When buying or building a home, most banks prefer people to have a deposit of at least 20%. With the current price of homes, This can be a huge figure! Surely there is a way to reduce the amount of deposit required? The great news is, there is!

However, when borrowing more than 20% of the property price, most banks will request you pay Lenders Mortgage Insurance, or LMI.

Depending on the circumstance, there are ways to avoid paying LMI.

First Home Guarantee

FHBG is an Australian Government initiative to support eligible home buyers. This enables an eligible home buyer to buy a home with as little as 5% deposit, without paying Lenders Mortgage Insurance. 

This is for first home buyers, or for someone that has not owned a home within the past 10 years.

The downside of this scheme is the Government has not yet caught up with the growing property prices. It is currently capped at a purchase price of $600,000, which may make it challenging to find a home around SA.

Buy with a 2.2% Deposit – No LMI

Most banks will not allow you to borrow money when the purpose is coded as a house deposit. However, there is a funder out there that will contribution the majority of the deposit required. This works by you taking a mortgage for 80% against the property. The secondary funder will then take a second mortgage against your home for the remaining 20% deposit. This is a great way to get into homeownership when the deposit is low.

The 2.2% mentioned above is to cover legal and lending fees.

As you are technically borrowing 100% of the property price, we need to make sure that your household income services the repayments on a loan this size.  

Certain Active Industries

Some banks will allow a 90% lend, with no LMI, if a person is quailed and actively employed in certain industries.

For example, if someone is a Teacher, or Registered Nurse, they would be eligible.

Other industries include some Health Care Professions, Accountants and Finance Professions.

Certificate 3, or higher – No LMI

If you are based in South Australia, is there a bank that will work with SA residents that offers a 98% with no LMI. Unfortunately, you must live in South Australia to be eligible to work with this bank.

If you have a Certificate 3 or higher, this bank will lend up to 98%. Depending on the circumstance, they also offer a small interest free loan to help cover fees, on top of the 98% lend.

What's the next step?

If you would like to learn more about any of the options below, scroll down to find our calendar for a free discovery call.