Lenders Mortgage Insurance (LMI) is a one-off insurance premium that protects the lender (not you) if you default on your home loan and the sale of the property does not cover the outstanding debt. LMI is typically required when your deposit is less than 20% of the property value, meaning your Loan-to-Value Ratio (LVR) is above 80%. The cost depends on the loan amount, LVR, and the insurer used by your lender.

How can I avoid paying LMI?

You can avoid LMI by saving a 20% deposit (keeping your LVR at 80% or below), using a government guarantee scheme like the First Home Guarantee (which allows a 5% deposit without LMI), having a family member provide a guarantor loan, or working in certain professions (doctors, lawyers, and accountants may qualify for LMI waivers with some lenders). Some lenders also offer LMI-free loans for specific borrower profiles.

Is LMI a one-off cost?

Yes, LMI is a one-off cost paid at settlement when your home loan is drawn down. It is not an ongoing monthly or annual charge. Most lenders allow you to capitalise (add) the LMI premium to your loan amount, which means you pay it off over the life of your mortgage with interest. Some states also charge stamp duty on the LMI premium itself, adding to the total cost.

Can I add LMI to my loan?

Yes, most lenders allow you to capitalise (add) the LMI premium to your home loan rather than paying it upfront at settlement. This means you do not need additional cash on hand for LMI, but the premium is added to your total loan balance and you will pay interest on it over the life of the loan. This increases both your total debt and your ongoing repayments.

LMI Calculator

Estimate your Lenders Mortgage Insurance (LMI) cost based on property value and deposit size. See how different deposit amounts affect your LMI premium.

Last verified: 1 July 2025

How is Lenders Mortgage Insurance calculated in Australia?

LMI kicks in when your deposit is below 20% of the property value (Loan-to-Value Ratio above 80%). The premium is a one-off cost calculated on the loan amount and LVR — typically 1% to 5% of the loan. Paid at settlement or capitalised into the loan. Source: ASIC MoneySmart; Helia (formerly Genworth) LMI rate tables.

Worked example. Buying a $700,000 home with a 10% deposit ($70,000), the $630,000 loan sits at 90% LVR. Typical LMI premium is roughly $12,000 to $14,000 (about 2% of the loan). A 5% deposit pushes LMI closer to $25,000 on the same property. Saving a 20% deposit avoids LMI entirely.

General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.

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How is Lenders Mortgage Insurance calculated in Australia?

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