Buy a home with a 5% deposit
A small deposit doesn’t have to hold you back from buying your first home. You may only need as little as 5%.
We understand that saving for a first home deposit isn’t always easy – especially if you’re paying rent on a place to live. But don’t give up on your goal of buying a first home! There are solutions that can get you into a place of your own even when your deposit is a little on the lean side.
Busting the 20% myth
It’s true that lenders like to see a deposit of at least 20% of your home’s purchase price. However, it may be possible to buy a home with less.
Some lenders may offer loans of 90% or even 95% of the property’s value, which means you can potentially get into the market with a deposit of 10% or even 5%.
What’s the catch?
A bit of background here. The amount you borrow relative to your home’s value is known as the “loan to value” ratio – or LVR. If your LVR is on the high side, you potentially pose a greater risk to the lender.
The impact of
But first, what is LMI?
LMI is something your lender will organise, and while it’s another cost to wear, your lender may let you capitalise the cost, which simply means
How’s your credit record?
Allow for upfront costs
Buying your first home doesn’t just involve saving for a down payment – other upfront costs apply too. These can include stamp duty and conveyancing fees, plus any costs to move into your new place.
Bear in mind though, as a first home buyer you may be eligible for the First Home Owner Grant or stamp duty savings, which can help with your home buying budget.
Options are available
The main take-out is that you may still be able to buy a home even when you don’t have a substantial deposit. Yes, there may be a few extra hoops to jump through but it’s reassuring to know
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- Chapter One : Getting started
- Chapter Two : Your Dream Home
- Chapter Three : Money Matters
- Chapter Four : Ways to Purchase
- Chapter Five : Understanding Interest Rates
- Chapter Six : Understanding Home Loans
- Chapter Seven : Lending Sources
- Chapter Eight : Getting Your loan
- Chapter Nine : Choosing a Home
- Chapter Ten : Steps to Settlement