What Is a Good LVR?
A “good” LVR depends on the borrower, lender, property and loan. Compare common LVR levels, understand the trade-offs, and see how a lower or higher loan-to-value ratio can affect your overall property finance position.
There is no single LVR that is “good” for everyone.
In general, a lower LVR means the loan represents a smaller proportion of the property's value. A higher LVR means the borrower is financing a larger proportion of the property value. Whether one is preferable depends on the complete lending situation.
What makes an LVR “good”?
LVR, or loan-to-value ratio, measures the loan amount relative to the value of the property.
A lower LVR generally means there is less debt relative to property value. A higher LVR means the loan represents more of the property's value.
But asking whether an LVR is “good” is more complicated than choosing the lowest possible percentage. A borrower may value keeping cash available, while another may prefer to contribute more upfront to reduce the amount borrowed.
If you're new to the concept, start with What Is LVR? You can then learn how to calculate LVR before comparing different levels.
Factors that can make an LVR more suitable
Instead of focusing on one universal “ideal” number, consider the following factors.
- Borrowing amount: How much you actually need to borrow compared with the property's value.
- Available cash: How much money you want or need to contribute upfront while keeping funds available for other purposes.
- Loan costs: Interest, fees and potentially mortgage insurance can affect the overall cost of different LVR scenarios.
- Lender requirements: Lenders may have their own policies around LVR, property types, loan products and borrower circumstances.
- Property value: LVR depends on the relevant property value, which can affect the ratio even if the loan balance does not change.
- Long-term plans: Your intended holding period, refinancing plans and future borrowing needs can influence which structure makes sense.
What do different LVR levels mean?
The following levels are useful reference points for comparing the mathematical relationship between a loan and property value. They should not be interpreted as universal approval thresholds or guarantees.
The loan represents 60% of property value, leaving a 40% mathematical difference.
70% Moderate LVRThe loan represents seven-tenths of the property's value.
75% Moderate LVRThree-quarters of property value is represented by the loan.
80% Common reference pointThe loan represents four-fifths of the property's value.
85% Higher LVRA larger proportion of property value is financed through the loan.
90% Higher LVRThe loan represents 90% of the property's value.
95% Very high LVRThe loan represents almost all of the property's value in mathematical terms.
LVR comparison: lower vs higher
Consider a property valued at $500,000. The table below shows how different LVR levels translate into loan amounts in a simplified mathematical example.
| LVR | Loan amount | Mathematical difference | General position |
|---|---|---|---|
| 60% | $300,000 | 40% | Lower loan relative to value |
| 70% | $350,000 | 30% | Moderate loan relative to value |
| 75% | $375,000 | 25% | Moderate loan relative to value |
| 80% | $400,000 | 20% | Common comparison point |
| 85% | $425,000 | 15% | Higher loan relative to value |
| 90% | $450,000 | 10% | Higher loan relative to value |
| 95% | $475,000 | 5% | Very high loan relative to value |
These figures illustrate the mathematics only. Actual lending policies, costs and requirements can vary significantly.
Is 80% LVR good?
80% LVR can be a useful reference point, but it is not universally “good” or appropriate.
At 80% LVR, the loan represents 80% of the property's value. In a simplified example, a $400,000 loan against a $500,000 property produces an 80% LVR.
Whether an 80% LVR works well for you depends on the loan's cost, your available funds, lender requirements and your broader financial position.
Read the full 80% LVR guide for more examples.
Is a lower LVR always better?
Not necessarily.
A lower LVR can mean a smaller loan relative to property value, which may reduce the amount of debt and potentially improve certain lending metrics.
However, achieving a lower LVR may require contributing more money upfront. That can reduce the amount of cash available for emergencies, investments, renovations or other goals.
What are the trade-offs of a higher LVR?
A higher LVR allows a larger proportion of the property's value to be financed through borrowing.
This can reduce the amount of money needed upfront, but it also means the loan is larger relative to the property value.
- More borrowing may mean higher interest costs over time.
- Some lenders or loan products may apply different requirements at higher LVRs.
- Mortgage insurance or similar risk-management arrangements may apply depending on the country, lender and loan.
- There may be less equity relative to the property's value at the beginning of the loan.
- A decline in property value can have a larger effect on the LVR position when the starting LVR is high.
LVR, equity and your property position
LVR and equity are closely related but measure different things.
If a property is worth $800,000 and the loan balance is $560,000, the LVR is 70%.
Estimated equity is:
Use the LVR & Equity Calculator to explore your own figures.
LVR and deposit size
LVR is often discussed in terms of deposits. In a simplified purchase scenario, a lower target LVR generally means a larger mathematical difference between the property value and loan.
For example, an 80% LVR corresponds to a 20% mathematical difference between property value and loan amount.
However, that difference should not automatically be treated as the buyer's complete cash requirement. Taxes, legal fees, valuation costs, insurance and other transaction costs can be additional.
Calculate LVR & Deposit →Does a good LVR avoid mortgage insurance?
Not necessarily.
Mortgage insurance requirements vary by country, lender, insurer, loan type and borrower circumstances. LVR may be one factor considered when determining whether insurance is required or how it is priced.
There is therefore no universal rule such as “below X% always means no mortgage insurance.”
Learn more in LVR vs LMI or explore an illustrative estimate with the LVR & LMI Calculator .
What is a good LVR for refinancing?
There is no single refinance LVR that guarantees a better outcome.
A lower LVR can change the relationship between the loan and property value, but a refinance decision also depends on interest rates, fees, loan features, valuation, affordability, credit assessment and lender policy.
To compare your existing position with a proposed refinance, use the Refinance LVR Calculator .
How can you lower your LVR?
If your goal is to reduce your LVR, there are several mathematical ways the ratio can change.
- Reduce the loan balance: Paying down debt can reduce LVR if property value stays unchanged.
- Increase the amount contributed upfront: Borrowing less for a purchase produces a lower initial LVR.
- Property value changes: If the relevant property value increases while the loan stays unchanged, the calculated LVR decreases.
Each approach has different financial implications. Read How to Lower Your LVR for a deeper explanation.
Find out where your LVR sits
Enter your property value and loan amount to calculate your estimated LVR and understand your current loan-to-value position.
Calculate My LVR →Explore the LVRcalc knowledge hub
Continue through the LVRcalc content cluster to understand the calculation, different LVR levels, equity, deposits, mortgage insurance and refinancing.
Core LVR guides
Compare LVR levels
LVR calculators
LVR glossary
Visit the LVR Glossary for definitions of loan-to-value ratio, equity, deposit, mortgage insurance and related terms.
Frequently asked questions
What is considered a good LVR?
There is no universal “good” LVR. A lower LVR generally means the loan represents a smaller proportion of property value, but the most suitable level depends on the loan, lender, borrower, property and overall financial position.
Is 80% LVR good?
80% LVR is a useful reference point, but whether it is suitable depends on the complete lending situation. It means the loan represents 80% of the property's value.
Is 60% LVR better than 80% LVR?
Mathematically, 60% LVR means a smaller loan relative to property value than 80% LVR. However, choosing between them involves more than the percentage because contributing more money upfront can affect available cash.
Is 90% LVR too high?
90% LVR represents a relatively large loan compared with property value, but whether it is available or appropriate depends on lender policy, borrower circumstances, property and loan type.
Does a lower LVR mean lower mortgage insurance?
It can affect mortgage insurance requirements or pricing in some lending arrangements, but there is no universal rule. Requirements vary by country, lender, insurer and loan type.
What is the ideal LVR for refinancing?
There is no universal ideal refinance LVR. A lower LVR can change the loan-to-value position, but refinancing decisions also depend on rates, fees, affordability, credit assessment, property value and lender requirements.
Can I improve my LVR?
Yes. Depending on the situation, reducing the loan balance, borrowing less or changes in property value can reduce the calculated LVR.
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, mortgage insurance availability or lender requirements.
LVR policies and lending criteria vary by country, lender, property, loan type and borrower circumstances. Confirm important requirements and figures with the relevant lender or qualified professional.
