LVR Calculator – How to Calculate LVR

Last Updated: 06/04/22


Ed McKnight

Economist, property investor and host of the Property Academy Podcast
The Calculator

LVR Calculator


Frequently Asked Questions

What does LVR stand for?

LVR stands for Loan to Value Ratio. It measures the amount of debt a property (or asset) has compared to its worth.

If you have a property worth $600,000 and it has a mortgage of $200,000, then the LVR is 33.3%.

What is an LVR Restriction?

An LVR restriction is where the Reserve Bank bans the commercial banks, e.g. ASB, from lending above a particular LVR.

In NZ, 90% of each bank’s lending to owner-occupiers needs to be at an LVR of 80% or lower.

For property investors, 95% of bank lending needs to be at 60% or less.

How do I calculate LVR?

LVR is calculated by taking a property’s mortgage and dividing it by its value.

LVR = (Mortgage / Property Value ) x 100

For instance, if you have a mortgage of $200,000 and a property worth $600,000, the LVR is 33.3% i.e. ($200,000 / $600,000 ) x100 = 33.3%.

What is the LVR for first home buyers in NZ?

Under the LVR restrictions, first home buyers can borrow up to 80% against the value of a property.

However, there are ways to borrow outside of the LVR restrictions.

10% of bank lending to owner-occupiers can also be outside of these restrictions.

And some first home buyers can access the government’s First Home Loan. In this scenario, a first home buyer can buy a property using just a 5% deposit. However, that is subject to bank approval, which rarely happens with just a 5% deposit.

In practice, it is common for a first home buyer to use a 10% deposit. And 38% of first home buyers use less than a 20% deposit to get started.

Can I borrow more than 80% for a property?

Owner-occupiers – people purchasing their own home – often can. However, property investors usually cannot.

An owner-occupier can borrow over 80% either by:

  • Using a government-backed First Home Loan (criteria applies)
  • Securing a loan that falls out of the LVR restrictions, i.e. in the 10% of loans a bank can lend to owner-occupiers outside the restrictions
  • Or by working with a non-bank lender – who aren’t subject to the LVR restrictions.

What does 80% LVR mean?

80% LVR means that the mortgage on a property makes up 80% of the property’s value.

For instance, a $1m property with an 80% LVR means the mortgage is $800,000.

What’s the difference between the Reserve Bank and a Commercial Bank?

Commercial banks are businesses like ASB, ANZ, BNZ and Westpac. These banks lend out money for mortgages and give you regular transaction accounts.

The Reserve Bank sets the rules and regulations for commercial banks. They ensure that the monetary system stands up and that the other banks don’t take on too much risk.


Ed McKnight

Ed McKnight is the host of the Property Academy Podcast – NZ's #1 business podcast. He is an economist, having studied at the University of Auckland and the University of Waikato. He's a frequent writer for Informed Investor Magazine and has contributed to NewsHub, Stuff, OneRoof and Property Investor Magazine.