LVR Calculator: The Worked Example Most Calculator Pages Skip

Most LVR calculator pages hand you a widget and a one-line definition, then leave you to work out what the number actually means for your deposit. Here’s the full picture: the formula, a real worked example tying your deposit to your LMI cost, and the exception most first home buyers don’t know applies to them.

Quick Answer: LVR Calculator

LVR stands for loan-to-value ratio. Use this LVR calculator formula: (loan amount ÷ property value) x 100. On a $600,000 loan for a $750,000 property, that’s ($600,000 ÷ $750,000) x 100 = 80% LVR. Staying at or under 80% LVR generally avoids Lenders Mortgage Insurance (LMI). Go above 80%, and LMI usually applies, with the cost rising fast as your deposit shrinks. Eligible first home buyers can sidestep this entirely through the government’s First Home Guarantee scheme, covered below.

LVR Calculator Formula and a Full Worked Example

• The formula is simple: loan amount divided by property value, times 100. So, a $600,000 loan against a $750,000 property gives you 80% LVR, meaning a $150,000 deposit.
• A smaller deposit means a higher LVR. Put down $75,000 (10%) on that same $750,000 property, and your loan is $675,000. Your LVR is 90%.
• At 90% LVR, LMI typically costs around $13,000. So, that’s the real dollar cost of a 10% deposit versus a 20% one on a $750,000 property.
• Drop to a 5% deposit and LMI climbs sharply. At roughly 95% LVR, LMI can exceed $31,600 on the same property, a genuinely large jump from the 90% figure.

Why 80% LVR Is the Number Everyone Talks About

• 80% LVR represents a standard 20% deposit. This has long been the threshold most lenders use to decide whether LMI applies.
• Staying under 80% avoids LMI entirely. So, that upfront insurance cost simply doesn’t apply if your deposit clears the 20% mark.
• It also tends to unlock better interest rates. Lenders often price loans at or under 80% LVR more favourably than higher-LVR loans, on top of avoiding LMI.
• 90% to 95% LVR is still workable, just costlier. So, plenty of buyers borrow above 80% and pay LMI rather than delay buying while saving a bigger deposit.

The First Home Guarantee: A Genuine Exception

• Eligible first home buyers can buy with just a 5% deposit and no LMI. This is a real, separate pathway from the standard 80% LVR rule, not just a smaller deposit option.
• The government guarantees part of the loan instead. So, the scheme guarantees up to 15% of the property value, which is what lets you skip LMI despite a high LVR.
• This only applies if you meet the eligibility criteria. Eligibility depends on factors like being a genuine first home buyer and the property meeting price caps for your area.
• Don’t confuse this with simply having a small deposit. So, a 5% deposit without qualifying for the scheme still means paying LMI at a high LVR, same as anyone else.

What Changes at Very High LVR

• Lenders often apply extra scrutiny above 90% LVR. So, expect closer checks on your income, expenses, and credit history the higher your LVR climbs.
• Some lenders cap how high they’ll go. Not every lender offers 95% LVR loans, so your options can narrow as your deposit shrinks.
• LMI providers also review the loan, not just the lender. This adds another layer of assessment beyond your lender’s own approval process.
• A recent regulatory change affects some high-LVR lending too. So, APRA’s debt-to-income cap now limits how many high-debt loans banks can approve overall, which can indirectly affect high-LVR approvals.

LVR in Low Doc and Equity Lending

• Low doc home loans use a lower LVR cap. Most low doc lenders cap borrowing at 60% to 85% of the property’s value, well below the standard 80% most full-doc borrowers aim for.
• Home equity works off the same LVR formula, in reverse. Usable equity is generally calculated as 80% of your property’s value minus your existing loan balance.
• Understanding LVR helps with both borrowing and accessing equity. So, the same percentage that determines your deposit requirement also caps how much equity you can later access.
• A lower LVR gives you more flexibility on both fronts. Paying down your loan faster lowers your LVR, which can reduce future LMI costs and increase usable equity.

For related reading, see our guides to CommSec Brokerage Fees: Standard Rates and the CDIA Difference Most Pages Skip and ANZ Fixed Term Deposit Rates: The Full Table and the Notice Period Most Pages Skip.

FAQ: LVR Calculator

What is LVR and how do I calculate it?
Loan-to-value ratio, calculated as (loan amount ÷ property value) x 100. A $600,000 loan on a $750,000 property gives an LVR of 80%.

What LVR avoids Lenders Mortgage Insurance?
Generally 80% or under. Above that, LMI typically applies, with costs rising sharply as your deposit shrinks toward 5%.

Can I get a home loan with a 5% deposit and no LMI?
Yes, if you qualify for the First Home Guarantee, which lets eligible first home buyers borrow at up to 95% LVR without paying LMI.

How much does LMI cost at 90% LVR?
Around $13,000 on a $750,000 property, rising to over $31,600 at roughly 95% LVR on the same property.

What LVR do low doc home loans require?
Most low doc lenders cap borrowing at 60% to 85% LVR, generally lower than the 80% threshold standard full-doc borrowers aim for.

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