What is Lenders Mortgage Insurance (LMI)?

LMI is a one-off premium that protects the lender (not you) if you default on the loan. It's typically charged when you borrow more than 80% of the property's value — i.e. your deposit is less than 20%.

How can I avoid paying LMI?

The most common way is to have a 20% deposit (an LVR of 80% or less). Some buyers avoid it with a guarantor, while certain professions and government schemes can also waive LMI.

Can LMI be added to my loan?

Yes — many lenders let you capitalise the LMI premium on top of your loan amount so you don't pay it as cash upfront. This means you pay interest on it over time.

LMI Calculator

Estimate your Lenders Mortgage Insurance premium based on your property value and deposit. LMI usually applies when you borrow more than 80% of the property's value.

Property value

Deposit

That's a 10.0% deposit

Eligible for the First Home Guarantee (5% deposit scheme)Government-backed scheme that lets eligible first home buyers buy with as little as 5% deposit and no LMI. Property price caps apply by state.

Estimated LMI

$15,480

Loan amount

$720,000

LVR

90.0%

Estimate only — premiums vary by lender, insurer and loan size.

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Your LVR matters

Loan-to-Value Ratio (LVR) is your loan amount divided by the property value. The higher your LVR, the more LMI typically costs. Getting your deposit to 20% removes LMI entirely — but if that means waiting years, the cost of LMI may be worth paying to buy sooner. A broker can help you weigh it up.

Key terms explained

The main terms used in this calculator and its results.

Deposit: The upfront portion of a property's price you pay yourself, with the remainder funded by your home loan.
Genuine Savings: Funds you've accumulated or held over time (usually three months or more), which many lenders require to approve a loan with a small deposit.
Guarantor: A family member who uses their own property or savings as additional security to help you borrow, often to avoid LMI.
Lenders Mortgage Insurance (LMI): A one-off premium that protects the lender (not you) if you default, typically required when borrowing more than 80% of the property value.
Loan-to-Value Ratio (LVR): Your loan amount expressed as a percentage of the property's value. A lower LVR generally means better rates and no LMI.

View the full mortgage glossary

Frequently asked questions

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