LVR — loan-to-value ratio — is the single most important number in Australian home lending. It's the percentage of a property's value you're borrowing. Below 80% LVR, you skip LMI and access most lenders' best rate tiers. Above 80%, your costs and lender choice change quickly.
How LVR is calculated
LVR = (loan amount ÷ property value) × 100.
On an $800,000 property:
| Loan amount | LVR |
|---|---|
| $640,000 | 80% — no LMI |
| $720,000 | 90% — LMI applies |
| $760,000 | 95% — LMI applies, max LVR for most lenders |
The property value is the lower of the purchase price or the lender's independent valuation. If you negotiate a property down from $850K to $800K, your LVR is calculated on $800K — unless the valuer comes back at $780K, in which case it's calculated on $780K. This is the most common surprise at pre-approval: a low valuation lifts your LVR and either reduces your borrowing or triggers LMI.
What each LVR threshold unlocks
| LVR | What it unlocks | What it costs |
|---|---|---|
| 60% or less | Best interest rate tier from most lenders | 40% deposit |
| 70% | Second-best rate tier; some niche products require it | 30% deposit |
| 80% | No LMI; standard rate; most lenders compete here | 20% deposit |
| 80–90% | LMI required; rate may step up slightly | 10–20% deposit |
| 90–95% | LMI required at the higher premium tier; fewer lenders compete | 5–10% deposit |
| 95%+ | Only specific lenders + First Home Guarantee Scheme | Less than 5% deposit |
Some lenders price loans in LVR tiers explicitly: their advertised "best rate" applies under 70% LVR; loans at 80% LVR pay 0.1–0.3% more; loans at 90% LVR pay 0.4–0.6% more. So saving an extra 10% deposit doesn't just dodge LMI — it can also drop your interest rate, compounding the savings over the full loan term.
LVR and LMI
LMI applies on any loan above 80% LVR. Premium rates rise sharply at 85%, 90%, and 95%:
| LVR | Approx LMI premium on $500K loan |
|---|---|
| 80% | $0 |
| 81–85% | ~$4,500 |
| 85–90% | ~$12,000 |
| 90–95% | ~$19,500 |
The LMI Calculator gives precise premium figures for your loan size and LVR.
How to reduce your LVR
Three levers, in order of effectiveness:
1. Cheaper property
The most powerful lever because it lowers both the numerator (loan needed) and the denominator (property value). Buying a $750K property instead of $800K with the same $80K deposit drops you from 90% LVR to 89.3% LVR — a small step. But buying a property where the saved purchase price funds a larger deposit lowers LVR sharply.
2. More deposit
Each extra dollar of deposit lowers LVR proportionally to property value. On an $800K property:
- $80K deposit → 90% LVR
- $120K deposit → 85% LVR
- $160K deposit → 80% LVR
The jump from 90% to 80% takes an extra $80K of deposit. Worth it if the LMI saving (~$15–25K) plus the rate-tier saving (potentially $40K+ in interest) exceeds the opportunity cost of saving longer.
3. Guarantor (family equity)
A close family member uses equity in their own property to secure a portion of your loan. From the lender's perspective your effective LVR drops below 80% so no LMI is required, even if your actual deposit is small.
LVR vs other lending metrics
Three numbers all have to pass at the lender:
- LVR — loan ÷ property value (security ratio)
- DTI (debt-to-income) — total debts ÷ annual income (typically capped at 6–8× depending on lender; APRA flags above 6×)
- Serviceability — whether your income can cover repayments after living expenses and a stress-test interest rate (typically 3% above the actual rate)
A 90% LVR loan might pass on LVR but fail on serviceability if income is too low. A 70% LVR loan might pass LVR but fail DTI if you have multiple existing loans. The Borrowing Power Calculator covers serviceability in depth.
Why LVR matters for refinancing
If your property has grown in value since purchase, your LVR drops mechanically — same loan balance, higher denominator. Brokers regularly recommend refinancing once a property crosses below 80% LVR by valuation, because:
- You may qualify for a cheaper rate tier (potentially saving 0.3–0.6%)
- You can drop LMI — you can't reclaim previously paid LMI, but a new lender means no new LMI
- You may unlock equity for renovation, investment, or other purposes
A property bought five years ago for $700K with a $630K loan (90% LVR) that's now valued at $900K with a $580K balance is at 64% LVR. The owner is still paying 90%-tier interest at the original lender and could refinance to a 65% tier — often a 0.5%+ saving worth $30K+ over the remaining loan life.
What this calculator does
Inputs:
- Property price — purchase price or independent valuation, whichever is lower
- Loan amount — the principal you'll borrow
Outputs:
- Current LVR percentage — where you sit right now
- LMI status flag — whether you're above the 80% line
- Threshold table — max loan at 80%, 90%, and 95% LVR
- Deposit required at each threshold — the cash needed to reach each tier
For LMI premium estimates use the LMI Calculator. For full serviceability and borrowing capacity assessment, use the Borrowing Power Calculator. For refinancing analysis when your LVR has dropped, see the Refinance Calculator.
Frequently asked questions
What is LVR (loan-to-value ratio)?
LVR is the percentage of a property's value you're borrowing. If you borrow $640,000 on an $800,000 property, your LVR is 80%. Lenders use LVR as the primary risk metric: lower LVR generally means lower risk, lower interest rate, and no LMI. It's the single most important number in Australian home lending alongside serviceability.
How do you calculate LVR?
LVR = (loan amount ÷ property value) × 100. The property value is the lower of the purchase price or the lender's independent valuation. Example: a $560,000 loan on a $700,000 property = 80% LVR. If the bank's valuer comes back at $680,000, the same loan = 82.4% LVR — which would trigger LMI.
What's a good LVR in Australia?
80% or lower is the gold standard — you avoid LMI and access most lenders' best rate tiers. Below 70% can unlock further rate discounts at some lenders. Above 80% triggers LMI and may restrict lender choice and pricing. 95% is the practical maximum for most home loans without using a guarantor or government scheme.
What's the maximum LVR in Australia?
95% for standard home loans at most major lenders. Above 95% is rare and typically only available through the First Home Guarantee Scheme (which lets eligible FHBs effectively borrow at 100% LVR with no LMI) or specific guarantor structures. Some niche lenders go to 97% with very tight criteria, but the practical ceiling for most borrowers is 95%.
Does LVR affect my interest rate?
Yes, at most lenders. Many banks publish 'tiered pricing' — loans under 60–70% LVR get the best advertised rate; 80% LVR pays 0.1–0.3% more; 90%+ LVR can pay 0.4–0.6% more. Over a 30-year loan, a 0.3% rate difference on $600,000 is roughly $40,000 in extra interest. Saving more deposit doesn't just dodge LMI — it also unlocks cheaper money.
How is LVR different from DTI?
LVR is loan ÷ property value (a security ratio). DTI (debt-to-income) is total debt ÷ annual income (an income ratio). They're independent risk checks — your loan must pass both. APRA expects banks to flag loans above 6× DTI; LVR doesn't have a hard regulatory cap, but each lender sets its own (typically 95%). A loan can pass on LVR but fail on DTI if you have multiple existing debts, and vice versa.
How do I lower my LVR?
Three levers: (1) more deposit — every extra dollar lowers LVR proportionally to property value, (2) cheaper property — lowers the loan needed AND the denominator, making it the most powerful lever, (3) family guarantor — a relative's property equity secures the portion above 80%, lowering your effective LVR from the lender's perspective without changing your actual cash deposit.
Why does LVR matter for refinancing?
Property growth lowers your LVR mechanically — same loan balance, higher property value. If your LVR has dropped below 80% since purchase you can refinance to a new lender without paying new LMI, and often unlock a cheaper rate tier. Many brokers track client LVRs and recommend a refinance review once a client crosses each key threshold (90%, 80%, 70%).
Can I refinance to get rid of LMI?
You can refinance to a new lender without paying new LMI, but only if your LVR has dropped below 80% — usually via property growth, principal repayments, or a combination. The original LMI you paid is generally non-refundable after the first year or two. So the goal is to push the LVR below 80% (by capital growth or paying down the loan) and then refinance for better rates.
What's a comfortable LVR for a first home buyer?
In Australia's current market, most FHBs without family help target 90% LVR (10% deposit + LMI). 80% LVR is the ideal but typically out of reach without family help, a guarantor, or several years of disciplined saving. The First Home Guarantee Scheme effectively brings the deposit requirement to 5% without LMI — the best option for eligible FHBs and worth applying for early because places are limited each financial year.
How does LVR change after settlement?
Your LVR drops over time as you make principal repayments (loan balance shrinks) and the property value changes (denominator changes). On a P&I loan over 30 years, even minimum repayments steadily reduce LVR. Property growth — if it happens — accelerates the drop. Stagnant or falling property values can keep LVR elevated. Refinance reviews are typically triggered when LVR drops below 80%, 70%, or 60%.
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Last updated: 16 May 2026