Understanding 80% LVR
An 80% loan-to-value ratio means the loan represents 80% of a property's value. Learn how to calculate 80% LVR and understand what it means for loan amounts, deposits, equity, mortgage insurance and refinancing.
What does 80% LVR mean?
LVR compares a loan amount with the value of the property securing the loan.
An 80% loan-to-value ratio
An 80% LVR means the loan amount is equal to 80% of the property's value.
The remaining 20% represents the mathematical difference between the property's value and the loan amount.
For example, a property valued at $500,000 with a $400,000 loan has an LVR of 80%.
80% LVR Formula
To calculate a loan amount at a target LVR of 80%, multiply the property value by 0.80.
How is 80% LVR calculated?
Once you know the property value and loan amount, calculating LVR is straightforward.
Divide the loan amount by the property value and multiply by 100:
Calculate the loan amount at 80% LVR
Enter a property value to see the corresponding 80% loan amount and 20% difference.
How much is an 80% loan?
At a target LVR of 80%, the loan amount is 80% of the property value.
The remaining 20% is the mathematical difference between the property value and loan amount.
This calculation is illustrative and does not indicate lending approval or borrowing capacity.
80% LVR examples by property value
The LVR remains 80%, while the corresponding loan amount changes with the property value.
| Property Value | 80% Loan | 20% Difference |
|---|---|---|
| $300,000 | $240,000 | $60,000 |
| $400,000 | $320,000 | $80,000 |
| $500,000 | $400,000 | $100,000 |
| $600,000 | $480,000 | $120,000 |
| $750,000 | $600,000 | $150,000 |
| $1,000,000 | $800,000 | $200,000 |
What does 80% LVR mean for a deposit?
At an 80% LVR, the loan represents 80% of the property's value and the mathematical difference is 20%.
Example property value.
80% of the property value.
20% of the property value.
In a simplified calculation, the difference at 80% LVR is 20% of the property value. This should not automatically be treated as the complete cash required to purchase a property. Taxes, legal costs, valuation charges, insurance, lender fees and other expenses may also apply.
Explore Deposit Calculations →80% LVR and equity
If the outstanding loan equals 80% of the property's current value, the mathematical difference is 20%.
Suppose a property is currently valued at $500,000 and the outstanding loan balance is $400,000.
In this simplified example, the difference represents 20% of the property's value.
Calculate Your Equity →Equity can change over time
Equity depends on the relationship between the property's current value and outstanding debt.
If the property value increases or the loan balance decreases, the resulting LVR may fall. If the property value decreases or debt increases, the LVR may rise.
Use a current property value and current loan balance when calculating an updated position.
Does 80% LVR affect mortgage insurance?
Mortgage insurance requirements vary by country, lender, loan type and borrower circumstances.
An 80% LVR can therefore be an important reference point when comparing lending scenarios, but there is no universal rule that applies to every lender or jurisdiction.
Explore LVR & Insurance →Insurance is not part of the LVR formula
Mortgage insurance, where applicable, is a separate cost or lending consideration and should be evaluated according to the applicable lender and jurisdiction.
80% LVR when refinancing
A proposed refinance loan can also be expressed as an LVR based on the property's current value.
Example
If a property is valued at $800,000 and the proposed new loan is $640,000:
Refinancing depends on more than LVR
An 80% LVR describes the relationship between a proposed loan and property value. It does not guarantee refinance approval, interest rates, fees or any particular lending outcome.
Compare Refinance LVR →Is 80% LVR considered a good LVR?
Whether 80% LVR is suitable depends on the borrower's circumstances, lender criteria, property and loan structure.
Why 80% is a useful reference point
80% LVR is a commonly discussed LVR level because it provides a clear way to compare a loan amount with a property's value.
At this level, the loan represents four-fifths of the property value and the mathematical difference represents one-fifth.
Lower LVR does not automatically mean better
A lower LVR can mean a smaller loan relative to the property's value, but the appropriate structure depends on the overall financial situation and applicable lending criteria.
80% LVR compared with other levels
Comparing percentages helps show how the loan amount changes for the same property value.
Related LVR guides
Explore the fundamentals behind loan-to-value calculations and related property finance concepts.
Key terms related to 80% LVR
Learn the terminology commonly used when discussing LVR, property value and borrowing.
80% LVR FAQs
What does 80% LVR mean?
An 80% LVR means the loan amount is equal to 80% of the property's value. The mathematical difference between the property value and loan amount is 20%.
What is 80% LVR on a $500,000 property?
An 80% LVR on a $500,000 property corresponds to a $400,000 loan because $500,000 × 0.80 equals $400,000.
What is the deposit for an 80% LVR?
In a simplified calculation, an 80% loan means the mathematical difference is 20% of the property value. Actual cash required for a purchase may be different because taxes, fees and other costs can apply.
Is 80% LVR a good LVR?
Whether 80% LVR is suitable depends on the borrower's circumstances, loan structure, property and applicable lender criteria. LVR is only one part of a lending assessment.
Does 80% LVR mean I need mortgage insurance?
Not necessarily. Mortgage insurance rules vary between countries, lenders and loan products. An 80% LVR should therefore not be treated as a universal trigger for mortgage insurance.
How much equity is represented by 80% LVR?
If the outstanding loan produces an 80% LVR, the mathematical difference between the loan and property value is 20% of the property's value. Actual equity should be calculated using the current property value and outstanding loan balance.
Can I refinance at 80% LVR?
A proposed refinance loan can have an 80% LVR if the new loan amount equals 80% of the property's current value. Whether refinancing is available depends on applicable lending criteria and individual circumstances.
Is 75% LVR lower than 80% LVR?
Yes. A 75% LVR means the loan represents 75% of the property's value, while an 80% LVR means it represents 80%. For the same property value, the 80% LVR corresponds to a larger loan amount.
What is your current LVR?
Enter your property value and loan amount to calculate your current loan-to-value ratio.
Calculate My LVR →