A low deposit home loan in Australia is any loan above 80% of the property value, which means a deposit below 20%. Most lenders will go to 95% LVR, so a 5% deposit is the practical floor. Below 20% you pay Lenders Mortgage Insurance unless a government guarantee, a family guarantor, or a professional waiver removes it. LMI on a 95% loan typically costs between 3% and 4% of the loan amount. First home buyers should check the Australian Government 5% Deposit Scheme before anything else, because it removes LMI entirely and no longer has an income cap.
Lenders Mortgage Insurance protects the lender if you default, not you. The premium is a one-off, usually capitalised into the loan, and it rises sharply as your deposit shrinks. The jump between a 10% and a 5% deposit is the steepest part of the curve.
Indicative LMI premiums on a $700,000 purchase. Premiums vary by lender, insurer, loan size and borrower profile — use these for magnitude, not as a quote.
| Deposit | LVR | Loan amount | Indicative LMI | Effect |
|---|---|---|---|---|
| 5% | 95% | $665,000 | $20,000 – $28,000 | Highest premium. Fewest lenders. Genuine savings tested hardest. |
| 10% | 90% | $630,000 | $11,000 – $16,000 | Materially cheaper. Wider lender choice. |
| 15% | 85% | $595,000 | $5,000 – $8,000 | Premium falls sharply. Most lenders comfortable. |
| 20% | 80% | $560,000 | Nil | No LMI, sharpest rates, full panel available. |
Because LMI is normally capitalised, you pay interest on it for the life of the loan. A $24,000 premium added to a 30-year loan at 6% costs roughly $28,000 in interest on top of the premium itself. That is the number worth comparing against waiting to save more.
The Australian Government 5% Deposit Scheme guarantees part of your loan, removing LMI at a 5% deposit. Since 1 October 2025 there is no income cap and no limit on places. Property price caps still apply by state and region.
A parent uses equity in their property as additional security, taking your effective LVR below 80%. No LMI, and no cash changes hands — but the guarantor carries real liability.
Medical, legal and accounting professionals can access LMI waivers to 90% or 95% at several lenders. This is a genuine policy concession, not a discount.
Some lenders offer a $1 LMI product or absorb the premium into the rate for specific borrower profiles. Compare the total cost, because a higher rate over 30 years can exceed the premium.
On high-LVR lending, most lenders require part of your deposit to be genuine savings — funds you accumulated yourself, evidenced over a period, rather than gifted or received as a windfall. Having the money is not the same as satisfying the policy.
Genuine savings policy varies more between lenders than almost any other criterion. If a gifted deposit is your position, that fact alone should determine which lender you apply to.
A 95% loan means you hold 5% equity on day one. If property values fall 10%, you are in negative equity — owing more than the property is worth — which blocks refinancing and means a sale would not clear the debt.
None of this makes a low deposit purchase wrong. Time in the market often outweighs the premium. But it should be a decision you make with the numbers in front of you, not one you back into.
Five per cent of the purchase price at most lenders, which is a 95% LVR loan. Below 20% deposit, Lenders Mortgage Insurance applies unless the First Home Guarantee, a family guarantor or a professional waiver removes it. A small number of lenders cap at 90%.
Typically 3% to 4% of the loan amount at 95% LVR. On a $665,000 loan that is roughly $20,000 to $28,000. It is normally capitalised into the loan, so you also pay interest on it for the life of the loan.
Yes, but it changes which lenders will take you. Most require part of the deposit to be genuine savings accumulated over at least 3 months, and a gift does not satisfy that. Some lenders accept rental history instead, and some waive the requirement below 90% LVR.
It depends on what the market does while you save. Twenty per cent avoids LMI and gets you the sharpest rates. But if prices rise faster than you save, the larger deposit buys less. Model both paths against your actual savings rate before deciding.
Most of the lenders NIK Finance models in full policy detail will lend to 95% LVR for owner-occupied principal and interest borrowers, though two cap at 90%. Investment lending is generally more restricted. Which of them will approve you depends on your income type and credit profile.
Usually yes. Many lenders price by LVR band, so a 95% loan attracts a higher rate than an 80% loan on the same product, separately from the LMI premium. The gap is commonly 0.1% to 0.4%.
Genuine savings policy and maximum LVR vary widely between lenders. Your Kreddi Score maps your deposit position against real lender policy so you apply where you will actually be approved.
NIK Finance Pty Ltd (ACN 685 393 917) is a Credit Representative (567387) of Finsure Finance & Insurance Pty Ltd (Australian Credit Licence 384704). This page is general information only and does not constitute financial advice. Consider your personal circumstances and speak with a licensed broker before applying for credit.