In short: Your loan to value ratio (LVR) is the loan amount divided by the property's value, expressed as a percentage. The rule of thumb: 80% or below means no lenders mortgage insurance and the sharpest rates; above 80% LMI usually applies; above 90% your lender choices narrow. A $650,000 home with a $65,000 deposit is a 90% LVR.
- Deposit / equity$130,000
- LMI likely?No (80% or under)
- Loan at 80% LVR$520,000
- Loan at 90% LVR$585,000
Lenders use their valuation, not the purchase price, if it is lower.
Loan-to-value ratio: 80.0%
That is a general estimate on standard assumptions. Every lender applies its own expense benchmarks, income shading and policy, so the real figure moves from lender to lender. Gorakh spent years as a senior credit officer deciding exactly these questions. Send him the numbers above and he will tell you what is realistic and which lenders fit — at no cost to you for home loans.
- A former senior credit officer reads itGorakh assessed loan applications on the lender side before he became a broker.
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How this calculator works
LVR = loan amount ÷ property value × 100. The detail is in what goes into each side.
Property value
Lenders use the lower of the purchase price and their own valuation. Pay $650,000 at auction in Craigieburn and the valuer says $630,000, and the LVR is calculated on $630,000. On a refinance the valuation alone sets the figure.
Loan amount
This includes anything capitalised into the loan, most commonly the LMI premium. A 90% loan with LMI added can become a 92% loan, so lenders cap the total including LMI.
The calculator also shows the deposit needed to reach 80% LVR, and whether the First Home Guarantee (5% deposit, no LMI, Melbourne price cap $950,000) could let you skip LMI at a higher LVR.
How to use the result
Read the result in bands rather than as a single number.
| LVR band | What it usually means |
|---|---|
| 60% or below | Lowest rates, widest lender choice |
| 60% to 80% | Standard pricing, no LMI |
| 80% to 90% | LMI applies; rate loading at some lenders |
| 90% to 95% | LMI is substantial; 5% genuine savings typically required |
| Above 95% | Rare outside guarantor and government scheme loans |
If you land just above a band, work out how much cash would move you under it. Sitting at 81% can cost thousands in LMI that a little extra deposit would avoid. On a refinance, a higher valuation from another lender does the same job; see our equity calculator.
Worked example
A Kalkallo couple buys a $650,000 house with $65,000 saved, paying duty and costs from other savings. For illustration, the rate is 6.00% p.a. over 30 years.
| Scenario | Deposit | Loan | LVR | LMI applies? | Monthly repayment |
|---|---|---|---|---|---|
| 10% deposit | $65,000 | $585,000 | 90% | Yes, unless eligible for First Home Guarantee | $3,507 |
| 5% deposit under First Home Guarantee | $32,500 | $617,500 | 95% | No (government guarantee) | $3,702 |
| 20% deposit | $130,000 | $520,000 | 80% | No | $3,118 |
At 90% LVR the couple must budget for an LMI premium, typically five figures on a loan this size; our LMI calculator estimates it. As first home buyers, the First Home Guarantee would remove LMI with only a 5% deposit, and at $650,000 they would also sit inside Victoria's sliding first-home-buyer duty concession ($600,001 to $750,000).
What this calculator doesn't include
- The lender's actual valuation, which can land above or below the price you paid.
- LMI premium amounts, which depend on insurer, loan size and LVR band.
- Stamp duty, legal fees and other upfront costs, covered by our upfront costs calculator.
- Lender-specific LVR caps for certain postcodes, high-density apartments, small units or vacant land, sometimes as low as 60%.
- Guarantor security, which lowers the effective LVR by adding a family member's property.
Tips to improve the outcome
- Push the deposit to 20% if you can; our deposit savings calculator shows how long it will take.
- Check First Home Guarantee eligibility before paying LMI; the 5% deposit guide explains the rules.
- Consider a guarantor home loan if parents have equity; it can take a 95% loan to an effective 80%.
- Buy below the top of your range to limit valuation risk.
- On a refinance, get valuations from more than one lender; they can differ by tens of thousands.
- Money in an offset account does not reduce LVR; extra repayments before refinancing do.
Frequently asked questions
What is a good LVR for a home loan?
An LVR of 80% or below is the benchmark: no lenders mortgage insurance, access to almost every lender and the best rate tiers. Under 60% often unlocks a further discount. Above 80% is workable, especially with a government guarantee, but costs more and needs a stronger application.
How is LVR calculated?
Divide the loan amount by the property value and multiply by 100. On a $700,000 property with a $560,000 loan the LVR is 80%. Lenders use the lower of contract price and valuation and include any capitalised LMI in the loan, so the LVR on your approval can be higher than your own figure.
Can I get a home loan with 95% LVR?
Yes, but options are narrower. Some lenders go to 95% including LMI with a strong credit history and 5% genuine savings held for three months. Eligible first home buyers can borrow 95% under the First Home Guarantee without LMI. Our low deposit home loans page covers the paths.
Does LVR affect my interest rate?
Yes. Most lenders price in LVR tiers, typically at 60%, 70%, 80% and 90%, with each step up adding to the rate. A falling LVR through repayments or capital growth is a strong reason to review your loan; our refinance calculator shows the potential saving.
What LVR do I need to avoid LMI?
Generally 80% or below, meaning a 20% deposit plus costs. Exceptions include the First Home Guarantee, guarantor loans, and professional packages for doctors, lawyers and accountants that waive LMI to 90% or higher. Our guide to understanding LVR and LMI covers each path.
Talk to GNT Finance
If your LVR sits just above a threshold, a small change in deposit, lender or structure can save a great deal. Gorakh Timilsina and the team can map your options across our lender panel, at no cost to you for our home-loan service in most cases.
Book a free consultation or call 0426 403 703.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.