Stop waiting years to save a deposit you do not actually need. A genuinely new type of home loan has arrived in Australia and it changes the maths completely.
Here is the conversation we have been having with clients for years. You earn good money. You pay your rent on time every month. You save consistently. But no matter how disciplined you are, that 20% deposit target keeps moving further away as property prices rise faster than you can save. You are not bad with money. The system is just not built for you.
That is starting to change. We now have access to a home loan product that allows both owner-occupiers and investors to purchase property with as little as a 2% deposit, with no Lenders Mortgage Insurance, competitive rates and minimal upfront fees. This is not a government scheme with limited places and price caps. It is a fully funded lending product available right now, and it is one of the most significant changes to the low-deposit lending market we have seen.
What is wrong with the way low-deposit lending has worked until now?
The traditional path for buyers without a 20% deposit has been to pay Lenders Mortgage Insurance. You pay a large premium, sometimes $20,000 to $35,000 on a typical Sydney purchase, and in return the lender is protected if you default. Notice what is missing from that sentence: you. LMI protects the bank, not the borrower. You pay for it, you get nothing from it, and it can add years to the time it takes to save enough to buy.
The government’s First Home Guarantee helped close this gap for some buyers by allowing purchase with a 5% deposit and no LMI. But it comes with income caps, property price caps, and a limited number of places each financial year. Plenty of eligible buyers miss out, and the scheme does not help investors at all.
The product we are talking about solves the problem differently. Instead of charging you a separate insurance premium, the lender builds the risk cost into the loan structure itself. The result is a one-off fee that is capitalised into your loan balance, not paid in cash at settlement, and is designed to always come in below what LMI would have cost you for the same deposit size. No cash out of pocket. No insurance premium. Just a loan.
The numbers that matter
Let’s put some real numbers around this. Say you are buying a property for $800,000 in Sydney.
| Standard lender with LMI (5% deposit) | This product (2% deposit) | |
|---|---|---|
| Deposit needed | $40,000 | $16,000 |
| LMI / upfront fee | ~$25,000 to $30,000 cash at settlement | Capitalised into loan, less than LMI equivalent, nil cash |
| Application fee | $300 to $700 | Nil |
| Annual fees | $0 to $400 per year | Nil |
| Extra repayments | Limited or capped on many products | Unlimited, free |
| Redraw | Varies | Free online redraw |
| Guarantor required? | Sometimes | No |
The cash difference at settlement is striking. On an $800,000 purchase, a standard 5% deposit plus LMI could require $65,000 to $70,000 in cash before you factor in stamp duty and conveyancing. This product requires $16,000 as a deposit plus your settlement costs. For most buyers, that is a difference of years of saving.
This works for investors too, not just first home buyers
Most low-deposit products are aimed squarely at first home buyers. This one is not. Investors can also access 98% LVR lending through this product, which opens up a genuinely different possibility for property investors who want to grow their portfolio without tying up large amounts of capital in deposits.
Think about what 98% LVR investment lending means in practice. Instead of saving a $160,000 deposit for an $800,000 investment property, you need $16,000. That frees up capital to retain in cash, invest elsewhere, or use toward a second property sooner. For investors who understand leverage, this is a powerful tool when used thoughtfully.
The key requirement for investors is that this product is available for the purchase or refinance of a single investment property. It is not designed for large portfolios. But for investors entering the market for the first time, or adding one investment property to an existing home, it is well worth assessing.
What are the requirements?
This product has specific criteria and is not right for every buyer or every property. Here is what you need to know upfront.
Genuine savings requirement: You need to demonstrate at least 5% genuine savings. This means funds that have been held in your name for a period of time, showing that you are a disciplined saver rather than someone who received a cash gift this week. Your deposit can be as low as 2%, but the lender wants to see evidence of your saving history.
Loan type: Variable rate, principal and interest only. Fixed rate and interest-only options are not available on this product.
Property location: Available across all major Australian capital cities and select regional centres. Properties must be at least 50 square metres excluding balconies and parking spaces.
Property type: New and established homes, townhouses and apartments. High-rise apartments in buildings above seven storeys completed after 2014 do not qualify for owner-occupier lending. There are additional high-density restrictions for investor lending in certain areas.
No vacant land or construction: This product is for established or newly completed properties only.
No guarantor required: Unlike some low-deposit products, you do not need a family member to guarantee your loan or provide equity support. You get in on your own terms.
Who is this best suited to?
The profile of a borrower who benefits most from this product looks something like this: someone with a stable income who could clearly afford the repayments on the property they want to buy, but who has not yet saved a full 20% deposit, does not want to pay LMI, and cannot or does not want to rely on family financial support. It suits buyers who have been in the rental market for several years and can demonstrate solid savings history even if the total amount saved is not at the 20% threshold.
It is also well suited to buyers who have saved their deposit and want to preserve cash rather than tip it into a deposit. Keeping $25,000 in an offset or emergency fund rather than putting it into a property deposit is a legitimate financial strategy, and this product makes that possible without the LMI penalty.
It is less suited to buyers who want a fixed rate for certainty around repayments, those purchasing high-density inner-city apartments, or those seeking interest-only lending for investment purposes.
How does this sit alongside government first home buyer schemes?
The First Home Guarantee also allows purchase with a 5% deposit and no LMI, and it is worth comparing the two. The First Home Guarantee has government-imposed property price caps, income caps and a limited number of places per year. This product has none of those restrictions. If you miss out on a First Home Guarantee place, or your income or property price exceeds the scheme thresholds, this is a strong alternative.
The First Home Super Saver Scheme can still be used alongside this product to boost your deposit savings, and NSW stamp duty concessions for first home buyers apply as normal. We map out the full combination of options as part of every first home buyer assessment.
How do you get access to this product?
This product is available through Rovo Finance as part of our 40+ lender panel. We assess your full situation, confirm eligibility including the genuine savings requirement and property type, and compare this option against the other low-deposit products on our panel to make sure it is the right fit.
