Personal Loan for House Deposit? Discover Your Options

For many Australians, saving for a house deposit is one of the most significant financial hurdles they face. With property prices continuing to rise in 2026, accumulating that initial 20% deposit can seem like an insurmountable challenge. What if you could use a personal loan to bridge that gap? This might seem like an attractive option, but it comes with its own set of considerations and challenges. In this guide, we’ll explore whether and how you can use a personal loan for a house deposit, helping you make informed decisions in your home-buying journey.

Understanding Using a Personal Loan for a House Deposit

The concept of using a personal loan for a house deposit involves borrowing funds to cover the upfront payment needed to secure a mortgage. While this might sound straightforward, it's not a typical approach, and lenders will scrutinise your financial situation more closely. It’s crucial to understand the implications, the potential benefits, and the risks involved.

Rates, Requirements, and Options

When considering a personal loan for a house deposit, it's essential to be aware of the interest rates, eligibility criteria, and available options. As of 2026, personal loan interest rates in Australia typically range from 6.49% to 12%, depending on your credit score, the lender, and the loan term. Let's break down the key information:

Before opting for a personal loan, consider whether you meet the eligibility criteria. Lenders will typically look for a good credit score, evidence of stable income, and a low debt-to-income ratio.

Steps to Use a Personal Loan for a House Deposit

Here’s a step-by-step guide to help you navigate the process of using a personal loan for your house deposit:

1. Assess Your Financial Health: Review your credit score and ensure your income is stable. Use online calculators to understand your borrowing capacity.
2. Research Lenders: With over 83 lenders available through Esteb and Co, you have a wide range of options. Compare interest rates, fees, and terms to find the best fit.
3. Apply for Pre-Approval: Obtain pre-approval for a personal loan to understand how much you can borrow. This will also give you negotiation power when discussing property prices.
4. Calculate Your Total Cost: Consider the total interest over the loan term and how it will affect your financial situation alongside mortgage repayments.
5. Consult a Mortgage Broker: Engage with a broker from Esteb and Co to explore your options and ensure using a personal loan is a viable strategy for your circumstances.
6. Proceed with Caution: If you decide to proceed, apply for the personal loan and ensure you have a clear plan for repayment.

Tips and Considerations

• Understand the Risks: Using a personal loan increases your overall debt, which can affect your financial stability and borrowing capacity for the mortgage.
• Plan for All Costs: Beyond the deposit, budget for other property purchase costs like stamp duty, legal fees, and moving expenses.
• Consider Loan Features: Look for personal loans with features like flexible repayments or the ability to make extra payments without penalty.
• Maintain a Healthy Credit Score: Ensure you pay all debts on time to maintain or improve your credit score.
• Seek Professional Advice: Consult with a financial advisor or mortgage broker to understand the long-term implications.

Frequently Asked Questions

• Can I use a personal loan as part of my home deposit? It's possible, but not common. Lenders prefer deposits from savings as it demonstrates financial discipline.
• Will a personal loan affect my ability to get a mortgage? Yes, it increases your total debt and can impact your borrowing capacity and interest rates for a mortgage.
• What are the alternatives to using a personal loan for a deposit? Consider saving over time, receiving a gift from family, or looking into government grants and incentives for first-home buyers.
• Is it riskier to use a personal loan for a deposit? It can be riskier due to increased debt and potential financial strain, impacting your ability to meet repayment obligations.
• Can I repay the personal loan early? Many personal loans allow for early repayment, but check for any penalties or fees associated with this.
• How does the loan term affect my repayments? A shorter loan term means higher monthly repayments but less interest over time.
• What role can Esteb and Co play? As a mortgage broking company with access to over 83 lenders, Esteb and Co can help you find tailored solutions and navigate your options effectively.