How to Calculate LVR
Learn the loan-to-value ratio formula, work through real examples, understand how property value and loan balances affect LVR, and calculate your own ratio in seconds.
Divide the loan amount by the property value, then multiply by 100.
For example, a $400,000 loan on a $500,000 property produces an LVR of 80%.
What is the LVR calculation?
LVR stands for loan-to-value ratio. It describes the size of a loan compared with the value of the property securing it.
The calculation is expressed as a percentage, which makes it easier to compare different borrowing scenarios.
If you want the broader explanation first, read What Is LVR? Then return here for the step-by-step calculation.
LVR formula
The standard LVR formula is:
You need two main figures:
- Loan amount — the amount borrowed or outstanding, depending on the calculation.
- Property value — the relevant estimated, assessed or agreed property value.
How to calculate LVR step by step
LVR calculation example
Suppose a property is worth $500,000 and the loan amount is $400,000.
The loan represents 80% of the property's value. The mathematical difference between the property value and loan is 20%.
That 20% should not automatically be interpreted as the total cash required for a purchase. Taxes, fees, insurance and other transaction costs can be additional.
Another LVR example
Consider a property worth $750,000 with a loan of $525,000.
The calculated LVR is therefore 70%.
The remaining mathematical difference is 30%, representing the portion of property value not represented by the loan in this simplified calculation.
What different LVR percentages mean
The same formula works regardless of the LVR level. The difference is simply the relationship between the loan and property value.
| LVR | Loan on $500k property | Mathematical difference |
|---|---|---|
| 60% | $300,000 | 40% |
| 70% | $350,000 | 30% |
| 75% | $375,000 | 25% |
| 80% | $400,000 | 20% |
| 85% | $425,000 | 15% |
| 90% | $450,000 | 10% |
| 95% | $475,000 | 5% |
Explore each level in detail through the 60% LVR, 70% LVR, 75% LVR, 80% LVR, 85% LVR, 90% LVR and 95% LVR guides.
How to calculate the loan amount from a target LVR
Sometimes you know the property value and the target LVR but want to work backwards to estimate the corresponding loan amount.
For example, if a property is worth $600,000 and the target LVR is 80%:
The resulting loan amount is $480,000.
This is a mathematical estimate only. Actual borrowing capacity can depend on lender policies, income, expenses, credit assessment, property type and other factors.
For a faster way to explore this relationship, use the LVR & Deposit Calculator .
What happens when property value changes?
LVR is not determined by the loan alone. If the relevant property value changes while the loan stays the same, the calculated LVR changes too.
Example: value increases
A property is worth $500,000 and has a $400,000 loan:
If the relevant property value later becomes $550,000 while the loan remains $400,000:
The calculated LVR has fallen because the loan is now a smaller proportion of the property's value.
What happens when the loan changes?
LVR can also change when the loan balance changes while the property value remains constant.
For example, a $600,000 property with a $480,000 loan has an 80% LVR.
If the loan balance falls to $450,000 and the property value remains $600,000:
The LVR has therefore decreased from 80% to 75%.
This is one reason LVR can be useful when reviewing an existing property loan or considering refinancing.
How LVR relates to equity
LVR and equity are related, but they are not the same calculation.
Estimated equity can be calculated as:
For a $700,000 property with a $490,000 loan:
The LVR is 70%, while the mathematical equity percentage is 30%.
Use the LVR & Equity Calculator to explore these numbers together.
Common LVR calculation mistakes
- Reversing the formula: The loan amount is divided by the property value, not the other way around.
- Forgetting to multiply by 100: The decimal result must be converted into a percentage.
- Using the wrong property value: The relevant valuation or purchase value may depend on the lending situation.
- Confusing LVR with equity: LVR measures debt relative to value; equity measures value minus debt.
- Assuming the percentage difference equals total cash required: Other purchase and transaction costs may apply.
- Treating the calculator result as a lending decision: A mathematical LVR calculation does not guarantee loan approval or any particular lending terms.
Does LVR affect mortgage insurance?
LVR can be one factor used by lenders and insurers when assessing mortgage insurance requirements or pricing.
However, there is no universal LVR threshold that applies to every country, lender, insurer or loan type.
If you want to explore an illustrative insurance estimate, use the LVR & LMI Calculator .
You can also read LVR vs LMI to understand how the two concepts differ.
Calculating LVR when refinancing
When refinancing, you can calculate the current LVR using the existing loan balance and current property value.
You can then calculate a proposed new LVR using the new loan amount and the same relevant property value.
Use the Refinance LVR Calculator to compare these scenarios.
Calculate your LVR instantly
Skip the manual calculation. Enter your property value and loan amount and let LVRcalc calculate your estimated LVR.
Open LVR Calculator →Explore the LVRcalc knowledge hub
LVR is easier to understand when you look at the calculation, lending context, equity, deposits and different LVR levels together. Explore the related guides and calculators below.
LVR guides
LVR calculators
LVR percentage guides
LVR glossary
Need to understand the terminology first? Visit the LVR Glossary for definitions of loan-to-value ratio, equity, deposit, mortgage insurance and related property finance terms.
Frequently asked questions
What is the formula for calculating LVR?
The standard formula is: LVR = Loan Amount ÷ Property Value × 100. The result is expressed as a percentage.
How do I calculate LVR from a loan and property value?
Divide the loan amount by the property value and multiply by 100. For example, a $400,000 loan on a $500,000 property produces an LVR of 80%.
How do I calculate the loan amount from an LVR?
Multiply the property value by the target LVR expressed as a decimal. For example, $600,000 × 0.80 = $480,000.
Does LVR change if the property value changes?
Yes. If the loan remains unchanged while the property value changes, the calculated LVR changes because the loan is now a different proportion of the property's value.
Does paying down a loan reduce LVR?
If the property value stays the same, reducing the loan balance reduces the calculated LVR.
Is LVR the same as equity?
No. LVR measures the loan relative to property value. Equity is generally calculated as property value minus outstanding loan balance.
Can LVR affect mortgage insurance?
It can be one factor considered by lenders or insurers. Requirements and pricing vary by country, lender, insurer and loan type.
Is an LVR calculator accurate?
A calculator can accurately perform the mathematical calculation using the figures entered. However, the underlying property value, loan amount and lender requirements may differ from the figures used in an actual lending decision.
Important information
LVRcalc provides general educational information and calculator estimates. This page does not provide financial, lending, legal or tax advice and does not guarantee loan approval, interest rates, insurance availability or lender requirements.
Actual LVR calculations used by lenders may depend on the relevant valuation method, loan structure, property and lending policy. Confirm important figures and requirements with the relevant lender or qualified professional.
