How to Calculate LVR: Formula and Worked Examples

To calculate loan-to-value ratio (LVR), divide the relevant loan amount by the property’s accepted value, then multiply by 100. Use the debt and valuation that apply to the calculation you’re making. A changed loan amount or valuation changes the result, even when the purchase price stays the same.

For a broker’s file, the calculation must be reproducible from recorded inputs. The examples below show manual arithmetic using fictional figures. They don’t produce a personalised calculator result or establish lender eligibility, serviceability, insurance treatment or approval.

LVR Formula and Required Inputs

The LVR formula is relevant loan amount / accepted property value x 100. Moneysmart’s LVR explanation confirms the calculation uses the loan divided by the asset’s value.

Label the inputs before entering numbers.

• The loan amount is the debt included for the stated purpose. It might be a proposed purchase loan, an existing balance or a proposed refinance facility.
• The accepted property value is the value the lender uses for that purpose. Record its source and date.
• For several facilities or properties, specify which debts and securities belong in the calculation. Each security’s value must appear only once.

A current-balance estimate can answer, What is my LVR on the existing loan? An application assessment can use a different amount if it includes further borrowing or committed funds. Keep those calculations separately labelled.

Use these steps for each case.

1. Identify the loan amount included in the calculation.
2. Identify the accepted property value for the same security or security group.
3. Divide the loan amount by that value to get a decimal.
4. Multiply the decimal by 100 to express it as a percentage.
5. Keep the unrounded result, then show the rounded percentage with the inputs.

For example, a decimal of 0.80 becomes 80%. If the property value is missing or zero, resolve the valuation input before calculating. If you need the broader meaning of the figure, read the loan-to-value ratio explanation.

Lender definitions can change either input. The Australian Prudential Regulation Authority (APRA) sets bank capital rules in Prudential Standard APS 112, effective 1 July 2025. Its LVR provisions govern regulatory capital calculations, so distinguish them from a lender’s product eligibility rules.

For purchases, APS 112 generally caps the property value at the effective purchase price, with an exception for non-arm’s-length transactions. A higher valuation therefore doesn’t automatically provide a higher denominator. The worked examples use a stated accepted value, leaving lender-specific treatment separate.

Purchase LVR Example

A purchase LVR calculation uses the proposed loan and the accepted value of the property being bought. In this fictional purchase, the price is $800,000, the accepted value is $800,000 and the proposed loan is $640,000.

1. Label the loan input as $640,000 and the property-value input as $800,000.
2. Divide the loan by the value: $640,000 / $800,000 = 0.80.
3. Convert to a percentage: 0.80 x 100 = 80%.
4. Record the result as 80.00% when displaying two decimal places.

The buyer contributes $800,000 - $640,000 = $160,000 towards the purchase price. Purchase costs are additional to that contribution in this example. The example assumes those costs are paid separately and excludes any financed fees.

Recalculate After a Lower Valuation

Keep the purchase price at $800,000 and the proposed loan at $640,000, but reduce the accepted valuation to $760,000. Only the denominator changes.

1. Substitute the revised value: $640,000 / $760,000 = 0.8421052632, approximately.
2. Convert to a percentage: 0.8421052632 x 100 = 84.21052632%, approximately.
3. Round for display: 84.21%.

Suppose the broker uses 80% as the target for this fictional case. It is a calculation assumption, not a universal lending limit.

At that target, the revised debt amount is $760,000 x 0.80 = $608,000. The difference is $640,000 - $608,000 = $32,000. Reducing the proposed loan by $32,000 returns the calculation to $608,000 / $760,000 x 100 = 80%.

If the purchase proceeds at the same price, the buyer’s contribution becomes $800,000 - $608,000 = $192,000, plus purchase costs. That is $32,000 more than the original $160,000 contribution. The bank property valuation guide covers the evidence and response when the accepted value is lower.

Refinance and Equity LVR

To calculate LVR for refinance, start with the debt being refinanced and the property’s current accepted valuation. Calculate the proposed debt separately if cash out or repayments change it.

In this fictional case, the existing balance is $450,000 and the accepted current valuation is $750,000. Assume the balance is the relevant loan input for the initial calculation.

The division is $450,000 / $750,000 = 0.60. Converting it gives 0.60 x 100 = 60%, displayed as 60.00%.

The table changes one input at a time from that starting case. It assumes no extra financed costs.

Change from the starting case	Loan input	Value input	Division and percentage conversion	Displayed LVR
Add $75,000 cash out	$450,000 + $75,000 = $525,000	$750,000	$525,000 / $750,000 = 0.70; 0.70 x 100 = 70%	70.00%
Pay down $30,000	$450,000 - $30,000 = $420,000	$750,000	$420,000 / $750,000 = 0.56; 0.56 x 100 = 56%	56.00%
Accept a lower valuation	$450,000	$700,000	$450,000 / $700,000 = approximately 0.642857; x 100 = approximately 64.2857%	64.29%

For an actual refinance, include the debt needed to complete the refinance under the proposed lender’s treatment. Record any payout interest or financed costs separately so the statement balance isn’t mistaken for the complete proposed facility.

Calculate Equity Against a Target LVR

Subtract the relevant existing debt from the accepted value multiplied by the target percentage to calculate available equity at that target. This amount still needs policy and repayment-capacity assessment.

Using the fictional $750,000 value and $450,000 debt, choose 80% as the example target.

1. Convert the target percentage to a decimal: 80 / 100 = 0.80.
2. Calculate debt at the target: $750,000 x 0.80 = $600,000.
3. Subtract existing debt: $600,000 - $450,000 = $150,000.
4. Check the resulting ratio: ($450,000 + $150,000) / $750,000 = 0.80. Multiplying by 100 gives 80%.

Total equity in the same example is $750,000 - $450,000 = $300,000. The $150,000 amount is the portion calculated against the chosen target. Neither figure establishes how much the lender will approve.

If $5,000 of costs is financed within the same $600,000 debt amount, the example leaves $150,000 - $5,000 = $145,000 for other purposes. A negative result means existing debt exceeds the chosen target amount. Record that shortfall instead of describing it as available equity.

Multiple Securities and Facilities

Calculate a combined or portfolio LVR by adding the relevant secured debts and dividing by the accepted values counted in that same security group. Use this calculation only where the proposed lender treats the facilities and securities together.

In this fictional example, assume both properties secure the same combined facilities. Property A has an accepted value of $700,000 and property B has an accepted value of $500,000. The included facilities are $420,000 and $360,000, with no additional amounts to include.

1. Add the included debts: $420,000 + $360,000 = $780,000.
2. Add the accepted security values: $700,000 + $500,000 = $1,200,000.
3. Divide the totals: $780,000 / $1,200,000 = 0.65.
4. Convert and record: 0.65 x 100 = 65%, displayed as 65.00%.

If the two loans are secured separately, their individual calculations are different. Property A’s ratio is $420,000 / $700,000 = 0.60. Multiplying by 100 gives 60%.

Property B’s ratio is $360,000 / $500,000 = 0.72. Multiplying by 100 gives 72%.

The combined 65% figure doesn’t replace those individual assessments. A simple average of 60% and 72% would give 66%, which is also different from dividing total debt by total value.

Identify Amounts Beyond the Drawn Balance

For its capital calculations, APS 112, effective 1 July 2025, includes outstanding debt, accrued interest and fees plus undrawn committed amounts. It aggregates a bank’s sequentially ranked loans over one property where no other lender’s interest intervenes. For a second-mortgage loan, it includes claims secured by both first and second mortgages over that property.

Those provisions explain why drawn balances alone can give an incomplete result. Before using a lender’s application figure, record its treatment of each relevant input.

Input	What to establish before calculation
Second mortgage	Identify debt under both mortgages and the first facility’s limit or maximum drawdown where relevant.
Undrawn commitment	Record the committed amount and whether the lender includes it in the assessed debt.
Capitalised fees or insurance	Record costs added to the loan and whether the target is assessed before or after those costs.
Multiple loans over one property	Identify the included facilities and count the property’s accepted value once.
Multiple properties	Identify the properties securing the debt and the accepted value of each included security.

For example, assume an assessed debt includes $400,000 drawn, $50,000 undrawn commitment and $5,000 financed fees against a $650,000 accepted value. Total debt is $400,000 + $50,000 + $5,000 = $455,000.

The calculation is $455,000 / $650,000 = 0.70. Multiplying by 100 gives 70%.

Count each cost once. If financed fees are already within a recorded facility amount, adding them again overstates the debt.

Check the Result Against Lender Policy

Check the LVR result by reproducing the arithmetic, then assess it against the lender’s rules for the actual proposal. A correct percentage alone doesn’t establish the applicable maximum LVR or the lender’s approval.

Keep these details in the file so another person can reproduce the calculation.

• The calculation’s purpose, such as current balance, proposed purchase or refinance with cash out.
• Each included facility, its balance or commitment and the treatment of financed costs.
• Each included property, its accepted value, valuation source and valuation date.
• The lender and product, the policy source and the date used to resolve input treatment.
• The full arithmetic, unrounded result and displayed percentage.
• Any assumed target and the debt reduction or additional contribution needed to reach it.

Reverse-check the result before rounding. For the revised purchase, $760,000 x 0.80 must return $608,000. Repeating the forward calculation must return 80%.

If your result differs from the lender’s, compare the inputs first.

An omitted loan split or financed fee changes the numerator. A different accepted valuation changes the denominator. If the difference remains, obtain the lender’s calculation basis and reconcile it in the file.

Then assess lenders mortgage insurance (LMI) separately from the mathematical result. Serviceability tests whether the borrower can meet repayments under the lender’s assessment. The lender’s final credit decision considers the application beyond its LVR.

For brokers checking input treatment, Bulma’s Policy Advisor quotes the lender policy wording behind its answers. Keep the relevant wording with the calculation and valuation evidence. Recalculate whenever the included debt or accepted security value changes before relying on the result for the application.