In short: You can buy a home in Melbourne with a 5% deposit, sometimes 2%, without waiting years to save 20%. The main paths are the First Home Guarantee (5% deposit, no LMI, no income caps, $950,000 Melbourne price cap), Help to Buy shared equity (2% deposit, income-capped), a 90–95% loan where you pay LMI, or a family guarantor. GNT Finance works out which costs you least.
A 20% deposit on a $650,000 home in Craigieburn is $130,000 before stamp duty and costs, a five-to-eight-year savings project for most households while prices keep moving. Low deposit lending exists so you do not have to win that race. The trade-off is a government scheme with conditions, an insurance premium, or a family member's equity. Choosing between them is where GNT Finance adds real value.
Who this is for
- First home buyers with 5–10% saved and a reliable income
- Buyers who could afford repayments today but keep getting outrun by prices
- Migrants with permanent residency whose savings history in Australia is short
- Upgraders who have equity in a current home but want to buy before selling
- Single parents and single legal guardians, who can access a 2% deposit path under the Home Guarantee Scheme
Check whether you qualify with our First Home Guarantee eligibility calculator.
Four ways to buy with a small deposit
| Path | Minimum deposit | LMI payable | Income limits | Price cap (Melbourne) | Who can use it |
|---|---|---|---|---|---|
| First Home Guarantee | 5% | No | None (since October 2025) | $950,000 | First home buyers, citizens and PRs, owner-occupiers |
| Help to Buy (shared equity) | 2% | No | $100,000 single / $160,000 couple | $950,000 (VIC, at the time of writing) | Eligible buyers; government holds up to 30–40% equity |
| 90–95% LVR loan with LMI | 5–10% | Yes | None | None (lender policy) | Anyone who services the loan, including investors |
| Guarantor loan | 0–5% | No | None | None | Buyers with a family member offering equity |
First Home Guarantee
The federal government guarantees the portion of your loan above 80%, so the lender does not need LMI. Since October 2025 there are no income caps and unlimited places, which has opened it to most working first-home buyers. You must be an Australian citizen or permanent resident, 18 or over, buying to live in, and not have owned property in Australia in the past 10 years. Full detail in our First Home Guarantee guide or at Housing Australia.
Help to Buy
The Commonwealth contributes up to 40% of the price of a new home or 30% of an existing home in exchange for an equity share. You need just 2% deposit and repay no interest on the government's portion, but you buy them out over time or when you sell. Income caps of $100,000 (single) and $160,000 (couple) apply. See our Help to Buy guide.
Loan with lenders mortgage insurance
Lenders will go to 90% and sometimes 95% of the value if you pay LMI, a one-off premium protecting the lender (not you), usually added to the loan. On a $600,000 purchase at 90–95% LVR the premium is roughly $10,000–$25,000 as a rough indication; it varies by insurer and LVR. Estimate yours on our LMI calculator.
Guarantor
A parent's equity replaces the deposit and removes LMI. See our guarantor home loans page.
Working with GNT Finance
- Eligibility triage. We check the schemes, your citizenship or residency status, previous ownership and income. Most buyers fit more than one path.
- Deposit and genuine savings review. Lenders generally want 5% held for three months. Gifts, grant money and sale proceeds are treated differently by each lender; our genuine savings guide explains what counts.
- Borrowing power at the buffer. Lenders assess you at your rate plus 3 percentage points. At 95% LVR an unclosed credit card can move the result, so we tidy the file first.
- Total-cost comparison. LMI cost versus scheme conditions versus a guarantee, over the years you expect to hold the property.
- Pre-approval. Scheme places are reserved through a participating lender, and pre-approval tells you what to bid on in Wollert or Sunbury. Read our pre-approval guide.
- Purchase and settlement. We manage the lender, coordinate with your conveyancer, and lodge the grant and stamp duty concession paperwork with the loan.
What lenders look for at high LVR
The higher the LVR, the more conservative the lender. Expect:
- Genuine savings: 5% accumulated (not gifted) over at least three months, though some lenders accept rental history instead
- Clean credit: no defaults, no recent payday loans, minimal enquiries
- Stable employment: generally past probation
- Property type: standard houses and townhouses are easiest; small apartments and some high-density postcodes are capped at lower LVRs
- Living expenses: assessed line by line from your statements
Documents: photo ID, two payslips, PAYG summary or two years of tax returns, three months of statements, a gift declaration if applicable, and all debts and credit limits.
Worked example: $650,000 in Craigieburn, three ways
Maya and Dev, permanent residents and first home buyers, earn $165,000 combined and have $45,000 saved. They want a four-bedroom home in Craigieburn for $650,000.
| First Home Guarantee | 95% loan with LMI | Guarantor | |
|---|---|---|---|
| Deposit | $32,500 (5%) | $32,500 (5%) | $0 |
| Stamp duty (first home buyer, sliding scale) | approx. $11,400 | approx. $11,400 | approx. $11,400 |
| LMI | $0 | approx. $22,000 (capitalised) | $0 |
| Loan amount | $617,500 | $639,500 | approx. $664,000 (incl. duty and costs) |
| Cash needed at settlement | approx. $45,900 | approx. $45,900 | approx. $2,500 |
| Monthly repayment (illustration, 6.00% p.a., 30 years) | approx. $3,702 | approx. $3,834 | approx. $3,981 |
Their $165,000 income rules out Help to Buy, but because the First Home Guarantee no longer has income caps it is the clear winner: no LMI and the lowest repayments, with $45,900 covering deposit, duty and costs. The LMI option would have cost $22,000 in premium plus about $130 a month more for 30 years. The guarantor path only made sense with nothing saved.
An established home does not qualify for the $10,000 First Home Owner Grant; a new house-and-land package in Kalkallo at the same price would, covering most of their stamp duty. Compare the paths at your own price point with our upfront costs calculator.
Costs and fees to budget for
- LMI (if applicable): $10,000–$25,000 on a $600,000–$650,000 purchase at 90–95% LVR, rough indication only
- Stamp duty: exempt up to $600,000 for eligible first home buyers, concession to $750,000, full duty above
- Conveyancing: $1,200–$2,500
- Building and pest inspection: $400–$700
- Lender application and settlement fees: $0–$600
- Government registration fees: roughly $250 combined for mortgage and transfer
There is no cost to you for our home-loan service in most cases, since the lender pays our commission.
Tips that make or break a low deposit application
- Start the three-month savings clock now. Move savings to one account and leave them alone.
- Cut credit card limits before applying. A $10,000 limit reduces borrowing power even at a zero balance.
- Avoid BNPL in the three months before applying. Lenders read it as reliance on credit.
- Do not change jobs mid-application unless you must.
- Budget for the repayments, not just the deposit. Test a 95% loan against your real budget with our mortgage repayment calculator.
Why a broker matters at high LVR
Not every lender participates in the Home Guarantee Scheme, and those that do apply their own credit policy on top. LMI premiums vary between insurers, some lenders waive LMI for certain professions, and genuine savings rules and postcode restrictions all differ. A borrower going direct sees one policy; GNT Finance compares them all through our lender panel. Gorakh Timilsina spent years approving and declining exactly these applications as a Senior Credit Officer, so the file we submit is shaped for approval the first time. A decline at 95% LVR leaves a mark on your credit file, so getting the lender choice right upfront matters more than any rate difference.
Frequently asked questions
Can I buy with a 5% deposit and no LMI in Melbourne?
Yes, through the First Home Guarantee if you are an eligible first home buyer purchasing to live in for up to $950,000 in Melbourne. There are no income caps and no limit on places as of October 2025. Buyers who do not qualify can avoid LMI with a guarantor, or accept LMI on a 95% loan from a lender that allows it.
Does the deposit have to be genuine savings?
For most 90–95% loans, lenders want at least 5% held for three months. A gift from parents can top up the deposit but usually cannot replace the genuine savings component, although some lenders accept 12 months of on-time rent as a substitute. Under the First Home Guarantee, genuine savings rules still apply through the participating lender.
Is LMI a one-off cost or ongoing?
LMI is a one-off premium paid at settlement, and most lenders let you add it to the loan so no cash is needed upfront. Capitalising it means you pay interest on it for the life of the loan. Unlike some insurance, it is generally not refundable if you refinance after a year or two, which is a good reason to choose the first lender carefully.
What is the difference between Help to Buy and the First Home Guarantee?
The First Home Guarantee is a loan guarantee: you own 100% of the home and borrow 95% with no LMI. Help to Buy is shared equity: you need only 2% deposit, but the government owns up to 30–40% of your home until you buy it back. Help to Buy has income caps of $100,000 for singles and $160,000 for couples; the First Home Guarantee has none.
Can investors get a low deposit loan?
Investors are not eligible for the government schemes, but many lenders will lend up to 90% on an investment property with LMI, and a few go to 95%. A guarantor loan is another option. Lenders assess investment lending more strictly, so strong income and clean credit matter more. See our investment property loans page.
Talk to GNT Finance
If you have some savings and a steady job, there is a good chance you can buy sooner than you think. GNT Finance will tell you which low deposit path fits you, how much you can borrow and what it costs, in English, Nepali or Hindi. Book a free consultation or call 0426 403 703.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.