Your loan to value ratio, also referred to as LVR, is one of the most important numbers in your home loan. It determines whether you pay Lenders Mortgage Insurance, which rate tiers you qualify for, how much equity you can access, and what options are available to you when you want to refinance or purchase again.
Use the calculator above to find your LVR instantly, understand what it means for your borrowing position, and see exactly how much you need to repay to reach key thresholds. The guide below explains how LVR works, why it matters, and how a broker uses it to structure the right loan for your situation.
Calculate your LVR, see whether LMI applies, check your usable equity, and understand what your current ratio means for your next property move
Enter the property value and your loan amount to calculate your LVR and see whether LMI applies.
Enter your property's current value and outstanding loan balance to see your current LVR, total equity, and how much usable equity is available.
See how much extra you need to pay off your loan to reach a target LVR — useful for planning a refinance, removing LMI, or building towards 80%.
Stanford Financial helps homeowners access equity for investment purchases, renovations, and debt consolidation across 50 plus lenders. We identify the right structure, compare lenders, and manage the full application at no cost to you.
Book a free equity assessment →LVR stands for Loan to Value Ratio. It is the amount you are borrowing expressed as a percentage of the property’s value. A $520,000 loan on a $650,000 property has an LVR of 80%.
LVR = (Loan Amount ÷ Property Value) × 100
LVR is used by lenders to assess the risk of a loan. A lower LVR means you have more equity in the property relative to the debt, which represents less risk for the lender. A higher LVR means the lender is exposed to more of the property’s value and has less buffer if the property needs to be sold in a default scenario.
LVR applies at both the point of purchase — where it is determined by your deposit relative to the purchase price and throughout the life of the loan as your balance reduces and the property value changes.
The LVR formula is straightforward:
Example 1 — Purchase: $520,000 loan on a $650,000 property = $520,000 ÷ $650,000 × 100 = 80% LVR
Example 2 — Existing property: $380,000 outstanding loan on a property now worth $700,000 = $380,000 ÷ $700,000 × 100 = 54.3% LVR
The calculator above performs this calculation automatically for both scenarios. It also shows how far you are from key LVR thresholds and how much equity you have available to access.
Different LVR levels trigger different lender responses. The following table summarises what each LVR range typically means in the Australian mortgage market:
| LVR Range | Rating | What It Means |
| Below 60% | Excellent | No LMI. Best rate tiers with most lenders. Strong equity buffer. |
| 60% to 70% | Very Good | No LMI. Competitive rates. Significant equity available to access. |
| 70% to 80% | Good | No LMI. Standard rates. Approaching the usable equity threshold. |
| 80% to 90% | Caution | LMI required. Higher rates. Limited equity access. Most buyers in this range. |
| 90% to 95% | High | LMI required. Restricted lender panel. First Home Guarantee may apply. |
| Above 95% | Very High | Very few standard lenders. Specialist or guarantor arrangement likely required. |
The most significant threshold in the Australian market is 80%. Above 80% LVR, lenders require Lenders Mortgage Insurance on standard residential loans. Below 80%, LMI is not payable and the full range of lender products and competitive rate tiers becomes available. This is why most home loan strategies are built around reaching or maintaining 80% LVR.
Lenders Mortgage Insurance is a premium paid by the borrower that protects the lender against loss if the borrower defaults and the property sale does not cover the outstanding loan. It is triggered whenever a loan exceeds 80% LVR on a standard residential loan.
LMI is not a fixed cost. It increases with both the loan amount and the LVR. The higher your LVR, the higher the LMI premium as a percentage of the loan. On a $600,000 loan at 90% LVR the LMI premium is typically between $15,000 and $24,000. At 95% LVR on the same loan amount the premium is typically between $25,000 and $37,000.
LMI can almost always be capitalised (added to the loan rather than paid upfront) but this increases the loan balance and the total interest paid over the life of the loan.
Several pathways allow borrowers to proceed with less than a 20% deposit without paying LMI:
Stanford Financial specialises in LMI waiver products for eligible professionals and has deep expertise in DHOAS entitlements for defence personnel. A broker can confirm whether you qualify for an LMI waiver before you commit to a deposit amount.
Equity is the difference between your property’s current value and your outstanding loan balance. Equity increases as you pay down the loan and as the property value grows over time. LVR and equity are directly related: a 60% LVR means you have 40% equity in the property.
Total equity is simply the property value minus the loan balance. Usable equity is the portion of that equity a lender will allow you to access while keeping your LVR at or below 80%.
Usable Equity = (Property Value × 0.80) − Outstanding Loan Balance
On a property worth $800,000 with a $480,000 loan, total equity is $320,000. Usable equity is ($800,000 × 0.80) − $480,000 = $640,000 − $480,000 = $160,000.
The $160,000 in usable equity could be accessed as an equity loan or line of credit, used as a deposit on an investment property, or drawn for renovations or other purposes which is subject to the lender’s approval and your ability to service the additional debt.
Property value growth directly reduces your effective LVR without you making any additional repayments. A property purchased for $600,000 with an $480,000 loan starts at 80% LVR with zero usable equity. If the property grows to $750,000 while you repay the loan to $460,000, your new LVR is 61.3% and your usable equity is ($750,000 × 0.80) − $460,000 = $140,000.
This is why many investors deliberately purchase in high growth areas even at the cost of lower rental yield — the equity build through capital growth funds the next purchase rather than requiring additional savings.
Most lenders price their loans in LVR tiers, with lower LVR borrowers receiving lower rates. The rate differential between the highest and lowest LVR tiers can be 0.2% to 0.5% per year, which on a $600,000 loan represents $1,200 to $3,000 per year in additional interest.
Common LVR rate tiers used by Australian lenders:
The rate tier you land in at settlement is fixed by your starting LVR. However, as you pay down the loan and the property grows in value, you may become eligible to refinance at a lower LVR tier and access a better rate. This is one of the primary reasons to conduct a regular home loan health check, not just to compare lenders, but to check whether your improving LVR qualifies you for lower pricing from your current lender or a competitor.
Reducing your LVR over time increases your equity, removes LMI obligations on refinancing, opens up lower rate tiers, and builds the usable equity needed for further property purchases. There are four main ways to improve LVR:
Every extra repayment reduces your loan balance which directly reduces your LVR. An extra $500 per month on a $500,000 loan at 6.5% will cut approximately 7 years off a 30 year term and reduce the loan balance by around $55,000 more than minimum repayments after five years. Use the LVR Target tab in the calculator above to see exactly how long extra repayments will take to reach your target LVR.
As your property increases in value, your LVR falls even without making any additional repayments. This is a passive improvement that occurs in growing markets but cannot be relied upon in flat or declining markets. In South East Queensland’s growth corridor including Springfield, Ipswich, and the Gold Coast, strong capital growth has materially reduced LVRs for many borrowers over recent years.
Tax returns, bonuses, inheritance, or proceeds from the sale of other assets applied to the loan balance create an immediate LVR reduction. Even a $20,000 lump sum on a $550,000 loan reduces LVR by 3.6 percentage points on a $550,000 property, which may be enough to cross a rate tier or eliminate an LMI requirement on refinancing.
If your LVR has improved since you took out your loan, either through repayments or property growth, refinancing allows you to access a lower rate tier that reflects your current LVR rather than the LVR at origination. Some lenders reprice existing loans for loyal customers when LVR improves significantly, but many do not. A broker can identify whether refinancing at your new LVR would yield a material rate improvement.
LVR stands for Loan to Value Ratio. It is the loan amount expressed as a percentage of the property value. An 80% LVR means you are borrowing 80% of the property’s value and providing the remaining 20% as a deposit or equity. LVR determines whether LMI applies, which rate tiers you qualify for, and how much equity you can access.
Divide your loan amount by the property value and multiply by 100. For example: $520,000 loan ÷ $650,000 property value × 100 = 80% LVR. The Buying a Property tab in the calculator above does this automatically and shows how close you are to key LVR thresholds.
80% LVR or below is considered the target for most borrowers because it eliminates the requirement for Lenders Mortgage Insurance and provides access to the full range of lender products and competitive rates. Below 60% LVR is considered excellent and typically qualifies for the best rate tiers across most lenders. Above 80% is workable but carries LMI costs.
Most standard lenders will lend up to 95% LVR on owner-occupied properties with LMI. The First Home Guarantee allows eligible first home buyers to borrow at 95% LVR without paying LMI through a government guarantee. Above 95% LVR requires a guarantor arrangement or specialist lending and is not available from most mainstream lenders.
LMI is triggered when LVR exceeds 80% on a standard residential loan. The premium increases as LVR rises. At 85% LVR LMI is lower than at 90%, which is lower than at 95%. Reaching or staying below 80% LVR eliminates LMI entirely. On refinancing, if your LVR has reduced below 80% since the original purchase, no LMI is payable on the new loan regardless of whether LMI was paid at the time of purchase.
Usable equity is the amount of equity a lender will allow you to access while keeping your LVR at or below 80%. It is calculated as: (Property Value × 0.80) minus Outstanding Loan Balance. On an $800,000 property with a $480,000 loan, usable equity is $160,000. Use the Existing Property tab in the calculator above to see your usable equity figure.
It is more difficult but not impossible. Some lenders will allow equity access at LVRs above 80% but LMI will apply on the additional borrowing and the product range is more limited. Some specialist lenders have specific equity release products at higher LVRs. A broker can identify whether any lender will allow equity access at your current LVR and what the cost and structure would be.
Your LVR is the starting point for every conversation about home loans, refinancing, and investment property. A broker uses it to identify which lenders and products you qualify for, whether you can avoid LMI, and how to structure your current or next loan to build equity most efficiently.
Call 0483 980 002 or book your free LVR assessment online. We typically respond within one business day.
