Minimum Deposit Loan requirements

LoanCaddie
May 27, 2019
1 min read

Updated: Dec 19, 2019

If you are intending to purchase a property with less than 10% deposit, you must be aware of the additional requirements that you must satisfy to be eligible for such a loan.

Key Requirements

Below are the key requirements for a Minimum Deposit Loan.

Genuine savings - You must be able to show that you have been able to save at least 5% of the property value. A number of sources of funds can be used to count towards this test. This includes: cash in deposits held for at least for the last 3 months; unspent income over the past 3 months; rent/board paid over the past 3 months (can only count up to 3%); equity held in other property; and deposits already paid relating to the property.
Exiting ability to meet repayments - Over the last 3 months, your unspent income plus rent/board must be in excess of the proposed repayments. Ideally, you should be able to show that you can still save at least $200/month once the loan commences.
Capital position - You need to have low debt levels and an acceptable asset position for your age.
Settlements costs must not be paid for by borrowed funds (but you can use cash, cash gifts inheritance and first home buyers grants).
Location and property type - The property must be in a metropolitan location and not be 'high-density apartment'. - Use our LVR Location Wizard to determine if this applies to you.
Loan-to-value ratio (LVR) - The loan amount (including capitalised LMI premiums) must not exceed 98% of the purchase price.