How to Get a Mortgage When You Only Have a Tiny Deposit


2 people giving high fives, packing boxes


The average time it takes to save for a house deposit is 7 years! This means that many aspiring homeowners end up living with their parents deep into their 20's - which isn't exactly easy riding!

In order to cut down the length of time that it takes to save for a home, buyers need to be able to utilise a tiny deposit. So, is it possible to get a mortgage with a small deposit?


What is the average deposit?

The main reason that it takes so long to save for a home is that mortgage lenders typically ask for a large deposit. The average house deposit is 10% of the asking price. However, to receive more competitive rates buyers may need to fork out up to 25%! This means that, for a $500,000 property, buyers will need to save at least $50,000.

Furthermore, the larger your initial deposit, the better your interest rates can be. For this reason, many prospective buyers will spend years saving up the funds to secure a home with relatively low monthly interest.

For those looking to buy as soon as possible, saving a large deposit for low-interest rates isn't always an option. Luckily, it is possible to get a mortgage with a small deposit. Doing so could help you to get onto the property ladder and finally move away from your childhood home!


How to get a mortgage with a tiny deposit

Some mortgage lenders will accept buyers who have a relatively low deposit. In fact, it is possible to find some mortgage loans, such as those offered by SoFI, that will accept a deposit of just 3% of the asking price!

A lower deposit can put limits on how much you can borrow. However, for first-time buyers looking for smaller apartments, this is no problem! Many people are willing to sacrifice an expensive property for fewer years of saving.

Most mortgage lenders ask for a deposit as a way of proving financial stability. If you are able to save a considerable sum of money, lenders feel confident that you will be able to pay back what you borrow. If you have a small deposit, you may need to prove your financial stability in another way.


Strong credit history

You can show mortgage lenders that you are financially trust-worthy by providing excellent credit history. The best way to do this is by maintaining a good credit score. Your credit score is a number that indicates how you handle your credit. The score can be affected by any type of loan that you take out, with a higher score reflecting good creditworthiness.

If you have a small deposit, your mortgage lender may ask for proof of a good credit history. This is done to ensure that applicants are able to pay back what they borrow.



With a small deposit, you may have to compromise on space! Luckily, there are plenty of great apartments available that make the most of the space available and allow for comfortable living deposits in the smaller size! If you get creative, you can turn even the smallest of homes into the perfect living space.


Consider sharing

The easiest way to secure a mortgage with a low deposit is to split the costs! If you have friends who are also looking to buy, you could put your savings together and apply for a mortgage as a partnership. Most mortgage lenders will allow up to four people on a mortgage agreement.

Sharing your first home with friends is a great way to cut down the initial deposit and ease yourself into living away from home! However, it does mean that you will only own a fraction of the property once the mortgage has been paid off.


The bottom line

It is possible to secure a mortgage even if you have a small deposit! While you may have to sacrifice space or even buddy up with a friend, with good credit history it won't take long to find a lender that is willing to offer you a contract!