How to Buy a House with a 10% Deposit

You Can Buy with 10% Down

You can purchase a home with a 10% deposit in Dulwich Hill, though you'll need to pay Lenders Mortgage Insurance and meet lender criteria around income stability and credit history. The real consideration isn't whether it's possible, it's whether the numbers work for your situation and which lender will give you the most suitable terms.

Consider a buyer who's been renting near Marrickville Road for three years and has saved $70,000. She's looking at units around $700,000 in the streets between New Canterbury Road and the light rail. With 10% down, she'd have her deposit covered, but needs to understand what LMI adds to her borrowing and whether her income supports the loan amount required.

What Lenders Mortgage Insurance Actually Costs

Lenders Mortgage Insurance protects the lender when your deposit sits below 20% of the property value. The premium gets calculated as a percentage of your loan amount and varies based on your loan to value ratio. At 90% LVR, expect the insurance to add several thousand dollars to your borrowing, though some lenders allow you to capitalise this cost into the loan itself rather than paying upfront.

In the scenario above, LMI on a $630,000 loan at 90% LVR might add $15,000 to $20,000 to the amount borrowed. Some lenders offer LMI waivers for certain professions or reduced premiums for first home buyers accessing government schemes. Your borrowing capacity needs to accommodate both the property price and the insurance premium.

How Your Income Affects a 10% Deposit Purchase

Lenders assess whether you can service the full loan amount, not just whether you have the deposit. At 90% LVR, you're borrowing more, which means higher repayments and tighter serviceability requirements. A couple earning $140,000 combined will find their borrowing capacity stretched differently than at 80% LVR, particularly if they carry existing debts or have dependents.

Your employment type matters more at higher LVR levels. Lenders prefer at least six months in your current role if you're a permanent employee, or two years of consistent income if you're self-employed. Dulwich Hill attracts a mix of creative professionals, small business owners and young families, and each employment type gets assessed through a different lens when you're borrowing at 90%.

The Property Type Limits You'll Encounter

Some lenders restrict what they'll finance at 90% LVR. Units under 50 square metres often attract additional scrutiny or higher rates. Properties in apartment blocks with commercial ground floors might require a larger deposit. The converted warehouses near the light rail station, for instance, can present valuation challenges that make lenders more cautious about high LVR lending.

In our experience, buyers targeting the older walk-up blocks between Dulwich Hill Station and Hurlstone Park find fewer restrictions than those looking at newer high-density developments. The property type influences not just whether you'll get approved, but which lenders will offer you the most suitable home loan structure.

Variable Rate Versus Fixed Rate at Higher LVR

Your rate type decision carries more weight when you're borrowing at 90% LVR. Variable rate loans offer flexibility to make extra repayments and build equity faster, which helps you reach 80% LVR sooner and potentially refinance to remove the LMI component from your borrowing. Fixed interest rate home loans lock in certainty but typically restrict how much you can repay above the minimum.

Some buyers at 90% LVR choose a split loan structure, fixing a portion for security while keeping another portion variable to maintain repayment flexibility. This approach works particularly well if you expect income growth over the next few years and want the option to pay down the variable portion more aggressively.

Building Equity to Escape the 90% LVR Position

Once you're in the property, your strategy should focus on moving below 80% LVR as quickly as your circumstances allow. An offset account linked to your variable rate portion lets you reduce interest without losing access to your funds. Even small additional repayments compound over time, particularly in an area like Dulwich Hill where property values have shown consistent growth near the light rail corridor.

Achieve home ownership at 90% LVR, then use a combination of capital growth and principal reduction to improve your position. After two to three years, many borrowers can refinance to better rates or access equity for other purposes, having built enough value through repayments and market movement.

Call one of our team or book an appointment at a time that works for you. We'll work through your income, deposit and property goals to find which lenders will support your purchase with a 10% deposit and structure your loan to build equity from day one.

Frequently Asked Questions