DTI vs LVR: what each ratio shows

LVR looks at the loan compared with the property value. DTI looks at total debt compared with gross annual income. They answer different questions.

• LVR asks: how much of this property scenario is funded by debt?
• DTI asks: how large is the debt scenario compared with income?
• A scenario can look fine on one ratio and stretched on the other.

Example: On an $800,000 property with a $640,000 loan, the LVR is 80%. If the household income is $140,000 and total debt is $665,000, the DTI is about 4.8x.

LVR is useful for seeing how deposit, price, and loan size interact. It is sensitive to the value figure entered, which may be a purchase price, estimate, or valuation depending on the context.

• A larger deposit usually lowers the LVR.
• A higher property value with the same loan lowers the LVR, but that does not create valuation certainty.
• A higher loan against the same property value raises the LVR.

Check next: Check what value a lender will use, whether a valuation is required, and whether the property type or borrower situation changes the assessment.

DTI is a broad leverage ratio. It can make a large debt position easier to see, but it is not the same as a full affordability or serviceability assessment.

• Existing personal loans, credit cards, and other debts can lift the DTI even if the mortgage amount is unchanged.
• Gross income is only one part of the picture; expenses, dependants, interest buffers, and lender policy still matter.
• A lower DTI does not automatically mean approval, and a higher DTI does not explain every risk by itself.

LVR is more about the property and equity position. DTI is more about the debt load compared with income. Used together, they can prompt better questions.

• If LVR is high, review deposit sources, property value assumptions, and loan size.
• If DTI is high, review total debt, income assumptions, and whether a smaller loan scenario should be tested.
• Use repayment estimates as a separate cash-flow check rather than relying on ratios alone.