Can you buy a home with a 2% deposit? How Connective Skip works
Connective Skip is a home loan launched in June 2026 that lets eligible borrowers buy with a deposit as small as 2% of the purchase price — no Lenders Mortgage Insurance, no guarantor, and no equity sharing. It's funded by non-bank lender Skip and is available only through brokers on the Connective network — including Legacy Mortgage Group, the broking arm of Legacy Financial Planning. It suits buyers who can comfortably afford repayments but haven't had time to save a 20% deposit — including first home buyers, upgraders and investors.
The hardest part of buying a home in Melbourne is rarely the repayments. It's the deposit. PropTrack's Housing Affordability Report puts the average time to save a 20% deposit at more than five and a half years — and while you're saving, prices keep moving.
In June 2026, Connective — one of Australia's largest mortgage aggregators, and the network Legacy brokers through — launched a product aimed squarely at that problem. Here's how it works, what it costs, and who it actually suits, explained plainly.
What is Connective Skip?
Connective Skip is a white-label home loan added to the Connective Lending panel in June 2026. It's funded by Skip, an Australian non-bank lender that specialises in low-deposit lending (Skip rebranded from Sucasa earlier in 2026, and holds its own Australian Credit Licence).
The headline feature: eligible borrowers can purchase with a loan-to-value ratio (LVR) of up to 98% — a deposit as small as 2% — without paying Lenders Mortgage Insurance. Connective says the structure can, in some scenarios, deliver up to 30% more purchasing power than a standard 95% loan with LMI.
The other thing that makes it unusual: you can't get it from a bank branch or a comparison site. It's available exclusively through Connective's 5,400+ member brokers — Legacy Mortgage Group, our broking arm, among them.
How can a 2% deposit work without LMI?
Normally, any loan above 80% LVR attracts Lenders Mortgage Insurance — a premium that protects the lender, not you, and typically runs to tens of thousands of dollars at high LVRs. Skip's model replaces LMI with a simpler, lower-cost upfront fee structure, and it doesn't use the other common workarounds either:
- No LMI — replaced by a lower upfront fee than a comparable LMI premium at the same LVR.
- No guarantor — your parents' home isn't on the line.
- No equity sharing — unlike some government and private schemes, the lender takes no share of your property's future growth. The upside is yours.
- Standard loan features — principal-and-interest repayments, free extra repayments and redraw, no application or ongoing fees.
- Refinance and cash-out too — existing borrowers can refinance up to 98% LVR with up to $200,000 cash-out for acceptable purposes.
- Fast, fully assessed approvals — approvals-in-principle are typically fully assessed within 1–2 business days.
What a smaller deposit looks like on a $700,000 purchase
- Traditional 20% deposit
- $140,000 — for many Melbourne buyers, five or more years of saving
- 5% deposit under the First Home Guarantee
- $35,000 — owner-occupiers only, property price caps apply
- 2% deposit with Connective Skip
- $14,000 — eligibility criteria apply
- In every case
- Add purchase costs such as stamp duty and legals — though Victorian first home buyer duty concessions may reduce these
Who is Connective Skip designed for?
The common thread is borrowers with strong income but a thin deposit — people who can clearly service a loan, but for whom the deposit is the bottleneck:
- First home buyers who sit outside the government scheme settings — for example, buying above the First Home Guarantee price caps.
- Upgraders whose equity is tied up in their current home, or who want to buy before they sell.
- Investors — unlike the government schemes, Skip lends at high LVRs for investment purchases too.
- Essential workers — for healthcare, transport and education workers, 100% of overtime and allowances can count as income.
- Eligible visa holders — flexible options for certain visa holders and their Australian or New Zealand partners.
- Buyers stuck in the savings cycle — saving hard, watching prices rise faster, and re-doing pre-approvals as they expire.
What's the catch?
There's no hidden trap, but there are real trade-offs, and an honest broker should put them in front of you before you apply:
- The rate is higher than a big-deposit loan. High-LVR lending is priced for its risk. Rates are typically above what a borrower with a 20% deposit pays — the question is whether paying more for a few years beats renting while you save.
- You're borrowing more, so repayments are bigger and you'll pay more interest over the life of the loan unless you refinance down the track.
- A small equity buffer. At 98% LVR, a dip in property values can leave you owing more than the home is worth on paper. That matters less if you plan to hold long term, but it's a genuine risk to understand.
- An upfront fee still applies — lower than a comparable LMI premium, but not zero.
- Property and location criteria apply. Lending is limited to eligible metro postcodes (capital cities and major centres like Geelong), established or new dwellings of at least 50m² — no vacant land, construction loans or certain high-density apartments — and variable principal-and-interest loans only.
- Full serviceability assessment. A 2% deposit doesn't mean easier approval. Your income, expenses and liabilities are assessed like any other loan, and lending criteria apply.
What are Connective Skip's interest rates?
As at 18 June 2026, Connective Skip variable principal-and-interest rates start from 6.39% p.a. (6.60% p.a. comparison rate*) for owner-occupiers and 6.79% p.a. (7.02% p.a. comparison rate*) for investors — the same rate bracket across the whole 85–98% LVR range. For high-LVR lending, that pricing is unusually sharp: many lenders charge well above this once you pass 90% LVR, before LMI is even added.
Rates change, and the rate you're offered depends on your circumstances — treat these as a guide and ask us for current pricing when we assess your scenario.
How does it compare with the other low-deposit pathways?
| Feature | Connective Skip | First Home Guarantee | Standard 95% loan + LMI |
|---|---|---|---|
| Minimum deposit | 2% | 5% | 5% |
| LMI payable | No — lower-cost upfront fee instead | No — government guarantee | Yes, often $15,000–$30,000+ |
| Property price caps | No scheme cap (lender criteria apply) | Yes — capped by state and region | No |
| Investors eligible | Yes | No — owner-occupiers only | Yes |
| Guarantor or equity share | No | No | No (unless used to avoid LMI) |
| Where to get it | Connective brokers only | Participating lenders | Most lenders |
None of these is universally "best". The right pathway depends on your price point, whether you're an owner-occupier or investor, your income trajectory, and how long you plan to hold the property. We've written a full explainer on how the First Home Guarantee works if you want the government-scheme side of the comparison.
How do you apply for Connective Skip?
- Talk to a Connective broker. The product isn't available directly from the lender or through banks — it can only be recommended and lodged by a broker on the Connective panel, like Legacy.
- We assess your position first. Income, expenses, savings, timeline — and importantly, whether Skip is actually your best option against the 70+ other lenders on our panel, including government scheme pathways.
- Pre-approval, then purchase. If it stacks up, we lodge the application, manage the lender back-and-forth, and coordinate through to settlement.
Wondering if a 2% deposit loan stacks up for you?
Book a free chat. We'll run the numbers against every pathway you're eligible for — government schemes, standard lending and Connective Skip — and tell you straight which one fits.
Book a free chatFrequently asked questions
What interest rate do you pay on a Connective Skip loan?
As at 18 June 2026, variable principal-and-interest rates start from 6.39% p.a. (6.60% p.a. comparison rate*) for owner-occupiers and 6.79% p.a. (7.02% p.a. comparison rate*) for investors, across the 85–98% LVR range. Rates change and depend on your circumstances — ask us for current pricing.
What is the minimum deposit for a Connective Skip home loan?
As little as 2% of the purchase price, plus purchase costs such as stamp duty and legal fees. Lending at up to 98% LVR is subject to Skip's eligibility and credit criteria.
Do I have to pay Lenders Mortgage Insurance on a 2% deposit loan?
No. Skip doesn't charge LMI. It applies a lower-cost upfront fee instead, which is designed to be cheaper than a comparable LMI premium at the same loan-to-value ratio.
Can property investors use Connective Skip?
Yes. Unlike the government's First Home Guarantee, which is limited to owner-occupiers, Connective Skip is also available for investment purchases at high LVRs, subject to lending criteria.
Can I get Connective Skip directly from a bank or online?
No. Connective Skip is a white-label product available exclusively through mortgage brokers on the Connective network. Legacy Mortgage Group — the broking arm of Legacy Financial Planning — brokers through Connective, so we can assess and lodge it — alongside comparing it against 70+ other lenders. Get in touch to talk it through.
How is Connective Skip different from the 5% deposit First Home Guarantee?
The First Home Guarantee is a government-backed scheme for owner-occupiers with property price caps by state. Connective Skip is private lending: it allows a smaller deposit (2% vs 5%), has no scheme price caps, and is open to investors — but it's priced as high-LVR lending, so the rate is typically higher than a scheme loan at a major bank. Which one wins depends on your circumstances.
Is buying with a 2% deposit a good idea?
It depends. You'll borrow more, pay a higher rate, and start with a very small equity buffer — but you may also stop paying rent years earlier and buy at today's prices rather than tomorrow's. The honest answer comes from modelling both paths against your income and goals, which is exactly what a broker should do before recommending anything.