Can You Really Buy a Home With a 2% Deposit?
Saving a 20% deposit in Sydney is a serious challenge. Even a 5% deposit on a $900,000 home is $45,000, and that doesn't include stamp duty, legal fees and moving costs. For a lot of buyers, the deposit isn't the problem — the income is there, the repayments are manageable — but the upfront cash requirement keeps pushing the goal further away.
A product called Skip is trying to change that. Here's how it works.
What Is Skip?
Skip is an Australian non-bank lender that offers home loans with as little as a 2% deposit, without requiring Lenders Mortgage Insurance. It's not a government scheme and it's not a guarantor loan. It's a straightforward home loan product with competitive rates and a structure designed specifically for buyers who have strong income but haven't saved a full deposit yet.
Skip has won multiple industry awards including Most Innovative Lender, Best for First Home Buyers and Best Low Deposit Home Loan, and has a 4.7 rating on Trustpilot from real customers.
How Does a 2% Deposit Work?
Normally, if you borrow more than 80% of a property's value, lenders require you to pay Lenders Mortgage Insurance. LMI protects the lender, not you, and it can add tens of thousands of dollars to your upfront costs.
Skip takes a different approach. Instead of charging LMI, Skip has built its own lending model that allows it to lend up to 98% of a property's value with a lower upfront fee structure that it says is cheaper than a comparable LMI loan at the same deposit level.
So on an $800,000 property, a 2% deposit is $16,000. That's what you need to contribute as a deposit, plus your other purchase costs. You're not giving away equity, you're not relying on a family guarantor, and you're not paying the standard LMI that most lenders would charge at this deposit level.
How Skip Differs From Other Low Deposit Options
It's worth understanding how Skip sits alongside the other low deposit pathways available to buyers right now.
The First Home Guarantee (5% deposit, no LMI) is a government scheme that removes the requirement for LMI for eligible first home buyers with a 5% deposit. It has no income caps or waitlists as of October 2025, and the property price cap for Sydney is $1.5 million. If you've saved 5% and you're eligible, this is worth exploring first. We've written a full guide to the scheme here.
A guarantor loan allows a family member to use the equity in their property as security for your loan, potentially allowing you to borrow up to 100% or more without a deposit or LMI. It requires a willing and eligible guarantor. We've written more about how guarantor loans work here.
Skip fills a different gap. It doesn't require a guarantor, it's not limited to first home buyers, it has no income caps or property price limits, and it allows you to buy with as little as 2% deposit. If you're a second home buyer, an investor, or someone who simply doesn't have the right family situation for a guarantor loan or doesn't qualify for the government scheme, Skip is worth knowing about.
How the Loan Structure Works
This is the part that makes Skip different from a standard home loan, and it's worth understanding before you apply.
Skip uses a split loan structure made up of two loans that work together.
The Primary Loan covers up to 80% of the property value. This is the main loan and sits at the lower, more competitive rate.
The Secondary Loan covers the remaining portion above 80% LVR, up to a maximum of 98% LVR. This is the part that replaces what would normally be covered by LMI or a guarantor. The secondary loan sits at a slightly higher rate than the primary loan, which reflects the higher LVR on that portion.
Together, the two loans get you to 98% of the property value, meaning you only need 2% as a deposit plus your purchase costs.
A Simple Example
Let's say you're looking at buying a home for $800,000 in Camden.
Your 2% deposit covers $16,000. Skip's Primary Loan covers $640,000 (80% of the purchase price). Skip's Secondary Loan covers the remaining $144,000 (18% of the purchase price). Your total borrowing is $784,000, which is 98% of the purchase price.
You make repayments on both loans. The combined rate is higher than if you'd borrowed at 80% LVR, but when you compare it to the same scenario with a standard lender adding LMI on top, the total cost is designed to be lower.
As your loan reduces over time and your property value grows, your LVR drops. Once you reach 80% LVR, the secondary loan is paid off and you're left with the primary loan at the lower rate. You can also refinance to a standard lender at any time once your LVR is at a level they're comfortable with, with no penalty for doing so.
Who Is Skip For?
Skip suits a range of buyers. Here's how to think about whether it might be right for you.
First home buyers who have saved some deposit but not the full 5% required for the government scheme, or who want to move sooner than waiting until they reach 5%.
Non-first home buyers who are upsizing, moving or buying their next home and don't have 20% equity or savings available but have the income to support the repayments.
Investors who want to buy an investment property with a small deposit without using equity from their home or a guarantor arrangement.
Buyers who don't want to use family. Not everyone has parents with equity or the willingness to act as a guarantor. Skip gives buyers a path that doesn't rely on family support.
Is Skip Right for You?
Skip isn't the right option for every buyer. If you qualify for the First Home Guarantee with a 5% deposit, that's worth exploring first given it comes with government backing. If you have a family member able to act as guarantor, that pathway may offer even lower upfront costs.
But if you don't have 5% saved, you're not a first home buyer, you don't have a suitable guarantor, or you simply want to get into the market sooner without waiting years to save a larger deposit, Skip is a genuine and well-structured option that a lot of buyers haven't heard of yet.
As brokers on the Loan Market panel, we have access to Skip and can help you work out whether it suits your situation, compare it against other options, and manage the application from start to finish.
