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LVR Calculator

Use our LVR calculator to check your loan-to-value ratio in Australia. Understand borrowing risk, costs, and home loan eligibility easily.

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What is LVR for Home Loans?

The Loan to Value Ratio (LVR) is an important lending measure that compares the size of your home loan to the value of the property you are buying. It’s a number expressed as a percentage that lenders use to assess the risk of the loan.

Simply put, your LVR tells you how much of the property you are borrowing, versus how much you actually own from the outset.

A high LVR means you are borrowing more against the value of the property. A low LVR means you have more equity and less risk from the lender’s perspective.

LVR is an important measure for lenders because it directly measures their level of exposure to a fall in property prices or to a borrower defaulting.

Why LVR Is Important To Lenders

Lenders use LVR as a measure of risk. The logic is simple:

Lower LVR = less risk to the bank
Higher LVR = more risk for the bank

Lenders usually require Lenders Mortgage Insurance (LMI) if the LVR is over 80%. Not to protect the borrower, but to protect the lender if default happens.

If the property is sold for less than the loan amount, LMI helps cover the shortfall if the borrower defaults.

LVR Sweet Spots – Small Changes Can Make a Big Difference

Small adjustments to your LVR can have a big impact on your interest rate and borrowing costs.

Example of “price jumps” of LVR

Lenders often have hidden pricing tiers, for instance:

80.00% → higher rate tier
85.00% → higher rate
89.00% vs 89.10% → different price tier

Mortgage brokers are often looking for these small thresholds to reduce costs.

Example in the real world

Senior mortgage broker Vivienne Than says lenders might change rates for small changes in LVR:

A borrower at 89.1% LVR could end up with a higher interest rate than someone at 89%, even if the difference is only 0.1%.

This is because lenders do not give every percentage equal weight, but instead group borrowers into risk bands.

LVR Calculator

Check Your Loan-to-Value Ratio Before You Apply

An LVR (Loan-to-Value Ratio) calculator helps you understand how much of your property value is being financed by a loan compared to your deposit. FS Loan helps you assess your LVR so you can better understand lender requirements and improve your approval chances.

Example: How Small LVR Changes Save Money

Even a slight improvement in LVR can reduce both:

Interest rates
LMI costs

LMI difference example

Property Value	LVR	LMI Cost
$1,000,000	90.10%	$32,408
$1,000,000	88.99%	$22,725

A difference of just over 1% LVR can save nearly $10,000 in LMI fees

This is why brokers often recommend increasing deposit slightly or adjusting loan structure.

How Is LVR Calculated?

LVR is calculated using a simple formula:

LVR = (Loan Amount ÷ Property Value) × 100

This formula converts your loan into a percentage of the property’s value.

Example Calculation

If you borrow $900,000 to purchase a $1,000,000 property:

LVR = (900,000 ÷ 1,000,000) × 100 = 90%

So your LVR is 90%, meaning you are borrowing most of the property value and contributing a smaller deposit.

How LVR Influences Home Loan Application

LVR is more than just a number. It affects:

Chance of approval
Interest rates
Other costs such as LMI
Lending capacity

Interest Rate Impact of LVR

Lenders use tiered pricing systems based on LVR bands.

LVR Range	Deposit Size	Interest Rate Impact
Below 60%	40%+ deposit	Lowest available rates, strong negotiating position with lenders
60%–80%	20%–40% deposit	Standard rates, no LMI required
80%–90%	10%–20% deposit	Rate loading of 0.1%–0.3% p.a. above standard + LMI required
90%–95%	5%–10% deposit	Highest rate loading + high LMI cost + stricter lender criteria

Even a small increase in LVR can push a borrower into a higher pricing tier. For example, borrowing at 81% LVR instead of 80% triggers both LMI and a rate loading – costing thousands more over the life of the loan.

Rate Loadings Above 80% LVR

It’s not just LMI you need to factor in. Many lenders also apply an interest rate loading on loans above 80% LVR – typically an additional 0.1% to 0.3% per annum on top of their standard rate.

This means a high-LVR loan can cost more in two ways: a large upfront LMI premium, plus a higher ongoing interest rate. A broker can help you find lenders with the most competitive rates at your LVR.

Loan Approvals and LVR

LVR also decides whether your loan is approved or not.

Rules of Key Lenders:

LVR ≤ 80% most lenders prefer
LVR improves with a better income and credit profile
Additional security or guarantees may be required for very high LVR

If your LVR is too high, lenders may:

Cut your borrowing amount
Require a bigger deposit
Outright refusal of application

What is a good LVR for a home loan?

Ideal LVR is ≤ 80%.

This range is seen as safe for lenders and cost-effective for borrowers.

Why 80% is important:

No LMI costs
More favorable interest rates
Higher chance of approval
Overall financial risk is reduced

High LVR or Low LVR – Which is better?

Low LVR (Best Option)

A low LVR (≤80%) means you own more of the property straight away.

Pros:

Lower interest rates
No LMI needed
Better equity position
Easier loan approval

Summary:
Lower LVR means lower cost and lower risk.

Higher Risk Option (High LVR)

A high LVR (>80%) means you are borrowing most of the property value.

Disadvantages:

Higher interest rates
LMI fees apply
Stricter lending conditions
Fewer loan features in some cases

High LVR Risks

High LVR loans are a risk to both lender and borrower.

Risks for lenders:

LMI cost involved
Higher interest rates applied to offset risk
Restricted features (e.g. offset or redraw may not apply)
Risk of negative equity if property value falls

Key risk scenario:

If property prices fall, borrowers with high LVRs could owe more than their property is worth — this is known as negative equity.

4 ways to reduce your LVR

Lower LVR results in better loan performance and lower costs.

1. Boost Your Starting Deposit

The most direct way to reduce your LVR is to save a larger deposit.

Aim for 20%+ deposit
LMI reduction or removal
Better interest rate offers

2. Select a Guarantor Loan

Family members can use property as security.

May allow up to 100% loan
In some cases no LMI required
Reduces upfront cash needed

3. Government Schemes

The government offers support for first-home buyers.

Lower deposit requirements
Possible LMI waivers
Eligibility criteria apply

4. Professional LMI Waivers

Certain professions may be eligible for LMI waivers.

Typical examples:

Doctors
Lawyers
Accountants

These borrowers are often viewed as lower risk due to stable income profiles.

Final Thought

Loan-to-Value Ratio (LVR) is one of the most important factors in home lending. It can impact everything from your approval chances to your interest rate and additional costs like LMI.

A lower LVR typically means: