What Is LVR — And Why Does It Matter? 🔎

Iain-Sight Series: Episode 1

Welcome to the first episode of the Iain-Sight Series, where I break down lending terms in plain English

Today we’re talking about LVR, one of the most important numbers in lending.

What is LVR?

LVR (Loan-to-Value Ratio) is the percentage of the property’s value that you're borrowing. It tells the lender how “risky” the loan is.

Example:

• Property: $600,000

• Deposit: $120,000 (20%)

• Loan: $480,000

• LVR = 80%

Lenders generally like to see 20% deposit / 80% LVR, because it lowers the risk and usually means:
✔ No Lenders Mortgage Insurance (LMI)
✔ Better interest rate options
✔ Smoother approval

Can You Buy With Less Than 20%?

Absolutely — plenty of people do.

If your LVR is above 80%, lenders may charge LMI, or they may require more documentation. But there are also government schemes designed to help first home buyers get in sooner. There are also some lenders that give certain LMI waivers to specific industries, such as lawyers, accountants, the medical industry, teachers and many more.

First Home Guarantee / aka 5% deposit scheme

Under this scheme, the government acts as a guarantor so eligible buyers can purchase with:

• 5% deposit

• Without paying LMI
  You still need to meet lender criteria, but it’s a great pathway for those trying to enter the market with a smaller deposit.
  
  I’ll be making another video soon taking you through this one in more detail - stay tuned!

First Home Owner Grant (FHOG)

This is separate from the Guarantee.
It’s a cash grant (in Victoria it's currently $10,000 for new builds), designed to help first-time buyers with building or buying a new home.

The key takeaway?
LVR affects what you can borrow, how much deposit you need, and whether you can access schemes that reduce your upfront costs.

If you’d like help figuring out your own LVR — or whether you can qualify for the 5% First Home Guarantee or FHOG — I’m always happy to have a chat.

Iain — Mortgage Muster