How to Calculate LVR for an Australian Home Loan

Short answer

Loan-to-value ratio, usually shortened to LVR, compares the home loan amount with the value a lender assigns to the property.

LVR = loan amount divided by property value, multiplied by 100

A $640,000 loan against an $800,000 property has an 80% LVR. A $720,000 loan against the same value has a 90% LVR.

Use the LMI Calculator to enter a loan amount and property value and see the estimated LVR alongside an indicative lenders mortgage insurance scenario.

Which property value should you use?

For early budgeting, buyers commonly use the purchase price. A lender may use its own valuation when it assesses the loan. If that valuation is below the contract price, the LVR can be higher than expected.

That distinction matters because an extra deposit does not always solve a valuation shortfall dollar for dollar. The lender is comparing the loan with the value it accepts as security.

This page is not a valuation and does not estimate what a bank will value a property at.

Worked example: 80% LVR

Assume:

• property value: $800,000,
• loan amount: $640,000,
• cash deposit applied to the price: $160,000.

The calculation is:

$640,000 divided by $800,000, multiplied by 100 = 80% LVR

An 80% LVR is a common reference point in Australian home lending. LMI is often charged above 80%, but lender, insurer, product, borrower and property rules vary. An online result is not a quote or approval.

Worked example: 90% LVR

Assume the property value remains $800,000 but the loan is $720,000.

$720,000 divided by $800,000, multiplied by 100 = 90% LVR

The deposit applied to the purchase price is $80,000. Buying costs such as transfer duty, legal fees and inspections are separate. If those costs are paid from the same savings balance, the buyer needs more than the headline 10% deposit.

Estimate those costs with the Property Purchase Cost Calculator, then test the repayment on the Mortgage Repayment Calculator.

Valuation shortfall example

A buyer signs a contract at $800,000 and plans to borrow $720,000. Using the price, the planned LVR is 90%.

The lender later values the property at $760,000.

The loan has not changed, but the accepted property value has. This may change the maximum loan, LMI premium, product options or cash required at settlement. Read the bank valuation shortfall guide before treating a pre-approval amount as a complete purchase budget.

Deposit and LVR table

This table assumes the loan is simply the property value minus the deposit. It excludes capitalised LMI and other costs.

A capitalised LMI premium increases the loan balance. The final LVR after capitalisation may therefore be higher than the simple deposit percentage suggests.

LVR is not borrowing power

LVR measures the loan against the security value. Borrowing power estimates whether income and expenses may support a loan under a serviceability model. They answer different questions.

A low LVR does not guarantee approval. A lender can still decline or reduce a loan because of income, expenses, debts, credit history, employment, property type or policy. A high estimated borrowing capacity also does not remove the need for an adequate deposit and purchase-cost budget.

Use the Borrowing Power Calculator separately and treat both results as indicative.

Common mistakes

1. Using the deposit percentage without checking costs. Transfer duty and other purchase costs may need to be paid from savings.
2. Assuming contract price always equals lender value. The lender may adopt a lower valuation.
3. Leaving capitalised LMI out of the final loan. Adding the premium can lift the effective LVR.
4. Treating 80% as a universal approval rule. Lender and product policies differ.
5. Confusing LVR with equity. They are related, but usable equity also depends on the lender's valuation and maximum acceptable LVR.

Source notes

• ASIC Moneysmart: loan to value ratio definition, checked 12 July 2026.
• APRA: Residential Mortgage Lending reporting standard, which reports funded residential mortgages across LVR bands. Checked 12 July 2026.

General information disclaimer

This guide provides general information and indicative calculations only. It is not financial advice, credit advice, a property valuation, a lender assessment, an LMI quote or a loan approval. Lenders may use different valuations, rounding, insurance and product rules. Check the figures with the lender or a licensed credit professional before relying on them.