No deposit first home buyers
Being able to buy your first home with no deposit can sound like a dream come true – but are no deposit home loans really a thing?
There’s no getting around the fact that most lenders do not offer true “no deposit” home loans. Among those that do, you’ll likely need to meet some pretty rigorous criteria including a near-perfect credit record and a very stable work history. The loan may also come with a higher interest rate.
However, there is a decent selection of lenders that offer what could be the next best thing – home loans that need just a 5% deposit. The main downside of these loans is that you will almost certainly be asked to pay lenders mortgage insurance. But hey, it is a way of getting started on the property ladder when you only have a small deposit.
Can the First Home Owner’s Grant be my deposit?
Yes! The First Home Owner’s Grant (FHOG)can usually form at least part of your deposit. In terms of timing, if you’re buying an established home, the FHOG will normally be paid on settlement, or if you are building a new home, you are likely to receive the FHOG when you make the first progress payment on your loan, and that’s typically when the slab is laid. However it’s important to note that each state and territory has different requirements, with some states only offering the FHOG to people buying new homes. To find out what’s on offer in your state or territory, read here.
Bear in mind, depending on how much you pay for your first home, the FHOG is likely to comprise just part of your deposit, and you still need to allow for the other upfront costs of buying a home such as legal fees and moving expenses.
Can I use super as my deposit?
It is possible to use your super for your first home deposit if you take advantage of the First Home Super Saver scheme (FHSS). It is designed to help first home buyers save a deposit faster by contributing money to super. These contributions can then be withdrawn to form part of your deposit. The FHSS works this way because contributions to super are taxed at a low rate, so more of your money goes towards your first home deposit.
How do I apply for a FHB no-deposit loan?
If you have a small deposit, it really is worth speaking to a home loan expert like your Aussie Broker. This will help you understand whether you meet the conditions that different lenders may impose for no deposit home loans.
It is also an opportunity to know if you can tap into some of the other options worth considering if you have no deposit or only limited savings.
These strategies can include asking your family to chip in for your first home deposit. Or, if that’s not an option, a family member may be able to act as a guarantor for your home loan. The guarantor doesn’t need to pay anything, however if their guarantee is worth more than 20% of your home’s value, you may be able to avoid paying lenders mortgage insurance, and that’s a valuable saving.
There’s also the option to use a windfall, such as an inheritance or a monetary gift from family members. Lenders usually like to see that you saved up for a deposit because it shows that you will be able to meet your loan repayments, but some may be willing to accept cash gifts as deposits. Conditions can apply. As a guide, the lender may ask for a statutory declaration stating that the money is being handed over to you unconditionally.
Yes, it may be possible to buy a first home with a very small deposit – the key is to know if it is the right choice for you. Your Aussie Broker can help you weigh up the pros and cons.
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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