Is a 10% Deposit Enough for a House?
Potential home buyers researching the various requirements of applying for a home loan may have questions about loan deposits. A 10% deposit is typically not enough for a house, but this can vary depending on the individual borrower and lending establishment. Generally, lenders and mortgage brokers advise that a 20% deposit is best for a home loan. Some lenders may accept deposits lower than 15% if the borrower is a low-risk borrower, however, they will typically be required to pay for Lenders Mortgage Insurance (LMI).
LMI is a type of insurance that protects the lender in the case of a borrower defaulting on their home loan repayments and offsets the funds that have been lost.
The best way to become approved for a home loan with a small deposit is by researching and comparing the various lenders and loan options available to you. Researching and comparing allows potential borrowers to select the best loan option with rates and terms that fit with their desired deposit.
First-time home buyers may be able to receive government assistance with purchasing a home through the First Home Guarantee, also known as the First Home Loan Deposit Scheme. The First Home Guarantee allows first-time homeowners to purchase their homes with a deposit as low as 5% without being required to pay for LMI.
If you are interested in learning more about your home loan deposit options, reach out to the professional Mortgage House lending specialist for specialised assistance.