LVR is the percentage of a property’s lender-assessed value you borrow. LMI usually protects the lender, not you.
- Deposit towards the price
- $160,000
- Loan before added costs
- $640,000
- LVR if the lender values it at $800,000
- 80%
$640,000 ÷ $800,000 × 100. Buying costs are separate. A lower bank valuation makes the LVR higher.
Why 80% comes up so often
LMI is commonly required above 80% LVR. This is a reference point, not a universal approval rule. Income, expenses, debts, the property and the lender’s policy still affect a loan application.
When can LMI be avoided?
A larger deposit may bring the LVR down. An eligible government guarantee or a lender’s specific professional waiver may also help. Waivers are not automatic: ask about eligible occupations, income, registration, loan limits and all other conditions.
What to check before choosing
Ask the lender which valuation it uses, whether the quoted loan includes financed fees and whether LMI applies. If a premium is added to your loan, you may pay interest on it too. A cheaper upfront cost does not automatically mean a cheaper loan overall.
Calculate the loan before the percentage
Imagine an $800,000 home and $80,000 available for the deposit towards its price. With buying costs paid separately, the loan is $720,000. Divide $720,000 by $800,000 and multiply by 100: the LVR is 90%. The deposit is 10% of the price, but the LVR describes the borrowed share. In the Howloop calculator, enter the deposit actually used towards the purchase, rather than all the cash in your savings account. Keeping money aside for duty and moving costs reduces what is available for that deposit.
A lower valuation changes the answer
Keep the same $720,000 loan, but suppose the lender values the home at $760,000. The LVR becomes about 94.74%, even though the agreed purchase price has not changed. If a further $10,000 of costs is financed, the loan becomes $730,000 and the LVR becomes about 96.05%. These are arithmetic examples, not lending offers. Ask which value and loan amount the lender will use before treating an online result as the ratio that will appear on an application.
Compare two deposits using the same home
For that $800,000 price and matching valuation, an $80,000 deposit means $720,000 borrowed; a $160,000 deposit means $640,000 borrowed. The difference is $80,000 less debt. Try both loan amounts in the mortgage calculator using the same interest rate and term. Then separately compare any actual LMI premium, fees and rate differences in the lender quotes. Do not add an assumed LMI saving to the repayment calculation if the quoted loan amount already includes that premium.
Take a short question list to the lender
Write down the property price, expected valuation, deposit towards the price, buying costs paid in cash and costs proposed to be added to the loan. Ask for an itemised quote showing the LMI premium, whether it is financed, the interest rate and ongoing fees. If a waiver or government guarantee is mentioned, request its eligibility conditions and confirmation for your application. Keep a second budget showing the money left after settlement. A low LVR and a comfortable household cash buffer measure different things.
Who does lenders mortgage insurance protect?
Sources & update record
- Moneysmart: house deposits ↗
- Moneysmart: what LMI protects ↗
- CommBank: example of professional waiver conditions ↗
Expanded with original worked examples, practical checks and common mistakes. Current rule notes remain separate from illustrative arithmetic.
Published 18 Sept 2026 · Updated 18 Sept 2026. These dates do not guarantee rules are unchanged.
Published by Howloop. AI assists preparation. This lesson has not been reviewed by a licensed financial adviser. How we check our content →