Current Interest Rates
2% deposit home loan rates as at 8 May 2026: owner occupier 6.39% p.a. (comparison rate 6.42% p.a.), investment 6.79% p.a. (comparison rate 6.82% p.a.). Fees: settlement $395, valuation $395, discharge $795. No application, monthly or annual fees.
| Loan Purpose | Variable Rate | Comparison Rate | Rate Type |
|---|---|---|---|
| Owner occupier | 6.39% p.a. | 6.42% p.a. | Variable, P&I |
| Investment | 6.79% p.a. | 6.82% p.a. | Variable, P&I |
Rates current as at 8 May 2026. Comparison rates based on a $150,000 loan over 25 years. Subject to change without notice. All loans subject to approval.
The same interest rate applies across both the primary loan (up to 80% LVR) and the secondary loan (80% to 98% LVR). There is no rate differential between the two portions of the split. All loans are variable rate, principal and interest only. No fixed rate or interest-only options are available.
The Two Rate Options
Two rate options are available for the 2% deposit home loan, allowing you to choose the balance between upfront cost and ongoing rate that best suits your financial position:
- Option A, lower ongoing rate: a slightly higher upfront rate reduction fee in exchange for a lower ongoing variable rate. This option suits buyers who have more cash available upfront and want to minimise their long-term interest costs.
- Option B, lower upfront fee: a lower upfront rate reduction fee in exchange for a slightly higher ongoing variable rate. This option suits buyers who want to preserve cash at settlement and are comfortable with a marginally higher rate.
The exact difference between the two options varies by purchase price and LVR. Your broker will present both options with specific numbers for your scenario so you can make an informed choice.
The Upfront Rate Reduction Fee
In place of Lenders Mortgage Insurance (LMI), the 2% deposit home loan charges an upfront rate reduction fee. This fee is capitalised into the loan (added to your loan balance), so you do not need to pay it out of pocket. Key facts about this fee:
- It varies by purchase price and LVR. Higher purchase prices and higher LVRs result in a higher fee.
- It is designed to be lower than the equivalent LMI premium you would pay on a standard high-LVR loan.
- It is a one-off cost, not an ongoing charge.
- Two options are available (see above), giving you flexibility over the upfront vs ongoing cost trade-off.
Fee Schedule
| Fee | Amount | When Payable |
|---|---|---|
| Application fee | $0 | N/A |
| Settlement fee | $395 | At settlement |
| Valuation fee | $395 | At valuation |
| Monthly fee | $0 | N/A |
| Annual fee | $0 | N/A |
| Discharge fee | $795 | At discharge |
| Mortgage registration (x2) | Government set | At settlement |
| Upfront rate reduction fee | Varies by price/LVR | Capitalised at settlement |
Government fees and charges (including stamp duty and mortgage registration) are payable by the borrower. Because the loan is structured as two parts (primary and secondary), two mortgage registration fees apply instead of one. This is a consequence of the split structure that eliminates LMI.
Worked Example: 2% Deposit vs Capitalised LMI
This example compares the total cost of entry for a $900,000 owner-occupied purchase using a 2% deposit loan versus a standard 95% LVR loan with capitalised LMI.
| Cost Component | 2% Deposit (98% LVR) | 95% LVR + Capitalised LMI |
|---|---|---|
| Cash deposit required | $18,000 | $45,000 |
| LMI premium | $0 | ~$28,000 (capitalised) |
| Upfront rate reduction fee | Capitalised (lower than LMI) | N/A |
| Loan amount | ~$882,000 + fee | ~$883,000 (loan + LMI) |
| Settlement fee | $395 | Varies |
| Valuation fee | $395 | Varies |
| Mortgage registrations | 2 x government fee | 1 x government fee |
| Rate (OO, as at 8 May 2026) | 6.39% p.a. (comp. 6.42%) | Varies by lender |
| Cash saving at purchase | $27,000 more in your pocket with 2% deposit | |
Figures are indicative. LMI estimates approximate and vary by lender/insurer. Comparison rate 6.42% p.a. based on a $150,000 loan over 25 years. As at 8 May 2026.
The 2% deposit structure typically results in a lower total amount financed compared to a standard high-LVR loan with capitalised LMI, because the upfront rate reduction fee is set lower than the equivalent LMI premium. You also need $27,000 less cash at settlement on a $900,000 purchase, which can be directed to stamp duty, moving costs, or kept as a buffer.
What About Government Charges?
In addition to the loan fees above, you will need to budget for government charges including:
- Stamp duty (transfer duty): varies by state/territory and purchase price. First home buyers may qualify for concessions or exemptions. Check your state's revenue office or visit ASIC MoneySmart for calculators.
- Mortgage registration fees: two are payable due to the dual loan structure (one for the primary loan, one for the secondary loan). Fees are set by the state land titles office.
- Transfer registration fee: payable to the state land titles office at settlement.
Back to 2% Deposit Home Loans hub. See also: owner occupier loans, investment property loans, the step-by-step process.
General Advice Warning: The information on this page is general in nature and does not take into account your personal objectives, financial situation, or needs. Seek independent financial, legal, and taxation advice before making any decision. All loans subject to approval. Published by Lend & Loan (ACL 511092), which provides credit assistance services only and does not lend money directly. For more information, visit ASIC MoneySmart.
Last updated: 8 May 2026.
