What LVR means for your home loan
3 min read · reviewed 2 Nov 2026 · live figures as at 2 Nov 2026
LVR, or loan-to-value ratio, is the size of your loan as a percentage of your property's value. It decides which rates you can get and whether you pay lenders mortgage insurance.
How to work it out
LVR = loan ÷ property value × 100.
| Property value | Deposit | Loan | LVR |
|---|---|---|---|
| $600,000 | $120,000 | $480,000 | 80% |
| $600,000 | $60,000 | $540,000 | 90% |
| $600,000 | $30,000 | $570,000 | 95% |
The value is what the lender's valuation says, which may differ from the price you pay or your own estimate. Costs such as stamp duty and fees are separate, and LMI added to the loan raises the loan amount.
Why 80% matters
Moneysmart says that with less than 20% equity you may pay lenders mortgage insurance. LMI is a one-off premium. It protects the lender if you default, not you, and it is usually paid by the borrower. The cost depends on the lender, the loan amount and your LVR, so ask for a quote from each lender rather than relying on a rule of thumb. Some lenders let you add it to the loan, which means you pay interest on it.
When you refinance, Moneysmart notes that LMI can raise the cost of switching enough to outweigh the savings from a lower rate, and that you can ask for a partial refund of LMI on the loan you are leaving. See the refinancing checklist.
First home buyers may avoid LMI through a government scheme. See first home buyer schemes.
LVR and rates
Lenders price risk. Many advertise their lowest rates only for borrowers under a certain LVR, often 60%, 70% or 80%. In RateSonar's data, the lowest advertised standard owner-occupier variable rate is 5.69% (Aaa Financial Corporation Portfolio Loan, for borrowers borrowing up to 90% of the property value), as at 2 Nov 2026. The middle rate is 6.74%. A rate with an LVR limit only applies if your loan fits inside it.
The RBA's table F6 reports average rates on new owner-occupier loans by LVR at commitment. For August 2026 (published 8 October 2026, checked 2 November 2026):
| New owner-occupier loans, August 2026 | Average rate |
|---|---|
| LVR under 81% | 6.2% |
| LVR 81% or more | 6.3% |
These are averages across all lenders at one decimal place. Your own gap will depend on the lender, the product and your profile.
Use LVR when you shop
- Work out your LVR using a realistic value.
- Open home loan rates. Each loan shows its conditions, including the LVR range where the lender publishes one.
- Ignore headline rates that need a lower LVR than yours. Compare like with like in compare rates.
- Ask for the LMI cost for any loan above 80%.
- If you are close to a threshold, ask whether a bigger deposit or paying the loan down first would move you under it.
Lowering your LVR
- Save a bigger deposit.
- Pay the loan down. Extra repayments reduce the balance.
- Wait for the property value to grow. A fresh valuation may move you into a lower band, but values can also fall.
- Ask your lender to revalue the property when you negotiate a better rate.
Check it on RateSonar
Common questions
What is a good LVR?
A lower LVR gives you more choice and often better rates. Many lenders use 80% as a threshold for lenders mortgage insurance and for their best rates. Your goals, savings and the loan conditions matter more than a single number.
Do I have to pay LMI if my LVR is above 80%?
Often, but not always. Policies differ by lender, loan size and borrower. Government schemes can help eligible first home buyers avoid LMI. Ask each lender for its LMI quote.
Does LVR affect my interest rate?
It can. Many lenders advertise their lowest rates for lower LVR bands. Check the conditions on each loan.
How can I find a rate for my LVR?
Filter home loan rates by loan type, then check each loan's conditions for the LVR it allows.
Can I get a loan above 90% LVR?
Some lenders lend above 90% with LMI or under a government guarantee. Each has its own policy, so ask.
Sources
- Moneysmart: Switching home loans · page updated 29 October 2026, checked 2 November 2026
- RBA Statistical Table F6: Housing lending rates · published 8 October 2026, checked 2 November 2026 (series FLRHOLA and FLRHOLB)