How to Buy a House with No Money Australia

October 12, 2023
how to buy a house with no money australia

Key takeaways:

    • Explore alternative financing options like guarantor loans and existing equity to purchase a house with no or low deposits.

    • Leverage government schemes, grants, rent-to-own agreements and property flipping strategies for building an investment portfolio without cash deposit.

    • Prepare financially by improving credit scores, reducing debts and seeking professional advice before engaging in a no money home purchase.

How to buy a house with no money in Australia? This often involves alternative financing methods like a guarantor loan, using equity or government schemes.

Not sure how these could work for you? Don’t worry, our guide on how to buy a house with no money will provide you with various options to purchase a property without a deposit, including how to find affordable properties, taking advantage of government schemes, and employing creative strategies to build a property portfolio.

So, are you ready to take the first step towards your dream home?

Alternative Financing Options to a Deposit

You might think that a big deposit is the only way to get your foot on the property ladder. However, several alternative financing options can help you buy a house without a deposit or with a low deposit.

Are you able to buy these homes with no money? Probably not, but they make homeownership more accessible.

These alternatives include leveraging existing equity, guarantor loans, and joint ventures or partnerships.

Let’s go through these one by one to learn about the advantages and risks involved.

Leveraging Existing Equity

Equity is the value of your investment property, minus any amount you still owe on the mortgage. This difference is known as equity.

By leveraging the equity in your existing property, you can use it as a deposit for a new home loan, helping you enter the property market or expand your investment property portfolio without additional cash deposits.

This strategy can be particularly beneficial in a growing market, where your property value continues to increase.

However, leveraging existing equity comes with risks. The property market can be unpredictable. If it declines, your equity could decrease, making it difficult for you to secure a loan. Furthermore, defaulting on the new loan could jeopardize your existing properties.

To mitigate these risks, consider using a deposit bond, which is a guarantee from a reliable provider that can secure a purchase in lieu of a cash deposit, potentially saving you money on interest costs.

Guarantor Loans

how to buy a house with no money australia

A guarantor loan is a type of loan where a family member agrees to guarantee the loan by providing their property as collateral.

This allows you to obtain a home loan without a deposit and avoid paying lenders mortgage insurance (LMI) since the guarantor assumes the risk on your behalf.

However, the guarantor takes on considerable risk by offering their property as collateral, and not all lenders provide guarantor home loans. In comparison, a personal loan may be a more suitable option for some borrowers.

To minimize the risks associated with a family guarantee, consider creating a plan to generate equity in the new property, allowing you to refinance within a few years and remove the guarantee.

This strategy can involve selecting a desirable location with reliable property appreciation, improving the home to increase its value, and making extra payments on the loan to reduce the debt.

This approach can be particularly useful for property investors looking to expand their portfolio in the investment property market.

Joint Ventures and Partnerships

A joint venture is a strategic partnership where one partner finances the initial costs of a property purchase and shares the resulting profits with the other partner.

This can be an effective way to invest in multiple investment properties without bearing the entire financial burden, allowing you to enter the property market with minimal capital outlay.

However, all parties are jointly liable for the full debt if one party ceases to pay their share.

To ensure a successful joint venture, it is crucial that all parties involved are in agreement. Establish a clear budget and timeline for the duration of the property’s ownership, and create a written partnership agreement that outlines:

  • Ownership percentages
  • Financial responsibilities
  • Dispute resolution procedures

How to Find Affordable Properties in Australia

how to buy a house with no money australia

If you’re on the hunt for the cheapest houses in Australia, you’re not alone. Affordable properties can be challenging to find especially since a lot of us are looking for the same thing.

To locate affordable properties, consider off-the-plan purchases, distressed sales, and up-and-coming suburbs.

By identifying motivated sellers or properties with growth potential, you can buy properties at a lower cost, making homeownership more achievable.

Keep in mind that the affordable end of the Australian property market has generally outperformed the upper end since the early 1980s, despite Australia’s property market being considered one of the most expensive globally.

By focusing on finding affordable properties, you can take advantage of this trend and build a successful property portfolio, while keeping an eye on property prices.

Off-the-Plan Purchases

Off-the-plan purchases refer to buying a property that has yet to be constructed or is under construction.

This involves entering into an agreement to purchase a property before the title is generated. The main benefits of off-the-plan purchases include potentially reduced stamp duty and securing a price, making it an attractive option for property investors looking for more affordable property options.

However, off-the-plan purchases come with risks, such as the property being worth less than the purchase price, construction delays, and unsatisfactory changes to the property.

To mitigate these risks, conduct thorough market research, scrutinize contracts carefully, and seek professional guidance.

Distressed Sales

A distressed sale occurs when a property owner is forced to sell their property quickly, typically at a reduced cost, due to financial constraints or pressing situations like foreclosure or asset liquidation.

These sales can offer bargains for buyers, as sellers are often willing to accept a lower price than market value.

However, distressed sales also have risks, such as hidden defects or extensive repair requirements, and the seller may not be able to provide clear title to the property.

When negotiating a distressed sale, conduct in-depth research and present a fair offer. Additionally, be patient and flexible, as the seller may be under time constraints to accept a lower price.

Identify Up-and-Coming Suburbs

Investing in up-and-coming suburbs with new infrastructure and amenities can lead to increased property values and rental yields.

To identify undervalued suburbs, research areas that have a satisfactory level of amenities yet, compared to nearby suburbs or suburbs with similar features, have either lower growth or a lower median price.

Acquiring an undervalued property in a densely populated area slated for development can potentially bring about higher rental yields and capital growth due to the additional amenities the new development will offer.

Examine light industrial regions that have recently been rezoned or where councils are planning to rezone to find potential investment opportunities.

Government Schemes and Grants

how to buy a house with no money australia

In Australia, there are several government schemes and grants available to help individuals purchase a property without a deposit or with a low deposit.

These include the First Home Loan Deposit Scheme, First Home Owners Grant, the Help to Buy Scheme and Family Home Guarantee.

By taking advantage of these first home buyer grants and schemes, you can enter the property market with minimal upfront costs and benefit from government support.

However, it’s essential to be aware of the eligibility requirements and limitations of each program. Some schemes have restricted availability and stringent criteria, making them unsuitable for all home buyers.

Understanding the specifics of each program can help you determine which options are best suited to your financial circumstances and property goals.

First Home Guarantee Scheme

The First Home Guarantee Scheme is an Australian Government initiative that enables eligible first home buyers to purchase their first home with a deposit of 5% or more, without the need for lenders mortgage insurance (LMI).

As a result, you can enter the property market with a lower deposit and avoid paying additional insurance costs. Deposit home loans, like this scheme, make it easier for first-time buyers to enter the market.

However, this scheme has limited availability and strict eligibility requirements, such as income and location value caps. To apply, you must submit an application form to the National Housing Finance and Investment Corporation (NHFIC), which will assess your eligibility and provide a guarantee to the lender if approved.

Understanding how to save for a home deposit is crucial for aspiring homeowners, and the First Home Loan Deposit Scheme offers an avenue to make that dream more attainable.

First Home Owners Grant

The First Home Owners Grant is a one-off grant available to eligible first-time home buyers who meet specific criteria, such as being at least 18 years old, holding permanent residency or Australian citizenship, and purchasing a newly constructed property, an off-the-plan property, or a substantially renovated property.

The grant varies by state and property type, with some states offering the grant only for newly constructed dwellings, while others offer it for both newly constructed and off-the-plan properties. This financial assistance can help first home buyers enter the property market with a lower initial investment.

Family Home Guarantee

The Family Home Guarantee is designed to support eligible single parents or legal guardians with at least one dependent in purchasing a home with a deposit of as little as 2%.

This government initiative can help single parents overcome the challenges of entering the property market with a limited deposit.

To be eligible for the Family Home Guarantee, you must be a single parent with dependents and meet other specific requirements. By taking advantage of this program, single parents can secure homeownership and provide a stable environment for their children.

Creative Strategies for Building a Property Portfolio

how to buy a house with no money australia

In addition to the alternative financing options and government schemes discussed earlier, there are creative strategies you can employ to build a property portfolio without a cash deposit.

Rent-to-own agreements and property flipping are two such methods that can help you enter the property market and grow your portfolio with minimal capital outlay.

By understanding the benefits and risks of these strategies, you can tailor your approach to your financial situation and property goals, maximizing your chances of success in the Australian property market.

Rent-to-Own Agreements

Rent-to-own agreements allow tenants to gradually purchase a property while living in it as renters. In these agreements, tenants pay a rent above the market rate, with a portion of the rent applied towards the property’s purchase.

This can be an attractive option for those who cannot afford a large down payment but still want to work towards homeownership.

However, rent-to-own agreements come with potential drawbacks, such as being bound to a long-term agreement, responsibility for repairs and maintenance, and the possibility of not being able to purchase the property at the end of the lease period.

To ensure a successful rent-to-own agreement, read the contract thoroughly, plan for the increased rent payments and additional payments towards the property purchase, and research the property and area to ensure it’s the right fit for you.

Property Flipping

Property flipping is a real estate investment strategy in which an investor acquires a property, renovates or repairs it, and then sells it quickly for more than they paid, generating a substantial profit in a short period.

This strategy can be lucrative for those with market knowledge and renovation skills, as well as the ability to identify properties with growth potential.

However, property flipping is not without risks, including potential losses if the market fluctuates or the property isn’t renovated correctly.

To ensure successful property flipping, research the market, familiarize yourself with local laws and regulations, create a budget and timeline for the project, and enlist the help of experienced professionals to guide you through the process.

Looking out for where you can buy a home for under $100k can also be helpful. You can add these suburbs to your interested areas on your Soho match profile so you never miss a beat.

Preparing for a No-Money Home Purchase

how to buy a house with no money australia

Before embarking on a no-money home purchase, it’s essential to prepare yourself financially and seek professional advice.

Improving your credit score, reducing debts, and consulting with financial planners, mortgage brokers, and real estate agents can help you navigate the complexities of no-money home purchases and improve your chances of success.

By taking these preparatory steps, you can better position yourself to enter the property market and make informed decisions about the best options for your unique financial situation and own property goals.

Improving Credit Scores

Your credit score is a numerical representation of your creditworthiness, based on your borrowing and repayment history. A higher credit score can improve your chances of securing a loan with favorable terms and interest rates.

To boost your credit score:

  • Pay bills on time
  • Reduce credit card balances
  • Correct any errors on your credit report

Improving your credit score will not only increase your loan eligibility but also show lenders that you are a responsible borrower, reducing the perception of higher risk often associated with no-money home purchases.

Reducing Debts

Reducing your debts can greatly improve your financial standing and make it easier to secure a loan for a no-money home purchase.

To reduce debts, consider:

  • Consolidating loans
  • Creating a budget
  • Prioritizing the repayment of high-interest debts.

By reducing your debt levels, you can demonstrate to lenders your commitment to improving your financial situation and increase your chances of securing a loan with favorable terms.

Seeking Professional Advice

When considering a no-money home purchase, it’s crucial to seek professional advice from financial planners, mortgage brokers like Soho Home Loans, and real estate agents.

These professionals can help you understand the various financing options, government schemes, and creative strategies available to enter the property market without a deposit. They can also guide you through the legal requirements and potential risks associated with each option.

By seeking professional advice, you can make informed decisions about the best path for your unique financial situation and property goals, reducing potential legal or financial risks and ensuring a smoother home purchase process.


In conclusion, buying a house without a deposit in Australia is achievable through various alternative financing options, affordable property identification, government schemes, and creative strategies.

Preparing yourself financially and seeking professional advice can help you navigate the complexities of no-money home purchases and improve your chances of success.

The journey to homeownership without a deposit may be challenging, but with determination, research, and the right guidance, it’s a dream that can become a reality.

Remember, the key to success in the property market is to be proactive, informed, and open to exploring new opportunities. So, take that first step today and embark on the exciting journey towards your dream home!

Frequently Asked Questions

Can I buy a house with $10 000 deposit?

Based on the usual advice for buying a house, it is possible to buy a house with $10,000 as a deposit, depending on the property’s value and your loan amount.

If you require more financing, having a guarantor may be necessary. Ultimately, the ability to purchase a home with this deposit will depend on individual circumstances.

Can I buy a house in Australia with no deposit?

Yes, it is possible to purchase a home in Australia with no deposit. There are multiple options available, such as using a guarantor loan, borrowing equity from another property, and utilising the First Home Loan Deposit Scheme.

However, the specifics of these strategies vary greatly from lender to lender, so it’s important to assess your individual situation before committing.

Can I buy a house with $20000 deposit?

Based on the most common advice, it is likely not possible to purchase a house with a $20,000 deposit.

However, there may be programs available through which you can access more money, such as the First Home Super Saver (FHSS) scheme which could increase the amount of your deposit and make purchasing a house a viable option.

Can you use your super to buy a house?

Yes, it is possible to use your super to purchase a house if you’re eligible for the FHSS Scheme. The FHSS Scheme allows individuals who are looking to buy their first home to access voluntary contributions made to their superannuation fund towards a deposit on their property.

What is the difference between leveraging existing equity and a guarantor loan?

The main difference between leveraging existing equity and a guarantor loan is that, with the former, you are using your own property as collateral, while with the latter, it is a family member who is providing their asset to guarantee the loan.

What is Frugal living in Australia?

Frugal living in Australia refers to a lifestyle approach focused on living within one’s means, being mindful of expenses, and making intentional choices to save money. It involves adopting a thrifty mindset and making conscious decisions to reduce unnecessary spending, prioritize needs over wants, and find creative ways to save on everyday expenses.

Frugal living practices in Australia may include budgeting, meal planning, shopping for discounted or second-hand items, reducing energy consumption, minimizing waste, DIY projects, and exploring free or low-cost recreational activities. The goal is to maximize the value of each dollar and achieve financial stability and freedom.

Frugal living is a personal choice that can be influenced by individual financial goals, values, and circumstances. It offers an opportunity to save money, reduce debt, build savings, and live a simpler and more sustainable lifestyle.

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Our AI match engine will match you with over 150,000+ properties and you can swipe away or shortlist easily. Making your home buying journey faster and easier.