| While it’s often said you need a 20% deposit to qualify for a home loan, a significant number of borrowers are securing mortgages with smaller deposits, according to the latest data from APRA, the banking regulator.
In the March 2024 quarter, 31.0% of new home loans (by value) had deposits of less than 20%, while 6.2% of new loans had deposits of less than 10%. Generally, you will need to pay lender’s mortgage insurance (LMI) if you purchase a property with a deposit of less than 15-20%. However, some lenders give LMI exemptions to certain professionals, such as doctors, dentists, physiotherapists, lawyers and accountants. |
While more than 3 in 10 borrowers are taking out loans with deposits under 20%, these figures are relatively low by historical standards. Back in December 2020, for example, 41.7% of new loans had deposits of less than 20%, while 11.3% had deposits of less than 10%.
This illustrates how banks have tightened their lending standards, to ensure borrowers don’t take on an excessive amount of debt.
Yet it’s still possible to buy a property with a small deposit, provided your financial circumstances allow it and you structure your loan application correctly.
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