The Easiest Way to Buy with a 10% Deposit

A 10% deposit gives you access to a wider range of lenders and loan products than a 5% deposit, and it typically reduces your lenders mortgage insurance premium by several thousand dollars.

Most buyers assume that once they have 10% saved, the only decision left is which lender offers the lowest rate. But the structure you choose at this deposit level can affect your repayment flexibility, your ability to access redraw or offset, and how quickly you can refinance or pay down debt later. Some lenders restrict certain features on loans above 80% LVR, while others treat a 90% LVR loan almost identically to an 80% LVR loan once LMI is paid.

How Lenders Mortgage Insurance Changes at 10%

LMI is required whenever your deposit is less than 20% of the property value. At 10% deposit, your LVR is 90%, and the LMI premium is calculated as a percentage of the loan amount on a sliding scale. The premium is lower at 90% LVR than it would be at 95% LVR, often by several thousand dollars depending on the loan amount. For a $500,000 loan, the difference in LMI between 95% and 90% LVR can exceed $8,000. The premium is usually capitalised into the loan, meaning you borrow the cost rather than paying it upfront.

LMI protects the lender if you default, not you. Once the premium is paid, the policy remains in place for the life of that loan. If you refinance to a new lender within the first few years, you may be required to pay LMI again unless the new lender offers LMI portability or you have reduced your LVR below 80%. Some lenders offer LMI waiver products for certain professions or under specific loan structures, but these are not standard and typically require a larger deposit or income above a certain threshold.

What Loan Features Are Available at 90% LVR

Most lenders offer offset accounts on loans up to 90% LVR, but some restrict offset functionality to loans at 80% LVR or below, particularly for fixed rate or packaged products. If you plan to park savings in an offset to reduce interest, confirm with the lender that the offset is fully functional at your LVR and loan type before proceeding. A linked offset on a variable rate loan at 90% LVR works the same way as it does at 80% LVR with most major lenders, but this is not universal across all institutions.

Fixed rate options are also available at 90% LVR, though the rate offered may be slightly higher than the advertised rate for lower LVR loans. Some borrowers split their loan into a fixed and variable portion to lock in certainty on part of the debt while retaining flexibility on the rest. A split rate structure can work well if you expect your income or expenses to change in the next few years, or if you want to make extra repayments without incurring break costs on the full loan amount.

Redraw facilities are commonly available on variable loans at 90% LVR, but the terms vary. Some lenders allow unlimited redraws at no cost, while others impose monthly limits or processing fees. If you plan to make extra repayments and access them later, check the redraw terms in the loan contract. Offset accounts are generally more flexible than redraw for this purpose, but not all loan products include them.

How the Serviceability Buffer Affects Borrowing at 10%

Even with 10% saved, the amount you can borrow is determined by serviceability, not just the deposit. Lenders assess your capacity to service the loan at an interest rate that is at least 3.0 percentage points above the actual loan rate. This buffer, set by APRA, applies to all new borrowers and has been in place since October 2021. If the variable rate offered is 6.2%, the lender will assess whether you can afford repayments at 9.2% or higher.

Consider a buyer with a household income of $120,000 and minimal other debt. At current variable rates, they might comfortably afford a $600,000 loan. But if they have a car loan with $400 monthly repayments and a credit card with a $10,000 limit, even if the balance is zero, the lender includes those commitments in the serviceability calculation. The credit card limit alone can reduce borrowing capacity by $30,000 or more, depending on the lender's assessment rate and the card's assumed repayment percentage. Closing unused credit accounts or reducing limits before applying for pre-approval can increase what you can borrow.

From 1 February 2026, APRA also introduced a debt-to-income lending limit. Each authorised deposit-taking institution can lend up to 20% of new owner-occupier loans to borrowers with a total DTI ratio of six times or greater. This does not mean you cannot borrow more than six times your income, but it does mean lenders are required to manage their portfolio mix and may apply stricter conditions or higher rates to borrowers above that threshold. If your DTI is close to six, your application may take longer to assess or require additional documentation.

Using the Australian Government 5% Deposit Scheme with More Than 5%

If you have 10% saved but are eligible for the Australian Government 5% Deposit Scheme, you can still use it. The scheme requires a minimum deposit of 5%, not a maximum. Housing Australia provides a guarantee to the participating lender of up to 15% of the property value, which allows you to reach a combined deposit and guarantee of 20% without paying LMI. If you contribute 10%, the guarantee covers 10%, and you still avoid LMI entirely.

This approach can be useful if you want to keep some of your savings for furniture, moving costs, or an emergency buffer rather than putting every dollar into the deposit. The scheme has no income caps and no annual place limits. Property price caps apply and vary by location. In Victoria, the cap is $950,000 in Melbourne and Geelong and $650,000 in other areas. In New South Wales, the cap is $1,500,000 in Sydney, Central Coast, Newcastle, Illawarra and other regional centres, and $800,000 elsewhere.

Applications are made through a participating lender, not directly through Housing Australia. Not all lenders participate in the scheme, and those that do may have different product features, rates, and service standards. Some participating lenders offer full offset and redraw functionality, while others offer more limited features. If you are considering the scheme, compare the actual loan products available from participating lenders, not just whether the lender is on the panel.

Fixed, Variable, or Split: Which Structure Works at 90% LVR

A variable rate loan gives you flexibility to make extra repayments, access offset or redraw, and refinance without break costs. Rates can move up or down with official cash rate changes or lender margin adjustments, so your repayments are not locked in. If rates fall, you benefit immediately. If they rise, your repayments increase unless you have a buffer built into your budget.

A fixed rate loan locks in your interest rate for a set period, typically one to five years. Your repayments stay the same regardless of rate movements during that period. Most fixed loans allow limited extra repayments, often up to $10,000 or $20,000 per year, but exceeding that limit can trigger break costs. Offset accounts are less common on fixed loans, though some lenders offer them. If you break a fixed loan early to sell or refinance, the break cost can be substantial, particularly if rates have fallen since you fixed.

A split loan divides your borrowing into two portions, one fixed and one variable. You might fix 50% of the loan for three years and leave the other 50% variable. This gives you rate certainty on part of the debt while keeping flexibility on the rest. You can make extra repayments on the variable portion without restriction and still have predictable repayments on the fixed portion. The downside is that you are managing two loans with separate terms, and the fixed portion still carries break cost risk if you sell or refinance early.

As an example, a buyer purchasing a $600,000 property with a $540,000 loan at 90% LVR might split $300,000 fixed for three years at 5.89% and $240,000 variable at 6.19%. The fixed portion provides repayment stability through a period when rates might rise further, while the variable portion allows them to make extra repayments as their income grows or if they receive a bonus. If they need to sell within the fixed term, the break cost applies only to the $300,000 fixed portion, not the entire loan.

How Stamp Duty Concessions and Grants Interact with a 10% Deposit

Stamp duty concessions and first home owner grants are determined by the property price and your eligibility, not by your deposit size. If you are a first home buyer purchasing in Victoria with a 10% deposit, you can access the full stamp duty exemption on properties valued up to $600,000 and a sliding scale concession on properties valued from $600,001 to $750,000. In New South Wales, a full transfer duty exemption applies to new and established homes valued up to $800,000, with a concession available up to $1,000,000.

The Victorian first home owner grant of $10,000 applies to new homes valued up to $750,000. In Queensland, the grant is $15,000 for new homes under $750,000 for contracts signed from 1 July 2026. These grants can be used toward your deposit, settlement costs, or LMI premium. Some buyers use the grant to increase their deposit from 10% to 12%, which can reduce the LMI premium slightly, though the saving is often marginal compared to the benefit of keeping cash available for post-settlement costs.

If you are using the Australian Government 5% Deposit Scheme or Help to Buy, you can generally combine those schemes with state and territory grants and concessions, though some restrictions apply depending on the jurisdiction. Check the specific terms for your state before assuming all concessions stack.

When Refinancing Makes Sense After You Buy

Once you own the property and have been making repayments for 12 to 24 months, your equity position improves in two ways. Your loan balance reduces with each repayment, and the property may increase in value. If the property has risen in value or you have paid down enough debt to bring your LVR below 90%, you may be able to refinance to a lender with lower rates or features that were not available at 90% LVR.

Refinancing at a lower LVR can also allow you to access products with offset accounts, lower interest rates, or better redraw terms if your original loan did not include them. Some lenders offer rate discounts or waive annual fees once your LVR drops below certain thresholds. If you refinance within two years of taking out your original loan and your LVR is still above 80%, you will likely need to pay LMI again unless the new lender offers LMI portability. If you wait until your LVR is 80% or below, LMI does not apply on the new loan.

Refinancing is not always worth the cost. Application fees, valuation fees, and discharge fees from your existing lender can add up to $1,000 or more. If the interest rate saving is only 0.10% to 0.20% and you plan to sell or pay off the loan within a few years, the upfront cost may exceed the benefit. But if the rate difference is 0.50% or more, or if you gain access to features that meaningfully improve your financial position, refinancing can be worthwhile.

Buying with a 10% deposit is a realistic option if you understand the lender requirements, the cost of LMI, and the loan features available at this LVR. The structure you choose and the lender you work with will affect your flexibility and cost over the life of the loan. If you want to compare your options or work through the numbers for your situation, call one of our team or book an appointment at a time that works for you.

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