Home Loan 10% Deposit? Here's How to Secure Approval

Buying a home is a dream for many Australians, but the journey can seem daunting, especially when you're worried about the size of your deposit. If you’ve managed to save a 10% deposit and are wondering if this is enough to secure a home loan, you’re not alone. Understanding your options, eligibility, and the steps involved can make the difference between homeownership and continued renting.

Understanding Home Loans with a 10% Deposit

In the Australian property market, a 20% deposit has traditionally been the benchmark for securing a home loan. However, with property prices continuing to rise, saving such a large amount can be challenging. For many, a 10% deposit is a more attainable goal. The good news is that it is indeed possible to get a home loan with a 10% deposit, though it comes with specific considerations.

A 10% deposit means you’ll be borrowing 90% of the property's value, which may require Lender’s Mortgage Insurance (LMI). LMI is a one-off insurance payment that protects the lender should you default on your loan. This additional cost is an important factor to consider when planning your home purchase.

Current Market Rates and Requirements for 2026

As of 2026, interest rates in Australia vary considerably based on lender policies, borrower profiles, and economic conditions. Generally, home loan interest rates range from 6.49% to 12%. A 10% deposit can typically qualify you for these rates, although the exact rate will depend on factors like your credit score, employment status, and the loan amount.

Eligibility criteria for securing a home loan with a 10% deposit include stable income, a good credit score, and a clear understanding of your borrowing capacity and repayment ability. Lenders will assess your financial situation thoroughly to ensure you can manage your mortgage repayments alongside other financial commitments.

Lender	Interest Rate Range	Special Conditions
Lender A	6.49% - 8.5%	Requires LMI
Lender B	7.1% - 9.2%	Discounts for first-time buyers
Lender C	8.0% - 10.5%	Flexible repayment options

Steps to Secure a Home Loan with a 10% Deposit

Securing a home loan with a 10% deposit involves several steps:

1. Assess Your Financial Situation: Review your income, expenses, and savings to determine your borrowing capacity. Use online calculators or consult with a mortgage broker for a detailed analysis.
2. Improve Your Credit Score: Check your credit report for errors and settle any outstanding debts to improve your score. A higher credit score can help you secure a better interest rate.
3. Save for Additional Costs: Besides the deposit, save for other expenses like LMI, stamp duty, and legal fees. These costs can add up, so it’s crucial to budget accordingly.
4. Consult with a Mortgage Broker: With access to 83+ lenders, a broker like Esteb and Co can provide invaluable insights and help negotiate the best terms for your loan.
5. Get Pre-Approval: Securing pre-approval strengthens your offer and gives you a clear understanding of your budget when house hunting.
6. Find Your Property: With pre-approval in hand, begin your search for a property within your budget.
7. Finalise Your Loan: Once you’ve found a property, complete the necessary paperwork and formalise your mortgage with the lender.

Tips and Considerations

When considering a home loan with a 10% deposit, keep the following in mind:

• Consider LMI Options: Some lenders may capitalise LMI, allowing you to add it to your loan amount instead of paying it upfront.
• Look for Government Schemes: Investigate if you’re eligible for government incentives like the First Home Owner Grant or the First Home Loan Deposit Scheme, which can reduce the amount of deposit required.
• Compare Lenders: Interest rates and conditions can vary significantly. Use comparison tools or consult with Esteb and Co to find the most favourable terms.
• Maintain Financial Discipline: Once you have a mortgage, prioritise your repayments and avoid unnecessary debt to ensure financial stability.
• Plan for Future Rate Changes: Interest rates may rise; ensure your budget can accommodate potential increases in repayments.

Frequently Asked Questions

• Can I avoid LMI with a 10% deposit?
  Generally, LMI is required with less than a 20% deposit, but some government schemes may help reduce or waive this requirement.
• How does my credit score affect my home loan application?
  A higher credit score can improve your chances of approval and may result in better interest rates.
• What is the minimum income to qualify for a home loan?
  This varies by lender and depends on loan size, expenses, and financial commitments. Consulting with a broker can provide specific guidance.
• How long does pre-approval last?
  Pre-approval is typically valid for 3 to 6 months, allowing time to find a suitable property.
• Can I use a guarantor to avoid LMI?
  Yes, a guarantor can help avoid LMI by providing security for the loan, but this involves significant responsibility for the guarantor.
• Are there any grants for first-time buyers?
  Yes, various state and federal grants exist to assist first-time buyers, reducing the financial burden of purchasing your first home.
• What happens if I default on my home loan?
  Defaulting can lead to legal action and potential loss of your home. It's crucial to maintain consistent repayments and seek help if you're struggling.