LVR, or loan-to-value ratio, is the loan divided by the property’s value, shown as a percentage. Borrow $640,000 on an $800,000 home and the LVR is 80%. Lenders use it to price the loan and to decide whether you pay lenders mortgage insurance, which usually applies above 80%. The value they use is their own valuation or the price, whichever is lower.

LVR at a glance
LVR Deposit or equity What it usually means
60% or less 40% or more Access to a lender’s sharpest pricing tiers
60.01 to 80% 20 to 40% No mortgage insurance; standard pricing
80.01 to 90% 10 to 20% Mortgage insurance usually applies, unless a waiver or scheme fits
90.01 to 95% 5 to 10% Higher premium; fewer lenders; the 5% Deposit Scheme removes it for eligible first home buyers
Above 95% Under 5% Usually only with a family guarantee or the 2% single parent option

How do you calculate LVR?

Divide the loan by the value and multiply by 100. A few worked figures:

LVR worked out
Loan Value LVR
$480,000 $600,000 80%
$702,000 $780,000 90%
$950,000 $1,000,000 95%
$520,000 on a refinance $1,000,000 valuation 52%

If mortgage insurance is added to the loan, it counts too: a 90% loan with the premium capitalised ends up slightly above 90%, which some lenders cap. The LVR calculator works out your ratio for a purchase or a refinance, and the LMI calculator the premium.

Which value does the lender use?

For a purchase, the lower of the contract price and the lender’s valuation. If you pay $820,000 and the valuer says $790,000, the lender works from $790,000, so the same deposit gives a higher LVR. For a refinance there is no price, so the valuation decides. The guide to a low bank valuation explains what to do when it comes in short.

Why does 80% matter so much?

Because at 80% or below most lenders do not charge mortgage insurance. Above it, the premium starts and rises steeply: published lender examples put it at about 2.5% to 3.7% of the loan at 90%, and about 4.8% at 95%. On a $702,000 loan at 90%, that is roughly $17,000 to $26,000. See how much LMI costs for more examples, and no LMI home loans for the professions and schemes that avoid it.

Does LVR change your interest rate?

Often. Many lenders price in LVR bands, with lower rates at 70%, 60% or 50% and below. Paying the loan down or a rising valuation can move you into a cheaper band, which is a reason to ask your lender for a repricing or to compare a refinance once you cross a threshold. See asking for a better rate.

How does LVR work with more than one property?

When two properties secure one loan, the lender looks at the combined LVR across both. That can help you borrow without a cash deposit, but it ties the properties together; cross-collateralisation explains the trade-off. Most borrowers are better off with separate loans and a separate LVR for each property.

Questions people ask

What does 80% LVR mean?

Your loan is 80 per cent of the property’s value, so you have a 20 per cent deposit or equity. It is the point at or below which most lenders charge no lenders mortgage insurance, and it often unlocks a lower rate.

What is a good LVR?

80% or below avoids mortgage insurance with most lenders; 60% or below often unlocks better pricing.

Is LVR based on the purchase price or the valuation?

The lower of the two for a purchase, and the valuation for a refinance.

Can I borrow at 95% LVR?

Yes, with mortgage insurance at some lenders, or with no mortgage insurance through the 5% Deposit Scheme if you are an eligible first home buyer. See the 5% Deposit Scheme guide.

Charles Touma works out your LVR on the lender’s likely valuation, not just the price, and checks which pricing band and insurance threshold you fall into. A free 30-minute call covers your deposit and the best structure. General information only, not credit advice; scheme rules and lender policies change, and eligibility is confirmed when you apply.

Sources: Moneysmart, lenders mortgage insurance; ANZ, LMI waiver for legal professionals (August 2024, example premium); Westpac, saving a deposit (LMI example), checked 20 October 2026.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.