Lenders Mortgage Insurance (LMI), explained
LMI is a one-off cost lenders charge when you borrow more than 80% of a property's value. Here's how much it costs, when it applies, and how to avoid it.
What is LMI?
Lenders Mortgage Insurance protects the lender — not you — if you can't repay your loan. It lets you buy with a smaller deposit, but the premium is paid by you, usually added to your loan and repaid over time.
When is LMI triggered?
LMI generally applies when your loan-to-value ratio (LVR) is above 80% — meaning your deposit is under 20% of the property value. The higher your LVR, the higher the premium.
How much does LMI cost?
Costs vary by lender, loan size and LVR, but typically fall between roughly 1% and 5% of the loan amount. Use our LMI calculator to estimate your premium.
How to avoid LMI
- Save a 20% deposit (80% LVR or lower).
- Use the federal First Home Guarantee (FHBG) — buy with as little as 5% deposit, no LMI.
- Family Home Guarantee — eligible single parents can buy with a 2% deposit.
- Use a guarantor (often a family member) to boost your effective deposit.
- Check for lender waivers — some professions qualify for reduced or waived LMI.
Frequently asked questions
This guide is general information only and not financial advice. LMI costs and eligibility for government schemes depend on your circumstances. Speak to a XLOANS broker for advice tailored to you.
Want to avoid LMI?
A XLOANS broker can check your eligibility for the First Home Guarantee and other ways to skip LMI — free, in 15 minutes.