Low Deposit Home Loans
A low deposit home loan lets you buy with 5–10% deposit instead of waiting years to save the traditional 20%. Andy helps Perth buyers get approved with smaller deposits, explains exactly what Lenders Mortgage Insurance costs, and structures the application so serviceability holds up when the bank scrutinises every dollar.
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What Is a Low Deposit Home Loan? Low Deposit
A low deposit home loan is any home loan where you borrow more than 80% of the property’s value — in other words, you’ve saved less than a 20% deposit. Most Perth buyers think of low deposit as 5–10% saved, which puts the loan-to-value ratio (LVR) at 90–95%. The higher the LVR, the more risk the lender sees, so they charge Lenders Mortgage Insurance (LMI) to cover that risk. LMI protects the lender, not you — it’s a one-off premium added to your loan or paid up front, and it can range from $3,000 on a small loan at 85% LVR to $18,000+ on a $600,000 purchase at 95% LVR.
Low deposit loans are real. Every major bank, most non-banks, and a handful of specialist lenders offer them. The catch isn’t whether they exist — it’s whether your income, employment type, credit file, and the property itself meet the lender’s tighter serviceability rules. A PAYG employee on $85,000 buying in Baldivis at 90% LVR will usually sail through; a contractor on the same income with six months’ bank statements might need a non-bank lender and a broker who knows which one says yes.
Andy’s been arranging low deposit loans since most Perth suburbs were still bush blocks. He’ll tell you up front if your deposit size works, which lenders accept your employment type at that LVR, and exactly what the LMI bill will be before you sign anything. No surprises at settlement.
We query over 30 lenders to find an outcome that’s right for you
5% vs 10% vs 20% Deposit — What Actually Changes? Deposit
The deposit size changes three things: the LMI cost, the lender’s appetite, and how much scrutiny your application gets.
5% deposit (95% LVR): LMI on a $500,000 property sits around $16,000–$20,000. Only a handful of lenders say yes, and they want perfect credit, stable PAYG employment, and genuine savings of at least 5%. If a parent goes guarantor and covers the deposit shortfall, some lenders will do 95% LVR with no LMI.
10% deposit (90% LVR): LMI drops to $11,000–$14,000. Every major bank and most non-banks accept 90% LVR, so Andy’s got twenty-plus lenders to choose from. Self-employed borrowers can get approved through lenders who specialise in self-employed home loans.
15% deposit (85% LVR): LMI falls to $6,000–$9,000, nearly every lender says yes, and you get discounted rates and better offset and redraw features.
20% deposit (80% LVR): No LMI, every lender, every rate discount. But getting there takes time — if you’re saving $1,500 a month and need another $50,000, that’s 33 months of renting while prices move.
Andy runs the numbers both ways: what you pay in LMI and interest at 10% deposit versus what you pay in rent and forgone equity waiting to hit 20%. About 60% of the time, buying sooner wins.
What You'll Actually Pay in LMI LMI
LMI cost depends on your LVR, the loan amount, the lender’s insurer (Genworth or QBE), the property location, and your borrower category. Typical costs for metro Perth properties in 2025:
- $400,000 loan at 90% LVR: $8,800–$11,200
- $500,000 loan at 90% LVR: $11,000–$14,000
- $600,000 loan at 90% LVR: $13,500–$17,000
- $500,000 loan at 95% LVR: $16,500–$20,500
- $400,000 loan at 85% LVR: $5,200–$7,000
LMI can be paid up front or capitalised into the loan. Most buyers capitalise it — borrowing an extra $12,000 costs about $85/month over 30 years at 6.2%, and you keep your cash for moving costs and the things that break in the first six months. Andy gets you three LMI quotes and shows you the one that’s $2,000 cheaper because they used a different insurer or a professional-category discount.
Why a Low Deposit Loan Makes Sense Now Now
Waiting for the perfect 20% deposit usually costs more than the LMI you were trying to avoid. Here's why buying with a smaller deposit often wins.
You Start Building Equity Sooner
Buying now with 10% down and $12,000 LMI can leave you $40,000+ ahead after two years of price growth and loan paydown, instead of renting and starting from zero.
Rates Are Still Historically Workable
Owner-occupier rates around 6.0–6.5% are higher than the 2020–2021 lows but nowhere near the 8–10% Perth saw in the early 2000s. Waiting for a drop can cost you in price growth.
WA Grants and Concessions Still Apply
The First Home Owner Grant and stamp duty concessions reduce the cash you need up front, and the thresholds don’t always keep pace with rising median prices.
Lenders Compete for Good Applications
Clean credit and genuine savings make you a low-risk 90% LVR borrower. Andy sends your file to three or four lenders and lets them compete on rate, LMI discount, and features.
Buy Now With 10% or Wait Two Years for 20%?
A $500,000 Mandurah property in 2025, assuming 7% annual price growth and $450/week rent.
| Scenario | Deposit | LMI | Equity After 2 Years | Rent Paid | Net Position |
|---|---|---|---|---|---|
| Buy now at 10% | $50,000 | $12,400 | $110,050 | $0 | +$110,050 equity |
| Wait 2 years for 20% | $100,000 | $0 | $100,000 | $46,800 | +$53,200 net |
In this scenario, buying now leaves you about $56,850 better off after two years, even after paying $12,400 LMI. Andy runs the same comparison with your real deposit, your target property, and the rent you're paying now.
Low Deposit Home Loan Questions Perth Buyers Ask Andy
Yes, but only with a handful of lenders (Commonwealth, Westpac, and a couple of non-banks as of 2025), and only if you’re PAYG employed with clean credit and genuine savings. Most lenders stop at 10% deposit (90% LVR). If you’re self-employed, contracting, or have a recent default, 5% deposit loans are almost impossible. The alternative is a family member going guarantor — some lenders will do 95% LVR with no LMI if a parent’s property secures the top 15%. Andy walks you through both paths and tells you which one’s cleaner for your situation.
At 90% LVR, LMI is typically $13,500–$17,000. At 95% LVR it jumps to $21,000–$26,000. The cost varies by lender because each uses a different insurer and risk pricing. Andy gets binding LMI quotes from three lenders so you know the real number before you make an offer. You can pay it up front or add it to your loan — most buyers capitalise it, which adds about $95/month to repayments over 30 years.
No. LMI is a one-off premium that protects the lender, not you. Once it’s paid, it’s gone — even if you refinance, sell, or pay the loan off within a year. Some lenders offer partial portability if you refinance to them within two years, but that’s rare and lender-specific. Assume LMI is sunk cost.
Yes. If a parent or family member puts up their property as security for your deposit shortfall, some lenders will lend up to 105% of the property value with no LMI. The guarantor’s property covers the risk above 80% LVR until you’ve paid down to that point, usually 3–7 years. The guarantor isn’t on the hook for your whole loan, just the bit above 80%. Read the full guide: Guarantor Home Loans.
Most lenders want at least 5% genuine savings — money saved over three months or more sitting in your account, term deposits, or shares held 3+ months. Not genuine savings: a lump sum from a personal loan last week, cash from a relative without a statutory declaration, or a tax refund that just landed. If part of your deposit is a gift, lenders want a signed gift letter and at least 5% saved yourself on top.
Only through the First Home Super Saver Scheme, which lets you withdraw voluntary contributions (up to $15,000 per year, $50,000 lifetime cap as of 2025). You can’t touch your employer’s compulsory super. It takes 3–6 months to arrange once you apply, and the ATO pays it to you, not the lender. Useful if you’ve been salary-sacrificing, but not a shortcut to raiding your whole balance.
You’ve got three options: renegotiate the price down, find the shortfall in cash so your LVR doesn’t blow out, or ask the lender if they’ll accept the contract price anyway at a slightly higher LVR. Andy sees this on about 8% of low-deposit applications. He’ll call the valuation team, explain your comparable sales, and sometimes get them to reconsider — or find another lender whose valuer lands closer to contract price.
Standard turnaround is 10–14 days for a clean PAYG application at 90% LVR. At 95% LVR or if you’re self-employed, add another week. Once formal approval issues, the valuation takes 3–5 business days in metro Perth, 7–10 days in Mandurah or regional WA. If the valuer’s report is clean, final approval is same or next day, and you move to settlement.
Reviewed by
Credit Representative & Mortgage Broker
The information on this page has been reviewed for accuracy by Andy Iriks, a Credit Representative & Mortgage Broker at Wanna Finance. It is general information only.
