11 Nov 2021

How much can I borrow with a 10% deposit?

Technically, in Australia, banks are allowed to give out loans with deposits as low as 5%. Although this is the case, it is not a widespread practice. The majority of mortgage lenders prefer a 20% deposit of the home’s value. That way, the loan amount is 80% of the value of the house. It is possible, however, to borrow money with only a 10% deposit. 

Homeowners can borrow an infinite amount of money with a 10% deposit; the problem is with interest and extra fees that are required. For example, any homeowner that receives money from a loan and places a deposit that is less than 10% will have to also enroll themselves and pay lenders’ mortgage insurance.

Currently, the Australian housing market is flourishing and also highly competitive. Not all homeowners have the ability to pay a deposit that is over 10% of the value of the home, and yet they can still become eligible to borrow.

Some things that can help with eligibility for borrowing with a 10% deposit include:

  • Having a high credit score/file
  • Having a consistent pay schedule and job
  • Having minimal to no extra debt
  • Low monthly expenses

The best way to figure out how much you can borrow with a 10% deposit, though, is to use a mortgage borrowing power calculator. There are several options online that can show you the exact costs and money that can be borrowed. The calculator asks for applicants, salaries, current housing costs, debt costs, and other monthly monetary needs. With all this information, the mortgage calculator can produce an estimate of how much should and can be borrowed. It is essential to know that it varies depending on interest rates and the fixed-rate years.

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