The first home owner grant has no doubt assisted many first home buyers with their low deposit home loan.  In some cases the $7,000 grant takes care of all the purchase costs and may even allow for a new coat of paint when you move in!  

There are currently no lenders offering 100% (or no-deposit) home loans in Australia.

However, there are some low-deposit options available.

If you do not have adequate savings for a deposit but can afford the mortgage repayments on a home, then you can take out a low deposit mortgage and use your FHOG to cover all the extra purchase costs.

Everyone knows that the more you save as a home deposit the less you will need to borrow, and therefore the less interest you will need to pay on your mortgage. Each lender will vary the size of the deposit needed but usually around 20% of the purchase price is required.  Any less than this and you will have to pay lenders mortgage insurance (LMI).

If you do take out a low deposit mortgage you can use your first home owner grant to cover the cost of the LMI as well as other costs.  These might include legal fees, settlement fees, property inspection charges and stamp duty fees.  

Obviously there are risks associated with a low deposit mortgage.  If you take out a low deposit mortgage and borrow more of the purchase price, you often end up paying more in interest.  And how will you afford all the extra costs that may come up after settlement?  Do you have enough room in your budget to accommodate for any surprises along the way?

The $7,000 grant is a considerable help to many first time owners.


As with all financial commitments it is a good idea to seek professional advice.  Before choosing a low deposit home loan talk to a mortgage broker about your financial goals, your current situation and let them provide you with the answers you seek.  You can find a mortgage broker in your area by calling 1300 787 665 begin_of_the_skype_highlighting              1300 787 665      end_of_the_skype_highlighting or by submitting your details on line.