Can you get a 100% home loan?

Australian lenders won't lend you 100% of a property's value any more. It's just too risky. You'll need at least a 5% deposit to get a home loan, if not a full 20% deposit. There are only 2 ways to get something close to a true 100% home loan: Have a guarantor, or be creative with how you build your deposit.

What actually is a 100% home loan?

Every home loan has a maximum loan-to-value ratio (LVR). This is the amount you can borrow in relation to your property's value and your deposit size. In plainer terms, a maximum LVR just means a minimum deposit. It's how much you need to have saved as a deposit to get the loan. Many home loans have LVRs of 80%, meaning you need at least a 20% deposit. You can borrow 80% of your property's value. Here's an example: - You buy a property with a value of $800,000. - You have a 20% deposit of $160,000. - You borrow the remaining 80%, or $640,000. So a 100% home loan means the maximum LVR would be 100%. But these loans don't really exist any more

Can I get a home loan with 95% or 100% LVR?

While they aren't as common as loans with 80% to 90% maximum insured LVRs, you can find loans with 95% LVRs in Australia. These loans are available with just a 5% deposit, meaning you can jump into the property market with a much smaller deposit saved. Your LMI premiums will be quite high – likely tens of thousands of dollars – unless you qualify for an LMI waiver or you're a first homebuyer accessing the First Home Guarantee.

Why won't lenders give you a 100% home loan any more?

Having a deposit makes you a safer borrower in the eyes of lenders. It demonstrates your ability to save money, and suggests you are financially responsible enough to meet your ongoing mortgage repayments. There was a time when lenders might give you all the money you need to buy a house without a deposit. In a time when property prices are rising fast, some lenders felt it was safe enough to lend 100%. If you couldn't repay the loan, the lender could simply sell your property and recover the debt. But after the 2008 Global Financial Crisis, Australian banks tightened their lending criteria. The American financial collapse proved that if something goes wrong in the economy, property prices can fall at the same time borrowers can't afford to make repayments. Suddenly those homes aren't worth as much, and lenders can't recover their losses. By tightening their lending criteria, Australian banks and lenders are now better able to lend to people who can realistically afford to repay their loans. By limiting loan-to-value ratios below 100%, lenders can have more confidence that borrowers have some equity in their properties, making them better able to recover debts if the borrowers default on their mortgages.