for both the personal loan and the home loan. You’ll also most likely need a very clean credit history and you may find that your lender charges you a higher interest rate than if you had your own saved deposit. 

Look into a first home owner grant and the first home super saver scheme

Thankfully, if you’re a first-time buyer you’ll probably find that you’re entitled to get help from the First Home Super Saver Scheme which enables you to use the tax advantages of superannuation to help with saving for a deposit for a home. Additionally, while every state is different, first-time buyers may also be able to access a first home owners grant.

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