Key Takeaways
- Self employed applicants can get home loans in Australia through low doc home loans.
- These loans can be easier to get because they don’t require financials, making it possible for small business owners and self employed people to finance their own homes.
- Most of the time, these loans have an LVR cap of 80%, which means you need to put down 20% plus other fees.
- Low doc loans with an LVR of more than 80% are rare, have higher rates, and usually have a risk fee instead of lender's mortgage insurance (LMI).
- Low doc loans usually have higher interest rates than full doc loans.
- Consulting a mortgage broker like Dark Horse Financial can help you navigate lender options and find the best terms.
In Australia, low doc home loans have become an essential option for self employed individuals whose income is difficult to verify via standard documentation. These loans provide flexibility and a chance for many self employed individuals to secure a home loan. It’s important to note that low doc loans can come with loan to value ratio (LVR) limits.
This article will cover what LVR limits apply to low doc home loans in Australia and whether Lenders Mortgage Insurance (LMI) applies.
What is a Low Doc Home Loan?
A low documentation (low doc) home loan is designed for borrowers who cannot provide full traditional income evidence like group certificates, PAYG payslips or tax returns. Instead, you may use alternative income verification methods such as:
- BAS (Business Activity Statements)
- Accountant letter (if available)
Low doc loans offer a chance for self-employed individuals to secure a home loan. To offset risk, lenders often charge higher rates, and LVR limits are rarely above 80% LVR.
Understanding Loan to Value Ratio (LVR)
Loan to Value Ratio (LVR) expresses how much of a property’s value is financed by a lender. It is calculated as:
LVR = (Loan Amount ÷ Property Value) × 100%
For example, if you are borrowing $800,000 to buy a $1,000,000 home, your LVR is 80%.
Why LVR Matters
- LVR shows how much of the property’s value is covered by the loan, which helps both lenders and borrowers understand how much equity is in the deal.
- Borrowers will know how much deposit or equity they need to put down up front if they know the LVR requirement.
- Business owners and self-employed borrowers can get loans without having to provide as much paperwork as they would for a traditional full doc loan if they have the right LVR.
LVR Limits on Low Doc Home Loans in Australia
On low doc loans, most Australian lenders set the LVR cap at 80%. This means that people who borrow money can get up to 80% of the value of a property, and they can put down the other 20% as a deposit or equity. Keeping the LVR at this level makes sure that the level of leverage is balanced.
Can I Get a 90% LVR Low Doc Home Loan?
Yes; however, they are rare. Traditional lenders usually stop at 80% LVR for low doc. For low doc loans going up to 90%, rates can be higher, and some lenders charge a risk fee.
Is there LMI Required on Low Doc Loans Over 80%?
LMI is typically not charged on low doc loans. For loans exceeding 80%, some lenders may charge a risk fee in the place of LMI. LMI usually applies to full doc loans with LVRs over 80%.
How Much Deposit is Needed for a Low Doc Mortgage?
From the 80% LVR limit, this implies you must provide a minimum 20% deposit plus cover upfront costs like stamp duty, legal fees, inspections, and lender fees.
Typical Low Doc Deposit Scenario
- Property price: $1,000,000
- 80% LVR limit → Borrow up to: $800,000
- Minimum 20% deposit = $200,000
- Additional upfront costs: Stamp duty typically adds another 3% to 5% of the property value (i.e. $30,000–$50,000)
So, to purchase a $1 million property with a low doc home loan, you’ll likely need at least $230,000 to $250,000 in savings or equity. This includes both your deposit and transaction costs.
How Does LVR Affect Approval on Self‑Employed Loans?
- The LVR is the highest percentage of the property’s value that a lender is willing to lend you, which directly affects how much you can borrow.
- If you have a lower LVR, you’ll have to put down more money up front. If you have a higher LVR, you’ll have to put down a smaller sum, but you might have to pay risk fees.
- If you are self employed and want to borrow funds, staying within the 80% LVR cap shows lenders that you have a lot of equity in the property, which can make it easier to get approved.
- LVR is just one of the tools that lenders use to look at applications. It helps make sure that self employed Australians can get loans while keeping their borrowing manageable.
Important Considerations for Low Doc Loans
- LVR Limits: Low doc loans come with 80% LVR limits, but on rare occasions, some lenders offer higher LVRs. Talk to our team to learn more.
- Interest Rates: Rates for low doc loans are slightly higher than full doc loans, but they provide self employed individuals a path to home ownership.
- Policy changes: Lender risk appetite shifts with economic conditions. What’s available today may change in a month.
- Bank vs non‑bank: Non bank lenders may be more flexible than banks but may come with higher costs.
Frequently Asked Questions
What’s the LVR cap on low doc mortgages?
Mainstream lenders typically cap at 80% LVR. Some non banks may stretch to 85-90%, but this remains rare and costlier.
Why do low doc loans require larger deposits?
Because insures don’t offer LMI on low doc loans. Larger deposits serve as a way for lenders to protect themselves.
Which lenders offer high-LVR low doc loans?
Most lenders in Australia, from banks to non bank lenders, have an 80% cap on LVR for low doc loans. If you wish to pay less deposit, you will have to apply for a full doc loan or seek non bank lenders that can offer higher LVRs, though they can be rare.
Are LVR policies different for trusts using low doc loans?
Yes. Trust owned properties require additional documentation and are treated as higher risk. LVR caps may be even lower, sometimes limited to 75–80%, depending on the trust type.
Quick Recap
For Australians seeking flexibility but limited in standard income documentation (particularly the self‑employed or small business owners) low doc home loans can be a viable path to property ownership.
If you are seeking more than an 80% LVR on a low doc loan, your best option is to consult a broker specialising in low doc finance. They can clarify which lenders currently offer higher LVR solutions and talk to you about fees, interest differences, and other factors affecting your eligibility.
Disclaimer: Loans and their accompanying benefits are available only to those who qualify for them and have been approved. Though we put a lot of care into writing this article, the information presented within is general and doesn’t consider your unique situation. It is not meant to serve as a substitute for professional advice, and you should not rely on it solely for any major financial decisions. You should always consult with a professional when you’re dealing with finance, tax, and accounting matters.
Secure a Low Doc Home Loan with Dark Horse Financial
We’re experts in low doc finance, helping self employed individuals and business owners find the right financing for their dream homes. Reach out today to learn more about how we can help.
