With house prices now easing a little from the highs of some 12-18 months ago, many properties still remain high, especially in the most desirable areas.

According to CoreLogic, which monitors housing prices across Australia, our biggest capitals, being Sydney and Melbourne, have median house prices of $1.05 million and $775,000 respectively at September 30, 2022.

The number of first home buyers able to save the 20% deposit hurdle has decreased significantly since 2022. With that being said, first home buyers shouldn’t give up.

There are strategies that you may be able to employ to help you into your own home sooner rather than later.

Here are 5 ways you can buy a property without the 20% deposit.

1. Get family or a friends’ help

Even if your parents or other relatives can’t give you money, they may agree to guarantee part of your loan with the bank. This means they don’t have to provide any cash if you meet your repayment obligations. This tactic also works well for friends that you trust and can work together.

Essentially, your parents, another relative or friends use their own property to boost your borrowing power. Doing this will guarantee all or a portion of your loan, for example 20%. This enables you to meet the 20% deposit required to avoid expensive lenders mortgage insurance (LMI) and tap into better mortgage rates.


2. Buy a smaller home & alternatives

The 20% to save for a deposit can be a near impossible task if you are looking for 3 plus bedrooms, 2 bathrooms, a big back and front yard. It’s possible to find a house that will be in a good location, however, may not have all the facilities you may want. If you can come to a compromise, you can find some gems.

There are also some alternatives to this. For example, if you want to get out of the renting trap and stop it eating your potential savings, you can try caravans &/or tiny homes. This alternate way of living can provide a place to live and can be permanent or a stopgap to your dream home.


3. Manage your expectations

I would say most people have anxiety of trying to get into the property market. There are many things to look for, travel to do inspections and hours finding the right place for you. Sometimes we are blindsided and don’t see alternatives or a diamond in the rough.

So, how do we change our perspective?

To get into the market, you may want to find a “fixer upper”. If you are holding back for a property new, modern and have all the nice furnishing you are restricting yourself. There is nothing wrong in finding a place that has great amount of land, possibly good location, but a few things are outdated.

Since you own the place, and it will be your potential residency for your life, there is nothing stopping you from attending to renovations on your property.


4. Find the right location

Leading from our previous point, the chances of finding your dream home that is already perfect for you and needs no changes are quite slim, even with unlimited money.

If you work on computers and just need an internet connection, one thing that many workplaces offer these days due to the pandemic is days to work from home.

For some it may mean you can buy in a regional area, where prices are usually considerably lower and the lifestyle better.

Further ways to lower your purchase price may include:

    • Look for suburbs where prices have not risen as much as their neighbouring areas over the past few years
    • Choose a less-than-ideal home that you can improve over time, especially if you have the ability to do some of the work yourself
    • Consider apartments, which are often a cheaper alternative


5. Tap into the First Home Loan Deposit Scheme (FHLDS)

This allows first-time buyers with at least a 5% deposit to avoid having to pay LMI when taking out a home loan. Instead, the federal government will act as the guarantor for the remaining deposit amount.

To be eligible you must be a genuine first home buyer and earn no more than $125,000 as a single person or $200,000 as a couple.

There are caps on the price you can pay for your property, depending on its location.

In Sydney and NSW regional cities, for example, it’s $900,000, and in other areas of the state it’s $750,000. In South Australia, Western Australia and Tasmania it’s $600,000 in the capital and regional cities and $450,000 in other areas.

With this in mind, there are some restrictions and rules to follow for this scheme – be careful!


Hopefully we have provided some helpful information on 5 ways you can buy a property without a 20% deposit. At Financially Sorted, we are experts in dealing with property tax, and getting the most out of your first home, to your investment property or your holiday home. To have a more in-depth personal conversation with your needs, contact us today and sign up for our newsletter for more insightful articles.