How do you calculate LVR?

Divide the loan amount by the value of the property and express it as a percentage. A $640,000 loan on an $800,000 property is an LVR of 80%. Lenders use the lower of the purchase price and their own valuation, so a valuation under the contract price raises the LVR.

What LVR do you need to avoid LMI?

At or below 80%. Above that, lenders mortgage insurance is generally payable as a one-off premium that rises steeply with LVR and protects the lender rather than the borrower. A guarantor or an eligible place under the Australian Government Home Guarantee Scheme are the other routes to avoid it.

Lower is cheaper. At or below 80% removes lenders mortgage insurance, and several lenders price sharper rate tiers at 70% and 60%, so crossing a tier can change the rate offered as well as the insurance. Above 95% sits outside most lenders' standard policy.

Does LVR change after settlement?

Yes. LVR moves as the loan balance falls and as the property value changes, so it is recalculated whenever a lender revalues, most often at refinance. Reaching 80% on a revaluation is what allows some borrowers to stop paying a higher-LVR rate.

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LVR calculator

Work out your loan to value ratio from a property value and either the loan amount or the deposit. LVR decides whether lenders mortgage insurance applies and which rate tier you fall into.

Property value$

The price you are paying, or the lender's valuation.

Start from

Loan amountDeposit

Loan amount$

Deposit implied: $160,000

Loan to value ratio

80.0%

80% or less, so no lenders mortgage insurance is payable

Deposit

$160,000

20.0% of the property value

Lenders mortgage insurance

Not payable

LVR is at or below 80%.

To reach 80% LVR

Already there

No further deposit needed to avoid LMI.

How LVR is calculated

LVR is the loan amount divided by the value of the property, written as a percentage. On a $800,000 property with a $640,000 loan that is 80.0%. Lenders use the lower of the purchase price and their own valuation, so a valuation below the contract price raises your LVR even though nothing else changed.

The 80% mark matters most: at or below it, lenders mortgage insurance is not payable. Above it, the premium is a one-off cost that rises steeply with LVR, and it protects the lender rather than the borrower. Some lenders also price rate tiers at 60%, 70% and 80%, so crossing a tier can change the rate offered as well as the insurance.

Next: estimate the premium with the LMI calculator, check what you can borrow with the borrowing power calculator, or read what LVR means for the background.

Want a real number, not a ballpark?

These figures are estimates. A 30-min broker consult will run your specific scenario against the actual lender policies, no fees, no obligation.

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Important: This calculator provides an estimate only and does not constitute credit advice. Actual rates, repayments, fees and approval are subject to lender policy and your individual circumstances. Comparison rates are based on a $150,000 loan over 25 years on a secured basis, see footer for the full disclaimer.

What LVR means for your rate

Loan to value ratio is the share of the property you are borrowing. It sets two things at once: whether lenders mortgage insurance is payable, and which rate tier a lender puts you in. Many lenders publish separate rates at 60%, 70%, 80% and above 80%, so the same borrower can be quoted materially different rates depending on which side of a tier the loan lands.

LVR and lenders mortgage insurance

At or below 80% LVR, no insurance is payable. Above it, the premium is a one-off cost that climbs quickly, and it insures the lender against loss, not the borrower. The LMI calculator estimates the premium for a given loan and LVR, and the LVR guide covers how lenders treat valuations, guarantors and the deposit schemes that can remove the premium.

Where to go next

Once you know your LVR, compare what it buys you. The home loan comparison ranks products by comparison rate at 80% LVR, the borrowing power calculator works backwards from income, and the repayment calculator turns a loan amount into a monthly figure.

LVR definition and the role of lenders mortgage insurance: Moneysmart, loan to value ratio. Premium estimates are indicative only, because each insurer prices its own grid.