What does LVR mean and why does it matter for my deposit?

Short answer: Loan to Value Ratio. Loan divided by house price. Below 80% is safe. Above 80% needs special approval.

What this actually means in plain English

LVR stands for Loan to Value Ratio. It is the loan amount divided by the house price, as a percentage. If you buy a $500,000 house with a $400,000 loan, your LVR is 80%. Banks care because high LVR means high risk. Below 80% is considered safe. Above 80% needs special approval.

Key Facts

LVR = (Loan amount / House price) x 100
80% LVR means 20% deposit
Banks prefer LVR below 80%
Above 80% requires First Home Loan or bank exception

Example

House Price: $500,000

Deposit: $100,000

Loan: $400,000

Lvr: 80%

Meaning: Standard lending, no special approval needed

Related

Back to Stackhold