Saving for a home loan deposit can often feel like a long and challenging journey. But what if there were ways for no deposit first home buyers to purchase a home with a smaller deposit—or even none at all? In this article, we’ll explore how you can potentially secure a home loan with little to no deposit, along with the benefits of these options.
Are no deposit home loans still available? Yes, it’s still possible for first home buyers to qualify for a home loan with no or low deposit. If you’re looking to buy a home without putting down a deposit, there are several options to consider. A no deposit home loan is essentially a loan where you don’t have to contribute any money upfront toward your new property purchase.
Can you buy a house with 0 deposit home loan?
Yes, in certain situations, it is possible to purchase a home with no deposit, though this is not typical. Low-deposit home loans are far more common than no deposit options.
That said, some lenders may consider 0 deposit home loans on a case-by-case basis, as long as you meet their specific requirements. The most common way to buy a home with no deposit is by securing a guarantor home loan.
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Guarantor home loan
A guarantor home loan is when a third party, usually a family member, uses some of their own home equity to help secure a home loan for someone else. With a guarantor, you may be able to borrow up to 100% of a property’s value. The guarantor’s equity must cover at least 20% of the property’s value. The lender then places a loan over the guarantor’s property until the guarantee is removed or expires.
If the borrower fails to make their home loan repayments, the guarantor could be held responsible for the payments. This means there is significant risk involved for the person agreeing to guarantee the loan. Once the borrower has paid off enough of the loan, or if the property’s value increases to meet the lender’s requirements, the guarantor can be released from the loan. Before proceeding with a guarantor loan, it’s highly recommended that both the borrower and the guarantor consult with a financial advisor. Despite this, if you want to get a home loan in Bella Vista, you can choose Star Homeloans.
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Home Guarantee Scheme (HGS)
The Home Guarantee Scheme (HGS) is an Australian government program designed to help eligible homebuyers purchase a property with a deposit as low as 2-5%. Housing Australia covers the remainder of the deposit, meaning homebuyers can avoid paying for Lenders Mortgage Insurance (LMI). The HGS offers several programs for different types of buyers, including:
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- First Home Guarantee (FHBG): For eligible first-home buyers to purchase a home with a deposit as low as 5% and no LMI.
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- Regional First Home Buyer Guarantee (RFHBG): For eligible first-home buyers purchasing a property in a regional area with a deposit starting at 5% and no LMI. This is not a 0 deposit home loan, this is called low-deposit home loan.
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- Family Home Guarantee (FHG): For eligible single parents or legal guardians of at least one dependent, allowing them to buy a home with a deposit starting from 2% and no LMI.
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Can the First Home Owner Grant be used as my deposit?
Yes, in most cases, the First Home Owner Grant can be applied towards your deposit. This grant, which ranges from $10,000 to $30,000 (depending on the state), was introduced to help eligible first-time homebuyers purchase their first owner-occupied property more quickly. However, there are some strict eligibility criteria, including property price caps. The grant amount may vary from one state to another. For example, the first home buyers grant in Melbourne will be $10,000 and this amount may vary in another state.
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Using Superannuation
You can use the First Home Super Saver scheme to help with a down payment on your first home. This program allows first-home buyers to make voluntary contributions to their superannuation account, and those contributions can then be used as part of your deposit.
Conclusion
There are ways to buy a home with little or no deposit home loan, including guarantor loans, the Home Guarantee Scheme, and the First Home Owner Grant. The First Home Super Saver scheme also lets you use super contributions for your deposit. Be sure to consult a mortgage Broker at Star Homeloans to understand the best option for you.
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