Are There Lenders That Accept a 3% Deposit for First Home Buyers in Australia?
No standard lender product is verified at a 3% deposit. Sub-5% deposits mainly come through government schemes — here's how they work.
Are there lenders that accept a 3% deposit for first home buyers in Australia?
No lender’s standard, publicly advertised home loan product is verified here to have a 3% minimum deposit — lender minimum-deposit policies aren’t something this article can confirm one way or the other, and they change without notice. What is verified is that deposits below 5% are reachable in Australia mainly through two government schemes rather than a bank’s everyday product: the Home Guarantee Scheme (5% deposit for most buyers, 2% for eligible single parents and legal guardians) and Help to Buy (2% deposit). Outside those schemes, a smaller deposit than 20% is possible, but it typically means paying lenders mortgage insurance (LMI) rather than finding a 3% product.
Loan-to-value ratio (LVR) is the amount you borrow expressed as a percentage of the property’s value — a $475,000 loan on a $500,000 home is a 95% LVR. Deposit size and LVR are two sides of the same number: a 3% deposit is a 97% LVR, and the closer you get to 100%, the fewer lenders and schemes will consider the loan at all.
What is the lowest deposit available for a home loan in Australia right now?
The Home Guarantee Scheme (5% Deposit Scheme)
Since the scheme’s expansion on 1 October 2025, the Australian Government’s Home Guarantee Scheme runs as two cohorts, not three — the earlier “Regional First Home Buyer Guarantee” and “Family Home Guarantee” names are retired. As at July 2026:
- A minimum 5% deposit for first home buyers generally.
- A minimum 2% deposit for eligible single parents and legal guardians.
- No income caps and no waitlists under either cohort.
- No LMI payable on the guaranteed portion of the loan.
- Property price caps that vary by state, territory and location (capital city/regional centre vs elsewhere) — check the current cap for your area on the government’s site rather than relying on a figure from anywhere else.
- Eligibility runs on citizenship or permanent residency, being 18 or over, being a first home buyer (or not having owned property in the past 10 years), intending to live in the property, using a participating lender, and the property price sitting at or under the relevant cap.
As at July 2026, you can’t apply for the Scheme directly through Housing Australia — you apply through one of the more than 30 participating lenders, a list that runs from the big four banks to a long tail of regional banks, credit unions and mutuals. The process runs in four steps: check your eligibility with the government’s online tool; contact a participating lender, who assesses your eligibility, guides you through loan options and submits the application on your behalf; once pre-approved you have 90 days to find a home and sign a contract of sale at or under the relevant price cap; then your lender manages the final approval through to settlement.
Help to Buy
Help to Buy is a separate federal shared-equity scheme with a 2% minimum deposit. It works differently from the Home Guarantee Scheme — rather than guaranteeing part of your loan, the Commonwealth takes an equity stake in the property alongside you. Full eligibility and property price caps sit under the Help to Buy Act 2024 (Cth) No. 124; check firsthomebuyers.gov.au for current settings before assuming Help to Buy and Home Guarantee Scheme caps are interchangeable — they aren’t the same figures.
Do any lenders offer a standard 3% deposit home loan outside these schemes?
This is genuinely a lender-by-lender question, and it’s one this article can’t answer for any named bank or lender. Under ASIC’s responsible lending guidance (RG 209), lenders must make reasonable inquiries and assess whether a borrower can meet loan repayments without substantial hardship — but RG 209 sets no single formula, and it explicitly leaves lenders room to set their own serviceability and minimum-deposit policies. Those policies vary between institutions and change over time — how much weight a 3% (or any) deposit gets from a specific lender is set by that lender’s own policy, not something this article can confirm or attribute to a named bank.
Does a smaller deposit mean paying lenders mortgage insurance (LMI)?
Usually, yes, outside a government scheme. LMI is typically payable once the amount you’re borrowing exceeds 80% of the property’s value — in other words, once your deposit falls under 20%. LMI protects the lender if you default, not you or any guarantor, and it’s a separate cost from the loan itself.
No authoritative source publishes a standard range for what LMI actually costs — Moneysmart’s guidance describes the mechanism but not a price, and insurers like Helia only offer an interactive estimator rather than a published rate card. Rather than quote a figure that no regulator or insurer has confirmed, the honest answer is: use an LMI estimator with your own numbers, and treat any “typical LMI cost” figure you see elsewhere with caution.
What should I weigh up if I only have a small deposit?
There’s no single right answer here — it depends on your price range, location, family situation and how comfortable you are waiting to save more. Some factors to weigh:
| Path | What it offers | What to weigh |
|---|---|---|
| Home Guarantee Scheme (5% or 2%) | No LMI, smaller deposit | Price caps by location; participating lenders only |
| Help to Buy (2%) | Government equity co-contribution | Separate eligibility and caps to check |
| Saving toward 20% | No LMI, more lender choice | Takes longer; prices and caps can move |
| Smaller deposit + LMI | More flexibility on timing | Added cost, usually upfront or capitalised |
A few things sit beneath that table rather than in it: the Home Guarantee Scheme also requires you to live in the property as owner-occupier; Help to Buy’s eligibility and price caps are assessed separately from the Home Guarantee Scheme’s, so check current settings rather than assuming the two line up; and LMI, where it applies, is usually paid upfront or capitalised into the loan.
How do you choose between these paths?
That depends on things only you can weigh — your savings timeline, whether you or a co-buyer qualify for a scheme place, the property price caps where you want to buy, and your appetite for paying LMI versus waiting. A licensed mortgage broker can model your specific numbers against current scheme settings and lender policies; this article can lay out the paths but can’t tell you which one is right for your situation.
For a broader look at how much deposit you actually need and the trade-offs between different deposit sizes, see our guide to how much deposit you need for a first home in Australia. For more on the mechanics of buying with a 5% deposit specifically, see our guide on buying a house in Australia with a 5% deposit.
