LVR in One Paragraph
Loan-to-value ratio is your loan as a percentage of the property's value. Borrow $540,000 against a $600,000 home and your LVR is 90%, meaning a 10% deposit. The Reserve Bank does not cap individual loans — it caps the share of each bank's new lending that can sit at high LVR, which is why low-deposit lending is competitive rather than unavailable.
The Current Settings (2026)
| Rule | Setting | Effective from |
|---|---|---|
| Owner-occupier lending above 80% LVR | 25% of new lending permitted (up from 20%) | 1 December 2025 |
| Investor lending above 70% LVR | 10% of new lending permitted (up from 5%) | 1 December 2025 |
| New builds | Exempt from LVR restrictions | Ongoing |
| Owner-occupier lending above 6× gross income (DTI) | 20% of new lending permitted | 1 July 2024 |
| Investor lending above 7× gross income (DTI) | 20% of new lending permitted | 1 July 2024 |
The Reserve Bank maintained these settings at its annual review in August 2026, so they are the rules to plan against for the remainder of the year.
Why the LVR Change Matters to You
Raising the above-80% allowance from 20% to 25% is a 25% increase in the pool of low-deposit lending each bank can write. In practice:
- A 10% deposit is genuinely more achievable than it was between 2021 and 2025, when the allowance sat at 10% and then 20%.
- It is still rationed. Banks choose who gets the headroom, favouring stable income, clean credit history and demonstrated savings.
- Low-equity pricing may apply. A loan above 80% LVR sometimes carries a higher rate or a low-equity fee — ask for both the standard and low-deposit pricing before deciding.
- New builds sit outside the whole system, which is why they are the most reliable route to a 10% deposit.
What Pre-Approval Actually Is
A pre-approval is a conditional offer from a lender to fund a purchase up to a stated amount, subject to the property passing a valuation and your circumstances not changing. It is not a guarantee, and it is not the same as a full approval.
Banks assess at least five things:
- Income and its stability — employment type matters as much as the number.
- Existing debt, including credit card and overdraft limits counted in full whether used or not.
- Serviceability at a test rate above the advertised rate, often assuming a shorter remaining term than you requested.
- DTI — debt relative to gross income, with the 6× line the practical ceiling for most owner-occupiers.
- Genuine savings — a consistent pattern is worth more than a single large deposit of unclear origin.
Getting a Pre-Approval That Holds
- Approach a broker as well as a bank. Brokers compare lenders at no cost to you in most cases, and lender appetites for low-deposit lending differ sharply.
- Reduce credit card limits before applying. Cutting a $10,000 limit to $2,000 can change an approval by tens of thousands of dollars.
- Assemble documents first: three months of payslips, bank statements, last two years of IR3 or income summaries if self-employed, and proof of deposit source.
- Ask what the pre-approval excludes. Common exclusions are apartments, leasehold properties, cross-leases, and homes in certain flood or coastal hazard zones.
- Note the expiry and the conditions. Pre-approvals typically run for 60 to 90 days, and some are conditional on a registered valuation.
At auction, a pre-approval is the entry ticket: the winning bid is unconditional with no cooling-off period and usually a 10% deposit payable immediately. Bidding without finance properly confirmed is the most expensive mistake in the market.
Pre-Approval vs Full Approval
The gap between the two is all in the property and the paperwork. Your pre-approval converts to a full approval when the lender has the signed sale and purchase agreement, a satisfactory registered valuation, confirmation of insurance, and evidence that your circumstances from the pre-approval still hold. Tell your lender immediately if anything changes — a new car loan, a job change, or an unpaid default on your credit file can void the offer, and the vendor can then cancel the agreement and keep the deposit.
Frequently Asked Questions
What are the LVR rules in 2026?
Since 1 December 2025 the Reserve Bank allows banks to write 25% of new owner-occupier lending to borrowers with an LVR above 80% (up from 20%), and 10% of investor lending above 70% LVR (up from 5%). New builds remain exempt from LVR restrictions entirely. The settings were maintained at the August 2026 review.
Can I get a mortgage with a 10% deposit?
Yes, subject to the bank's appetite. Because the above-80% LVR allowance rose to 25% of new lending, there is more low-deposit lending available than at any point since 2021. Banks allocate that headroom to the strongest applications, so stable income, clean credit and demonstrated savings all matter.
How long does a pre-approval last?
Pre-approvals typically run for 60 to 90 days, and many carry conditions such as a satisfactory registered valuation. You must also tell your lender if your circumstances change — a new loan, a job change or a credit default can void the offer before settlement.
Do the LVR rules limit how much I can borrow?
LVR rules limit how many high-LVR loans banks can write, not your individual borrowing. Your actual ceiling comes from the debt-to-income limit — roughly six times gross income for owner-occupiers — plus the lender's own serviceability test at a rate above the advertised one.