Construction Finance
What LVR Applies To Construction Loans?
5 min read- Finance Guide
- Updated 2026
Quick answer
Common benchmark
80%
LVR often marks the point where policy gets tighter
- Below 80% LVR Usually stronger
- 80%+ LVR LMI or tighter policy may apply
- Assessment basis Often end value
1300 421 044
1300 421 044
Detailed explanation
Construction loan LVR is not always as simple as applying a percentage to the contract price. Lenders commonly look at the total facility against the as if complete value of the project, then test whether the borrower has enough deposit, equity and repayment capacity to carry the build through to completion.
How construction loan LVR is assessed
Lenders commonly focus on these value points
- 01Land value
- 02Build cost
- 03Completed value
- 04Deposit or equity
- 05Contingency funds
- 06Servicing strength
Lenders usually compare:
Total proposed loan amount- Valuer adopted completed value
- Cash deposit or usable land equity
- Whether higher LVR settings fit policy
What usually affects allowable LVR
Typical construction LVR considerations:
-
Many mainstream lenders are strongest at or below 80 percent LVR
-
Higher LVR requests can still be possible, but conditions usually tighten
-
Land equity may count toward the borrower contribution
-
The completed value adopted by the valuer matters more than headline build cost alone
-
LMI, policy caps, or larger cash buffers may apply at higher LVR levels
LVR range
-
Lower risk zone
Up to 80%
-
Higher leverage zone
80% to 90%
-
Specialist or tighter policy
Above 90%
How lenders review construction LVR
Lenders review
Valuation method and completed value- Fixed price building contract
- Land equity or cash contribution
- Build cost breakdown and contingency
- Builder credentials and licence
- Borrower income and servicing
- Whether the requested LVR fits policy
Common LVR thresholds
-
At or below 80%
Common target
-
Above 80%
Higher risk
-
Completed value basis
Often used
-
Land equity
May assist
Increase cash contribution
