How to calculate your Loan to Value Ratio (LVR)

Rates and Fees verified correct on March 23rd, 2017

Know how much equity you have in your home

A Loan-to-Value Ratio is the size of a loan compared to the value of a property expressed as a percentage.

You can find this out by dividing the amount you'll need to borrow to purchase a property by the property's value. how to calculate your Loan to Value Ratio (LVR)If you buy a property for $500,000 and need a loan amount of $300,000 to purchase it, your LVR will be 0.60, or 60% when expressed as a percentage. Scroll down to see this equation used in a common example.

LVRs are important when it comes to getting a mortgage. Generally, the lower the LVR, the lower the risk you present to your lender. Also, the lower an LVR, the higher the chance a loan will be approved for the cheapest available rate. Generally, a loan of 80% or less is recommended, as borrowing more leads to more fees and charges and the possibility of higher interest rates.

To work out your property's value, a lender will order an independent property valuation. The loan amount is simply the amount you need to borrow to purchase the property.

Both your property value and your loan amount can rise and fall. Property values fluctuate with the market value of the property — the most prevalent direction is a rise in property value, whereas the loan amount can rise if a borrower borrows more or redraws. A loan amount reduces with principal repayments and by making additional repayments.

The size of a deposit (or existing equity when refinancing) is what determines an LVR. The larger the deposit saved compared to a property value, the lower the LVR.

Lenders and LVRs

A lender will look at the issue like this: if a client is able and willing to commit to paying a percentage of the property’s value, preferably no less than 20%, then the client in question has shown to have some good financial skills – being able to save the cash. Additionally, since the client has also invested their own money, there is a lower risk that they will default on the loan because 20% is, generally considered to be a considerable amount of money. Therefore, such applicants will find it easier to get their home loans approved all things being equal.

How to calculate your loan to value ratio

David has saved up $35,000 to use as a deposit and he wants to know the maximum price of a property he can purchase while avoiding LMI. His $35,000 deposit therefore has to represent at least 20% of the value of the property. To calculate an 80% LVR, David multiplies his deposit amount by five , which works out to be $35,000 x 5 — giving him an upper property price limit of $175,000.

David can’t spend more than $175,000 on buying a property without the need for LMI. With a property price of this value, his home loan would be $140,000 ($175,000-$35,000).

Property Value$175 000100%
Deposit$35 00020%
Loan Amount$140 00080%

Just because your LVR is within acceptable bounds, there's no guarantee that your application will be approved, as there are many other variables involved including your financial position.
LVR Diagram

Use your LVR to determine your price range

Using a home loan calculator, you can calculate your maximum budget for a property based on the average maximum LVR accepted and the amount you have saved up for a deposit. While this in no way guarantees that you will be approved for all the home loans you apply for, it is a good starting point to make your life easier.

So, let’s assume that you have saved up $35,000 to use as a deposit and, as is widely known, most lenders prefer to give out home loans with an LVR of 80% or less. Thus, your $35,000 has to represent at least 20% of the value of the property. Using a home loan calculator, we see that the value of the property should not exceed $175,000 and the maximum home loan you can get is $140,000.

Of course, just because your LVR is within acceptable bounds, there's no guarantee that your application will be approved, as there are many other variables involved including your financial position.

In certain situations, you can obtain a loan with a higher LVR, but you either have to have an amazingly good financial situation and a really good reason for a lower deposit or you need to have a guarantor. With guarantor home loans, you can sometimes obtain as much as 100% of the property’s value but remember that you are risking someone else’s home in the process, so make absolutely certain you are in a financial position to make the repayments on time like clockwork. You can use an online home loan calculator to help you work out how much your repayments will be to ensure you can afford it.


Maria and Luke

Maria and Luke have been married for almost three years now and have been saving for their deposit. They opened a savings account to assist them and have managed to save $25,000. If the house they are looking at is $250,000 they have 10% of the house value as deposit. This is a 90% LVR.

By borrowing 90% of the value of the property Maria and Luke will be required to take out Lenders' Mortgage Insurance (LMI). This is to protect the bank if they are unable to pay and default on the loan. Find out how they could have avoided paying LMI here.

If you are struggling to save up a deposit for your first house, you could potentially borrow up to 95% of the value. This is a high LVR home loan. You should compare the loans below if your savings are low and you are looking to get into the property market.

How does an LVR affect me?

An LVR determines:

  • The level of equity in your property (the part you own outright)
  • Whether you need LMI and a higher interest rate
  • How much more you can borrow against your property. Say, for adding stamp duty and LMI to the loan amount for instance, or to borrow to renovate.

Compare High LVR Home Loans

Rates last updated March 23rd, 2017.

Heritage Bank Discount Variable Home Loan - Special Rate Offer (Owner Occupier) New Customers Only

Advertised rate dropped to 3.79%

August 24th, 2016

ING DIRECT Orange Advantage Loan - $150,000+ (LVR > 90% Owner Occupier)

Comparative rate increases by 0.15% | Interest rate increases by 0.15%

December 12th, 2016

NAB Tailored Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier)

Comparative rate increases by 0.04% | Interest rate increases by 0.23%

January 16th, 2017

View latest updates

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Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
Greater Bank Great Rate Discount Variable with Family Pledge Home Loan - Up to 110% LVR
Discounted rate available with family pledge loans. Family pledge loans require no LMI and no deposit. NSW, Qld and ACT only.
3.89% 3.89% $0 $0 p.a. 110% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier)
Enjoy a fixed home loan with discounts on rates and other NAB products.
3.98% 4.92% $0 $395 p.a. 95% Go to site More info
3.79% 3.81% $0 $0 p.a. 95% Go to site More info
NAB Base Variable Rate Home Loan - Owner Occupier (P&I)
A competitive no frills home loan with no application fees for a limited time.
4.10% 4.14% $600 $0 p.a. 95% Go to site More info
IMB Essential Home Loan - LVR > 90% (Owner Occupier)
Enjoy a 100% offset account and no monthly fees.
4.31% 4.33% $0 $0 p.a. 95% Go to site More info
NAB Tailored Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier)
A fixed rate home loan with the ability to lock the interest rate at the time of loan approval for up to 3 months.
4.08% 5.16% $600 $8 monthly ($96 p.a.) 95% Go to site More info
ANZ Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier)
Lock in your rate for 2 years with an interest only option.
4.13% 5.10% $600 $10 monthly ($120 p.a.) 95% Enquire now
Westpac Flexi First Option Home Loan - 3 Years Introductory Special Offer (New Owner Occupier, P&I)
A limited time deal for new owner occupiers. Advertised rate includes 1.03%p.a. discount for the first two years.
3.99% 4.37% $0 $0 p.a. 95% Enquire now
St.George Fixed Rate Advantage Package -  2 Year Fixed Rate (Owner Occupier, P&I)
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cash back available for refinancers, conditions apply.
3.99% 5.04% $0 $395 p.a. 95% Enquire now
Commonwealth Bank Wealth Package Fixed Home Loan - 2 Year Fixed (Owner Occupier) P&I
A package home loan with fee free extra repayments available during the fixed term.
3.99% 4.99% $0 $395 p.a. 95% Enquire now
Beyond Bank Basic Variable Rate Loan - (Owner Occupier)
Enjoy 100% offset account with redraw facility and borrow up to 95% LVR with low monthly service fee.
4.40% 4.57% $445 $11 monthly ($132 p.a.) 95% Enquire now
ING DIRECT Orange Advantage Loan - $150,000+ (LVR > 90% Owner Occupier)
A fully featured home loan with an offset account and discounts available.
4.80% 5.01% $0 $199 p.a. 95% Enquire now
Suncorp Bank Standard Variable Rate Home Loan  - (Owner Occupier)
Enjoy a competitive interest rate, make fee free extra repayments and a redraw facility.
5.55% 5.71% $990 $10 monthly ($120 p.a.) 95% Enquire now
ANZ Breakfree Home Loan Package  - $250,000 up to $499,999 (LVR >80% Owner Occupier)
Pay no application fee with 100% offset account with redraw facility and borrow up to 95% LVR.
4.50% 4.89% $0 $395 p.a. 95% Enquire now
Bank of Melbourne Basic Home Loan - Regular Rate (Owner Occupiers, P&I)
Ideal for first home owners or anyone who wants a no-frills, basic variable rate home loan.
4.64% 4.69% $500 $0 p.a. 95% Enquire now
St.George Basic Home Loan - Promotional Rate (Owner Occupier, P&I)
A no frills loan with a competitive rate and a maximum LVR of 95%.
4.08% 4.09% $0 $0 p.a. 95% Enquire now
Westpac Rocket Repay Home Loan - Principal and Interest
The Westpac Rocket Repay Home Loan lets borrowers to own their home sooner with a 100% offset to save on interest.
5.29% 5.43% $600 $8 monthly ($96 p.a.) 95% Enquire now

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HSBC Home Value Loan - Resident Owner Occupier only

Enjoy the low variable rate with $0 ongoing fee and borrow up to 90% LVR. Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.59%p.a.
comp rate of 3.61%p.a.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)

Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.

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8 Responses to How to calculate your Loan to Value Ratio (LVR)

  1. Default Gravatar
    Wendy | October 23, 2015

    I have a block of land which is valued by the council at $23,000 but is for sale at $69,000, With a deposit of $8,000 I need a loan of $60,000, is this possible?

    • Staff
      Marc | October 26, 2015

      Hi Wendy,
      thanks for the question.

      Some lenders definitely do offer home or land loans which can be used to purchase land. The amount a lender will lend you will depend on what their third party valuer decides it’s worth, so you might want to contact a lender that you’re interested in to see if they can help you, or alternatively speak to a mortgage broker for more information.

      I hope this helps,

  2. Default Gravatar
    wendy | June 16, 2015

    I have two properties which I will cross secure against each other I need to know how much to pay the bank for the shortfall against the LVR. So property values together are $400,000 I owe $339,700 how much do I pay the bank so I don’t have to pay lenders mortgage and keep it within the LVR?

    • Staff
      Belinda | June 17, 2015

      Hi Wendy,

      Thanks for your enquiry.

      You can determine your loan to value ratio (LVR) by dividing the amount you’ll need to borrow to purchase a property by the property’s value.

      Generally, you’ll be required to pay lender’s mortgage insurance (LMI) where your LVR is 80% or greater, however this will vary depending on the lender.

      You can read more about LMI and ways to avoid paying LMI on this page.


  3. Default Gravatar
    Jordy | April 25, 2014

    What can we do if AMP have undervalued a property by $105,000 for which we have signed contracts for? It’s crazy that with a deposit of $200,000 we stand to lose a property we have had our hearts set on & financially entered into knowing finance was fully approved! Any advice would be appreciated? :-(

    • Staff
      Marc | April 28, 2014

      Hi Jordy,
      thanks for the question.

      I’d strongly recommend contacting AMP and lodging a complaint or dispute, and perhaps ask for another valuation. Alternatively, you might want to seek the services of a different lender or mortgage broker, although this will largely depend on how much time you have.

      Sorry I couldn’t be of more help,

  4. Default Gravatar
    VivC | February 5, 2014

    I have home loan with CommBank and want to borrow for investment. Will I be able to use the equity of my property as security to borrow from other banks/lenders?

    • Staff
      Marc | February 6, 2014

      Hi VivC,
      thanks for the question.

      This is referred to as a second mortgage, and can be granted on your property. Not every lender will grant a second mortgage on a property which already has one. The first lender will also have to give permission for you to have this second mortgage. You may wish to contact a mortgage broker for more information.

      I hope this helps,

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