Who wants to be a homeowner (with less than 10% deposit?)


How to become a home owner with less than 10% deposit.
How to be a home owner

It is a million-dollar question for all aspiring homeowners. How do you buy your first home when saving 20% is so hard, even impossible for some (not to mention stamp duty and other costs)? On average, it will take approximately 10 years to save for a deposit with the rising costs.


Well, the good news is there is a lifeline that gives you the option to buy with a 10% deposit – enough to make anyone want to ‘Lock it in Eddie’. But with banks putting low-deposit home loans under the spotlight, it is important to put your finances in the hot seat to make sure they are looking their best.

Here are five steps that could help you get the green light from a lender – and get into a place of your own sooner if you are buying with a 10% deposit.

  • Cut or close credit card balances

Lenders are more interested in the credit limit on your cards than the outstanding balance. The higher the combined credit limits, the less you may be able to borrow. This is because you could, at any moment, withdraw or spend the full credit limit.

Boost your borrowing power by closing any unused accounts and request a lower credit limit for the credit cards you want to hold onto.

  • Ditch other debt

The more you spend on repaying other loans means that there is less leftover to save for, or to pay off your potential new home. After all, if you are repaying $150 each month on a personal loan, that is $150 less that could be going towards your home loan.

Where possible, pay off other loans before applying for a home loan. If that is a stretch, aim to reduce the balance and maintain a squeaky-clean record for making repayments on time.

  • Top up your income

The higher your income, the more likely a lender is to roll out the welcome mat. So dust off the paperwork for all your earnings. That is everything from overtime payments, work bonuses, commissions, dividends on shares, even Centrelink payments like Family Tax Benefit. It can all go into the mixing pot of income.

Do not be shy about gig earnings either. It is not uncommon for aspiring homeowners to pick up car-share driving, catering shifts or other work to show extra cash coming in – an extra $200 a week is over $10,000 per year. Let your lender know how much a side hustle brings in each month. Every dollar counts.

  • Skip ‘buy now, pay later’ purchases

Spending up big with buy now, pay later (BNPL) platforms like Afterpay or zipPay can be a roadblock to landing a home loan. Late payments could even put a dent in your credit record. Your credit file may be impacted by this as well.

Play it safe by saying bye-bye to buy now, pay later purchases – even if that means closing the accounts. That way, you can avoid any awkward ‘please explain’ moments from a lender spotting BNPL payments all over your bank statements.

  • Apply for a smaller loan

If you are struggling to raise a bigger deposit, flip things around by reducing the amount you want to borrow. Think of it this way, if you have saved $50,000, and you want to buy a $500,000 home, your deposit is 10%. Scaling back your buying budget to a home worth $450,000 sees that same deposit jump to over 11%.

Borrowing less can also mean saving on lenders mortgage insurance, and lower loan repayments – and also proof that even though we all want to be a millionaire, we do not need to be one to buy a home.

Talk to your local independent Finance Banker for more tips on buying a home with a 10% deposit.


Some lenders offer LMI waiving for particular professionals such as Medicals, accountants, legal, etc. when applying for a home loan or refinance. Also, some lenders offer no LMI or risk fee up to 90% Loan To Value Ratio (LVR) for all applicants who has a 10% deposit. However, this may come at a higher rate than a premium interest rate available on the market with other lenders.


This is general information only and applications are subject to credit approval.

This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice. The original content was quoted from ME Bank Shared Blog.