Personal Loan for House Deposit? Here's How to Secure It Fast (2026)

For many Australians, buying a home is a milestone achievement, but coming up with a house deposit can be challenging. You might be wondering if using a personal loan for a house deposit is a viable option. This path could be attractive for some, but it's essential to understand the implications, requirements, and alternatives before making a decision.

Understanding Using a Personal Loan for a House Deposit

The idea of using a personal loan for a house deposit might sound appealing, especially if you're short on savings and eager to get onto the property ladder. However, it's crucial to understand what this entails. A personal loan is a form of unsecured borrowing, meaning it doesn't require collateral. This can be both a benefit and a disadvantage, depending on your financial situation.

While it may be possible to use a personal loan for your deposit, it's not a straightforward process. Lenders typically prefer borrowers to demonstrate the ability to save, which is seen as an indicator of financial discipline. Using a personal loan instead of savings might raise red flags for mortgage lenders.

Personal Loan Interest Rates, Requirements, and Options

As of 2026, personal loan interest rates in Australia range from approximately 6.49% to 12%, depending on your credit score and the loan's terms. These rates can be higher than home loan rates, which means that funding your deposit with a personal loan could lead to higher overall borrowing costs.

Eligibility criteria for personal loans typically include:

• A good credit score (usually above 620)
• Proof of income and employment
• Australian residency or citizenship
• Evidence of financial stability

Options for personal loans can vary widely among lenders. At Esteb and Co, we have access to a panel of over 83 lenders, providing a broad range of choices for our clients. This diversity allows us to help you find a personal loan that suits your unique circumstances.

Steps to Using a Personal Loan for a House Deposit

If you've decided that using a personal loan for your house deposit is the right option, here are the steps you should follow:

1. Assess Your Financial Situation: Calculate your total borrowing capacity, including both the personal loan and home loan repayments, to ensure you can afford them.
2. Check Your Credit Score: Obtain a copy of your credit report and ensure it's accurate. A higher score will help you secure better rates.
3. Research and Compare Lenders: Use resources like Esteb and Co to compare different lenders and find the best personal loan terms for your needs.
4. Apply for the Personal Loan: Prepare all necessary documents, such as proof of income and identity, and submit your application.
5. Secure a Mortgage Pre-Approval: Simultaneously, seek pre-approval for a mortgage to understand how much you can borrow for your home purchase.
6. Plan for Loan Repayments: Create a budget that includes both personal loan and home loan repayments, ensuring you can manage your financial responsibilities.

Tips and Considerations

Here are some expert tips and considerations to keep in mind when using a personal loan for a house deposit:

• Consider Loan Costs: Evaluate the total cost of borrowing, including interest and fees, to determine if it's a sustainable option.
• Impact on Mortgage Approval: Be aware that using a personal loan may affect your mortgage application, as lenders assess your total debt obligations.
• Alternative Savings Strategies: Explore other savings methods, such as a high-interest savings account or a term deposit, to build your deposit over time.
• Seek Professional Advice: Consult with a mortgage broker like Esteb and Co to explore all available options and receive tailored advice.

Frequently Asked Questions

• Can I use a personal loan as a deposit? Yes, but it may complicate your mortgage application as lenders prefer to see savings as a deposit.
• What are the risks of using a personal loan for a deposit? Higher interest rates and the potential impact on your mortgage approval are significant risks.
• Are there alternatives to using a personal loan for a deposit? Yes, consider saving through high-interest accounts or obtaining a guarantor loan.
• Will using a personal loan affect my credit score? Taking out a personal loan can affect your credit score, so ensure you make timely repayments.
• How much deposit do I need for a home in Australia? Generally, a deposit of at least 20% of the property's value is recommended to avoid Lenders Mortgage Insurance (LMI).
• Can a mortgage broker help with financing options? Absolutely, mortgage brokers like Esteb and Co can offer valuable insights and access to multiple lenders.
• What documentation is needed for a personal loan application? Typically, you'll need ID, proof of income, and evidence of financial stability.