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What is LVR, and why does everyone go on about 80% LVR?
Bayley Clarke · Mortgage broker on the road · Last checked 16 October 2026 · 4 min read
The short answer
LVR is loan to value ratio. It's one number divided by another: how much you owe, divided by what the property is worth. 80% is the magic number because that's your standard, bee's knees home loan.
At 80% or under, you're generally not paying lenders mortgage insurance or a higher rate. Go above it and you have less than 20% of the property's value as your own, so the bank wants to be paid for the extra risk.
The 90 second version, filmed from the driver's seat. The rest of this page is the detail underneath it.
The maths, which is basically year two
Loan to value. Loan is how much you owe, or how much you're planning to borrow. Value is how much the property is worth, either the purchase price when you buy or a valuation done on behalf of a bank later on. Divide one by the other and you've got your LVR.
Say you're buying at $600k and borrowing $480k. $480k divided by $600k is 80%. Borrow $540k on the same place and you're at 90%. Borrow $570k and you're at 95%, which means you've put down a 5% deposit.
That number isn't fixed. It changes over time as you pay your loan down and, hopefully, as your property goes up in value. Both of those push your LVR lower, which matters later if you want to refinance or get out of a scheme.
Why 80% is the line
At 80% or under, you have at least 20% of the property's value as your own. That's the standard home loan the whole market is built around. You're generally not paying lenders mortgage insurance, and you're not paying a higher rate for being a riskier borrower.
Above 80%, the bank has less of a cushion if things go wrong, so it protects itself. Usually that's lenders mortgage insurance, a one-off premium that can run into the thousands or tens of thousands depending on the loan. Some lenders charge their own fee instead, and a few have products that skip it up to a point. Often the rate is a bit higher too.
That's why investors also watch 80% closely. A lot of the time you don't want to be paying lenders mortgage insurance on an investment, so 80% becomes the target.
Where the 5% scheme fits, and the tiers below 80
This is the great thing about the 5% scheme for first home buyers. You can put down 5% and you're not penalised with lenders mortgage insurance, because the government guarantee stands in for it. You get into the market at 95% LVR without paying the insurance that normally comes with it.
Below 80, the steps keep going. At 70% the interest rates on offer often change again, and at 60% they can sharpen further. Not every lender prices that way, and the gap between tiers varies, but it's why paying your loan down or getting a fresh valuation can sometimes drop you into a better band. But 80% is your standard.
The honest bit: 80% is a line, not a rule you have to hit
Plenty of people buy above 80% and it's the right call, because waiting years to save a bigger deposit can cost more than the insurance. LVR tells you what the bank will charge you for the risk. It doesn't tell you whether buying now is right for you.
That's a numbers conversation, and it's different for every deposit and every price.
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Next question
What's an LVR tier, and can I get revalued to drop into a lower one?Banks price loans in loan to value bands: 80%, then 70, 60, 50 below and 90, 95 above.
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