Can I apply for a home loan with a low deposit?

One of the biggest hurdles to buying a property is saving for the deposit. This is the sum of money coming from you that will be used to purchase part of the property, with the loan being what you need to cover the rest. When buying a home or investment property the most important thing is that you can manage the repayments.

If you only have a small deposit a Pepper Money loan may still be possible if you are:

  • A first home buyer being helped by family or friends
  • Refinancing with equity in the home
  • Investing with equity in other property

In the current environment, some of our regular home loan options may not be available. We are happy to discuss your situation to see if we can help

A low deposit home loan: What percentage do I need?

The amount you require to borrow as a percentage of the value of the property being used as security for the loan is called your loan to valuation ratio [LVR] and it is an important factor in your application assessment.

The good news is that at Pepper Money we can consider loans with a LVR (up to 95 per cent on some loans). However, an assessment of your individual circumstances and eligibility based around your credit/repayment history, employment, income, and existing debt is required. Our job is to help you succeed, so it is really important that you can genuinely manage your repayments.

An LVR of 95 per cent means that the amount of your loan is 95 per cent of the value of the property. If the property is valued at $300,000 and you have an LVR of 95 per cent, you can borrow $285,000. The remaining $15,000 would come from your deposit. Remember when saving for a deposit that you also need to factor fees associated with purchasing a property and obtaining a loan, such as stamp duty and legal fees.

How can I qualify for a home loan with a low deposit?

  • Show you have reliable income.
  • Show you have been able to make genuine savings each month.
  • Stable employment. In most cases you would want to have been in your current job for at least six months.
  • Show your debts are under control. If you have several credit cards and multiple personal loans it may struggle to be approved.
  • Have a good credit history for the last 6 months. This means that your credit file has no major hiccups and that you have paid all of your bills like your rent, credit cards, personal loans and other debts on time [and every time] for the last six months.

Genuine versus non-genuine savings or gifted deposits

It’s important to remember that a gifted deposit – for example, a loan from your family or relatives – is not considered  ‘genuine savings’. The reason for wanting genuine savings is it shows that you can manage your money.

The good news is that, unlike most traditional lenders, at Pepper Money we can accept gifted deposits on a majority of our loan products. Other forms of deposits such as a private loan and non-genuine savings may also be accepted. However, we will always need to do an assessment of your individual circumstances and eligibility based around your credit/repayment history, employment, income, and existing debts.

Things to remember in a low deposit loan application

Things to remember

Helping you get sorted when you have a low deposit loan application does not mean we are any less thorough in making sure it is the right answer for you. We always complete a comprehensive assessment of each application. Each application must satisfy our normal credit assessment, and, importantly, it must be proven that it will genuinely meet your needs. 


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Here are some handy tips and guides to help you get started with a home loan with a low deposit.

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