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LVR means loan-to-value ratio – it’s your loan amount expressed as a percentage of the value of your property
LVR plays a big role in determining the cost of your home loan
Get to know your LVR & where you stand before applying
Our dedicated Home Loan team is here to help. Updated 13 Feb 2026.
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Borrow up to $2m with competitive variable rates from 5.54% p.a. (comparison rate^ 5.58% p.a.). Enjoy flexible payment options, zero monthly or ongoing fees, unlimited free redraws and up to 30 year terms. 90% Max LVR applies. Visit site for T&Cs and to check eligibility.
LVR or loan-to-value ratio is your loan amount represented as a percentage of your property's value. LVR is calculated by dividing the loan amount by the property value, then multiplying that by 100.
Here's a simple LVR calculation for a property valued at $600,000 and a buyer with a $150,000 deposit, resulting in a $450,000 home loan amount.
$450,000 (loan amount) ÷ $600,000 (property value) = 0.75 x 100 = 75% LVR
The larger your deposit when applying for a home loan, the lower the LVR will be as a result.
LVR is lenders' most important metric when assessing your home loan application and home loan interest rate, according to Debbie Hays, Money.com.au's home loan expert. It’s one of the big indicators of your risk as a borrower.
Generally, lenders consider loans with a loan-to-value ratio over 80% of the property value to be a particularly high risk. That's why if your LVR exceeds 80%, you generally have to pay lender's mortgage insurance (LMI) – a one-off insurance premium that covers the lender against the risk of default.
There are several government schemes that help eligible first home buyers with low deposits avoid the need to pay for LMI.
LVR affects your borrowing power and interest rate. That's why when you see a rate advertised, you'll often see 'based on an LVR of X' in the fine print. The lower your LVR, the lower the risk to the lender and the lower your rate may be. See this example from ING.
Keep in mind each lender has its own method of determining a property’s value, and sometimes one bank's valuation will be higher (or lower) than the next.
Debbie Hays, Senior Mortgage Broker
“This could be the difference between getting a good rate and a great rate. Get your mortgage broker to ‘shop the valuation’ across three to five lenders to see who gives you the best valuation; this will get you the best LVR and the best deal on your home loan.”
Debbie Hays, Senior Mortgage Broker
A loan-to-value ratio (LVR) of 80% or less is generally seen as ‘good’, but the most competitive rates are often reserved for borrowers with an LVR of 60% or less. For lenders, a lower LVR means reduced risk; for borrowers, it usually means better interest rates, lower home loan fees and more favourable loan terms.
Homeowners refinancing an existing loan typically have lower LVRs and are more likely to qualify for the best rates. However, first home buyers with a large deposit relative to their loan amount may also be able to access competitive deals.
If you’re purchasing a property, upfront costs such as conveyancing and stamp duty are not included in the loan amount for LVR calculations. These are out-of-pocket expenses that will need to be budgeted for leading up to settlement.
We analysed more than 20,000 Money.com.au home loan customers and found the average LVR on a mortgage in Australia is 60.6%.
For those buying a home, the average LVR is higher at 79.6%, while those refinancing an existing loan have an average LVR of 49.7%.
Your LVR is based on the lender’s valuation of your property – whether you’re buying or looking to refinance the loan on your current home.
If the property's purchase price differs from the bank's valuation, the lender and its mortgage insurer will often use the lower of the two when determining the LVR.
One typical example is off-the-plan purchases, where the property's value may have either increased or decreased between when the contract of sale was signed and settlement day (when ownership is officially transferred). If the property’s value increases, this works in your favour, resulting in a better LMI assessment (and a lower rate). But the opposite could be true.
Another equally common situation that can create variations in the purchase price and bank valuation is when a borrower is looking at buying a property from a family member at a discounted price. This scenario is commonly referred to as a ‘favourable purchase’. In this case, lenders often calculate the LVR based on their own valuation instead of the purchase price.
Banks and other major lenders cap the LVR on home loans to mitigate their risk. The maximum LVR most lenders will accept is 90-95% of the property’s value, while some may not accept a loan-to-value ratio over 80%.
If your lender determines you’re a high-risk borrower (e.g. you are applying for a low doc home loan), it may limit your maximum LVR to reduce the risk of you defaulting on your home loan repayments.
Here’s a common example of when a lender may impose an LVR limit:
This revolves mostly around the difficulty to re-sell or evaluate the property’s long-term value. This may include:
The property you’re buying has an unconventional design, layout or size. For example, it might have characteristics that most buyers aren’t in the market for, such as an outhouse toilet or a questionable feature wall.
Restrictions are imposed on the property that prevent it from being sold in a standard manner. This can include heritage-listed properties, serviced apartments and display homes.
This is usually done through a bridging loan, which allows you to buy a new home before selling your current one. Because you’re temporarily carrying more debt, lenders may impose stricter lending criteria, including tighter LVR limits.
You’ve heard the old saying, “location, location, location” – and it definitely applies here. Properties in remote or less accessible areas can be harder to sell, which may impact their marketability and appeal to lenders.
The property and similar properties in the area have significant difficulty selling or have not been shown to have sold easily in the previous 6-12 months.
The easier it is to assess the current and future value of a property, and its eligibility to be sold, the less likely a lender is to impose LVR restrictions.
Use our calculator to see your LVR in two simple steps.
 | ING Green Upgrade Loan **Available to existing ING home loan customers only**Interest rate 3.74% per annum (fixed 5 years) Comparison rate 4.97% per annum Split Loan Max LVR 80% | Compare now on Money.com.au or visit site |
 | Move Bank Everyday Fixed Home LoanInterest rate 4.99% per annum (fixed 2 years) Comparison rate 5.24% per annum Redraw App Fee: $600 Max LVR 95% | Compare now on Money.com.au or visit site |
| Move Bank Everyday Fixed Home LoanInterest rate 5.04% per annum (fixed 3 years) Comparison rate 5.23% per annum Redraw App Fee: $600 Max LVR 95% | Compare now on Money.com.au or visit site |
 | Pacific Mortgage Group Owner Occupied Variable Home LoanInterest rate 5.14% per annum (variable) Comparison rate 5.14% per annum Redraw Max LVR 80% | Compare now on Money.com.au or visit site |
| Move Bank Everyday Fixed Home LoanInterest rate 5.14% per annum (fixed 1 year) Comparison rate 5.28% per annum Redraw App Fee: $600 Max LVR 95% | Compare now on Money.com.au or visit site |
If you're buying a property, there are a few strategies that may help reduce your loan-to-value ratio:
If you're refinancing, you could:
These steps can help improve your LVR and potentially unlock better rates and loan terms.
While real estate websites offer free online valuations, a lender-ordered property valuation is typically more accurate. This is because lenders usually engage independent valuers who provide a more conservative and objective assessment, unlike the broader estimate ranges found online.
That being said, there’s no harm in using a real estate valuation to give you an idea on where you stand with your current LVR.
Yes, it’s possible to purchase a home with a 98% LVR if you qualify for the Family Home Guarantee – a government scheme that supports single parents with as little as a 2% deposit and no lender’s mortgage insurance. However, not all lenders offer loans at this high LVR, so your options may be limited.
Additionally, many lenders offer low deposit home loans for borrowers in the 80-95% LVR range. This may be an option if you want to get into the market sooner without having to save for a 20% deposit.
You should always seek professional help if you have a high LVR and want to explore your options.
According to the Money.com.au data, the average LVR on a home loan in Australia is around 60%. This is based on an analysis of more than 20,000 home loan inquiries over a 12-month period, including homebuyers, refinancers, investors and owner occupiers.
Megan Birot is a Finance Writer and Head of PR at Money with over a decade of industry experience. She keeps her finger on the pulse of financial trends, providing journalists and media with data, insights, and news that help Australians navigate complex topics and concepts. She's certified in Finance & Mortgage Broking and is compliant to provide general advice in Tier 1 General Insurance.
Sean Callery is the Editor of Money.com.au. He has over 15 years of international experience. He is qualified with a Certificate IV in Finance and Mortgage Broking (FNS40821) and is compliant to provide general advice in Tier 1 General Insurance (RG 146) products.
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