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.

Is LMI refundable if I repay the loan early?

Some insurers refund part of the premium if the loan is discharged within the first one to two years, on a sliding scale. After that, no refund applies.

Does LMI transfer if I move house?

Occasionally. A small number of lenders offer portability of the LMI policy when you sell and buy again, but in most cases a new premium is charged on the new loan.

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.

Part of our first home buyers guide — the full walkthrough, articles and client case studies for this topic.

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.

It's worth being clear about who LMI protects: the lender, not you. It is a one-off insurance premium the lender takes out against the risk of default, and the borrower pays for it. In return, lenders will accept deposits as small as 5%, which is why LMI is often the difference between buying this year and buying in three years' time.

How the premium is calculated

LMI is priced off two things: your LVR and your loan size, with the premium rising steeply as LVR climbs. The jump from 85% to 90% LVR often doubles the premium, and 90% to 95% can double it again. Loan size magnifies the effect, because the premium is a percentage of the loan. Some lenders also load the premium for investment loans, interest-only terms or non-standard security.

In most cases the premium is capitalised — added on top of your loan rather than paid in cash — so you also pay interest on it for the life of the loan. That means a $18,000 premium can cost well over $30,000 across 30 years if you never make extra repayments, which is a strong argument for paying it down early.

Worked examples

$700,000 purchase, 10% deposit — a $630,000 loan at 90% LVR; premium commonly around $13,000–$15,000.
$700,000 purchase, 15% deposit — a $595,000 loan at 85% LVR; premium commonly around $7,000–$9,000.
$700,000 purchase, 20% deposit — a $560,000 loan at 80% LVR; no LMI payable at all.

In that example, finding an extra $35,000 of deposit saves roughly $6,000 of premium — a strong return, but only if you can save it quickly enough that the market doesn't move more than that in the meantime.

Four legitimate ways to avoid LMI

The First Home Guarantee — buy with a 5% deposit and the government guarantees the rest, so no LMI is charged.
A family guarantor — a parent's equity supports part of the loan, bringing effective LVR under 80%.
Profession waivers — doctors, and in some cases other professionals, get LMI waived up to 90–95% LVR with select lenders.
Save to 20% — the simplest path, if the timing works for you.

Keep reading

The full LMI guide — waivers, refunds and portability.
First Home Guarantee — 5% deposit with no LMI.
LVR calculator — check which pricing band you land in.
LMI waivers for doctors.

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

Related calculators

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Guides for first home buyers

The written guides and directories that sit alongside this calculator.

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