LVR Calculator

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What is your LVR?

The Loan to Valuation Ratio (LVR) of your loan is the percentage of the property value that you’re borrowing.

Lenders use the LVR to assess your home loan application, as it indicates the likelihood that they will lose money in the event that you can’t repay your loan.

An LVR of 100% is a very high risk, whereas an LVR of 80% is considered as safe by most lenders. The majority of lenders will require you to pay Lenders Mortgage Insurance (LMI) if you borrow over 80% LVR.

Looking for ways to borrow at a high LVR?

Check out 5 Ways To Borrow At A High LVR to do just that!


Example of how to calculate LVR

If you borrow $900,000 against a property valued at $1,000,000 then what would your LVR be?

Loan amount: $900,000

Property value: $1,000,000

LVR calculation: 900,000 / 1,000,000 = 90% LVR

This would be considered high risk LVR by the lender, so they would require Lenders Mortgage Insurance for your loan.


Example LVR calculation with a low valuation

If you buy a property for $1,100,000 however the lender values it at $1,000,000 and you want to borrow $800,000, then what is the LVR?

Loan amount: $800,000

Property value: $1,000,000 (The lower of the purchase price or bank valuation)

LVR calculation: 800,000 / 1,000,000 = 80% LVR

This would be considered low risk LVR by the lender, so they would not require Lenders Mortgage Insurance for your loan.

However if you have a cooling off period you may want to withdraw from the sale or renegotiate the purchase price. Please be aware that the lender is not legally required to tell you that the valuation has come in low.

Example LVR calculation for an off the plan purchase

Sometimes the value of an off the plan property can increase between the time when you sign the contract and when the settlement occurs. If over 12 months has passed then some lenders will ignore the purchase price and rely on the valuation.

If you buy a property for $1,000,000 however the lender values it at $1,200,000 and you want to borrow $900,000, then what is the LVR?

Loan amount: $900,000

Property value: $1,200,000 (purchase price is ignored)

LVR calculation: 900,000 / 1,200,000 = 75% LVR

This would be considered low risk LVR by the lender, so they would not require Lenders Mortgage Insurance for your loan.

In this example if you wanted to you could increase your loan size and put in less of a deposit.

Example LVR calculation for a purchase from your family

What if you are buying a property from your family for less than the market value?

This is a common way for parents to help their adult children to get into the property market. Some lenders still require you to have a deposit and others do not. In our industry this is known as a ‘favourable sale’. The other common methods parents help are with a guarantor loan or a gifted deposit.

If you buy a property for $500,000 however the lender values it at $600,000 and you want to borrow 100% of the purchase price, then what is the LVR?

Loan amount: $500,000

Property value: $600,000 (purchase price is ignored)

LVR calculation: 500,000 / 600,000 = 83.33% LVR

This would be considered medium risk LVR by the lender, so they would require Lenders Mortgage Insurance for your loan.

In this situation you are really close to an 80% LVR so there are some options that may get you a better deal. This is where a good mortgage broker can help.

You could try to get a bank valuation from another lender, reduce your loan to $480,000 so you are at 80% LVR and avoid LMI, get an 85% no LMI home loan or just pay the LMI premium.

Example LVR calculation for a construction loan

What if you want to buy land for $500,000 and then build a house for $500,000? Let’s say that the bank completes a ‘tenative on completion valuation’ and values your property at $1,000,000 when it is complete. What is your LVR if you borrow $450,000 for the land and $450,000 to build?

Land purchase LVR calculation

Loan amount: $450,000

Property value: $500,000

LVR calculation: 450,000 / 500,000 = 90% LVR

Construction LVR calculation

Loan amount: $900,000 (this includes the land loan)

Property value: $1,000,000 (the value when complete)

LVR calculation: 900,000 / 1,000,000 = 90% LVR

This would be considered high risk LVR by the lender, so they would require Lenders Mortgage Insurance for your loan.

Please be aware that for a construction loan the lender will consider the property value to be the lower of the total cost of the project (land value plus cost of construction) or the tenative on completion valuation.

If you are overcapitalising or if you are paying your builder too much then you may get a low bank valuation.

Example LVR calculation with capitalised LMI

If your loan is over 80% LVR then the lender will likely require you to pay a LMI premium. In many cases you can add this onto your loan in what is known as LMI capitilisation.

If you borrow $900,000 against a property valued at $1,000,000 and you add the LMI premium to your loan then what would your LVR be? Let’s assume an LMI premium of 3% of the loan amount.

Base loan amount: $900,000

Final loan amount: $927,000 (includes an LMI premium of $27,000)

Property value: $1,000,000

Base LVR calculation: 900,000 / 1,000,000 = 90% LVR

Final LVR calculation: 927,000 / 1,000,000 = 92.70% LVR

Some lenders have limits on the capitalisation of an LMI premium. For example most lenders don’t allow you to add LMI onto the loan if you are borrowing 95% LVR.


How does my LVR affect my loan?

The policy used by the lender will change depending on the LVR of your loan.

If you’re borrowing 80% LVR or less then the lender may make exceptions to their normal lending policy. This is considered to be a low LVR home loan.

However, if you’re borrowing above 80% LVR, you’ll find that lenders are less willing to make exceptions, ask for more documents and assess your loan in a conservative way. This is considered to be a high LVR mortgage.

You can read the pages below for more information on applying for a high LVR home loan:

You can learn more on our LVR page.

  • Monica Rutner

    Hi Home Loan Experts, I wanted to know how the lenders calculate LVR in case of guarantors. I’ve seen a property worth 490k in Ballarat and my parents are giving guarantee for me and their house is worth 250k and it is fully owned by them. What will be the LVR here?

  • Hi Monica,

    If you want to buy a property for 490,000, the lenders will lend you 80% i.e. 392,000 against your property as a security and another 20-25% i.e. 98,000 against both your parent’s property and your property. The exact structure of this varies between lenders.

    Your LVR would be 100% to 105% on your property alone. The overall LVR considering both properties would be 66% approximately. Some lenders would not accept this as it is a large guarantee as a percentage of your parents home.

  • L Coulter

    Hmm… I had actually estimated a 90% LVR but some price changes and also a dip in my savings due to a personal situation makes it so that I need to borrow at 95-98%. Do you have a calculator that I can use to find out if I can qualify for a no deposit home loan instead?

  • Hey there,

    Yes, you can use the no deposit loan calculator to find out if you qualify for a no deposit loan. We also narrow down your options as to what alternative you can go for a no deposit home loan, e.g. gifted deposit, guarantor, etc. Here’s a link to the calculator:
    https://www.homeloanexperts.com.au/no-deposit-home-loans/no-deposit-loan-calculator/

  • McLaurin

    I got an LVR of over 90% and so LMI will likely be a lot. I’m a professional entertainer so can I avoid LMI even though my income is a bit inconsistent when you look at it monthly?

  • Helo McLaurin,

    As a general rule, banks will only consider professionals that have an accredited manager, agent or accountant. You’ll also have to be typically earning at least $150k a year. You can only avoid LMI if you’re borrowing at 90% though. You can check out the home loan for entertainment professionals page to learn more:
    https://www.homeloanexperts.com.au/unusual-employment-loans/home-loan-entertainment-professionals/

  • geo

    Do I need to pay LMI if I borrow 80% on a low doc loan?

  • Hi, banks are more conservative with low doc loans as they are more risky than standard, full doc loans. So if you’re getting a low doc loan then you’re required to pay LMI if you’re borrowing more than 60% LVR.

  • gosling

    Hi, is there a 97% home loan too without guarantor?

  • Hi gosling,

    There are only a few lenders that will approve 97% home loans, which is essentially a 95% home loan with the cost of Lenders Mortgage Insurance (LMI) added on top of your mortgage, which can save you thousands in upfront costs. You will need to build a strong case to qualify for this. Please check out the 97% home loans page to learn more:
    https://www.homeloanexperts.com.au/low-deposit-home-loans/97-home-loans/

  • Mel

    Looking at buying a cat4 rural residential property. Have 20% deposit but have been told i need 30% as a minimum. Can you help with a 20% deposit?

  • Troy Kayser

    If the buying price of a house + land package 8s 300k is that also considered a valuation ?

  • Bizzy

    Hi Team, how much can I borrow for a bridging loan? I owe $400k on my existing property which I’m planning to sell and buy a property around $600k.

  • Hi Bizzy,
    There are a few lenders that offer this type of bridging loans and they don’t require you to pay Lenders Mortgage Insurance (LMI), which is a one off premium charged when borrowing over 80% of the property value.
    In your situation, you may also borrow up to 80% of the peak debt. Peak debt is the purchase price of the new property plus your current mortgage.
    Please note that bridging loans can be full of pitfalls, like not being able to sell the existing property, overestimation of the sale price and more. So, please refer to this page https://www.homeloanexperts.com.au/home-loan-types/bridging-loans/ about bridging loans for more information. Alternatively, you can call us on 1300 889 743 to find out how you can apply for a bridging loan.