Lenders Mortgage Insurance is the cost of borrowing more than 80% of a property's value in Australia. It's the single largest upfront fee after stamp duty for most first home buyers, and it can range from a few thousand dollars at 81% LVR to over $30,000 at 95% LVR on a large loan. This calculator estimates your LMI premium, shows the deposit you'd need to avoid it, and reveals the post-capitalisation LVR if you roll the premium into the loan.
What LMI is and who pays it
LMI is a one-off insurance premium charged by virtually every Australian lender when your LVR (loan-to-value ratio) exceeds 80%. Two insurers underwrite most policies in the market — Helia (formerly Genworth) and QBE LMI — and lenders generally pass through their published rate tables.
The crucial thing to understand is that LMI is not insurance for you. You pay the premium, but the policy covers the lender against losses if you default and the property has to be sold for less than the loan balance. If that scenario plays out, the insurer pays the bank — then has the legal right to pursue you for the shortfall.
How LMI is calculated
LMI is calculated as a percentage of your loan amount. The percentage — the premium rate — depends on two variables:
- LVR (loan-to-value ratio) — the higher your LVR, the higher the premium. LMI kicks in above 80% and rises in steep steps at 85%, 90%, and 95%.
- Loan size — larger loans pay higher premium rates within the same LVR band. A $1.2M loan at 90% LVR pays a higher rate than a $400K loan at 90% LVR.
The standard rate bands look roughly like this (approximate, based on Helia / QBE published schedules):
| LVR | Loan ≤$500K | Loan ≤$1M | Loan >$1M |
|---|---|---|---|
| 80–85% | 0.91% | 1.29% | 1.59% |
| 85–90% | 2.45% | 3.04% | 3.41% |
| 90–95% | 3.91% | 4.42% | 4.58% |
Your premium = loan amount × the applicable rate. A $720,000 loan at 90% LVR pays approximately $720,000 × 3.04% = $21,888.
Worked examples
How much LMI on a 10% deposit (90% LVR)?
| Property price | Loan @ 90% LVR | LMI premium (approx) |
|---|---|---|
| $500,000 | $450,000 | ~$11,000 |
| $700,000 | $630,000 | ~$18,900 |
| $900,000 | $810,000 | ~$24,600 |
| $1,200,000 | $1,080,000 | ~$36,800 |
How much LMI on a $500,000 loan?
| Deposit | LVR | LMI premium (approx) |
|---|---|---|
| $25,000 (5%) | 95% | ~$19,550 |
| $50,000 (10%) | 90% | ~$12,260 |
| $75,000 (15%) | 85% | ~$4,565 |
| $100,000 (20%) | 80% | $0 |
How much LMI on a $700,000 loan?
| Deposit | LVR | LMI premium (approx) |
|---|---|---|
| $35,000 (5%) | 95% | ~$28,950 |
| $70,000 (10%) | 90% | ~$18,850 |
| $105,000 (15%) | 85% | ~$7,630 |
| $140,000 (20%) | 80% | $0 |
Five ways to avoid LMI
1. Borrow 80% or less
The cleanest option: save a 20% deposit plus stamp duty and legal/conveyancing fees. On an $800K property that's typically $160K deposit + $25–40K in costs depending on state. This usually takes 3–6 years of disciplined saving for FHBs — slow but predictable.
2. Professional industry waivers
Most major Australian lenders waive LMI up to 90–95% LVR for borrowers in specific low-risk professions:
- Medical: doctors, dentists, specialists, optometrists, veterinarians — often 95% LVR, sometimes 100%
- Legal: solicitors and barristers — typically 90% LVR
- Accounting & finance: chartered accountants, CAs, CPAs — typically 90% LVR
- Engineering & actuarial: some lenders extend waivers to engineers, mining engineers, and actuaries
Eligibility usually requires membership in the relevant professional body and minimum income thresholds — $150K–$200K is common for medical waivers, lower for legal and accounting. Each lender's eligible profession list is slightly different, so a broker is the fastest way to match the profession to the right lender.
3. Guarantor (family pledge) loan
A close family member, usually parents, uses equity in their own property to secure a portion of your loan. From the lender's perspective your effective LVR drops below 80%, so no LMI is required. The guarantor's exposure is limited to a specific amount (typically the portion of the loan above 80% of the property's value), not the whole loan.
Pros: lets buyers with little deposit enter the market years earlier. Cons: the guarantor's property is at risk if you default, and releasing the guarantee later requires re-valuation and refinancing — usually triggered once your LVR drops below 80% through property growth and repayments.
4. First Home Guarantee Scheme (FHBG)
The Australian Government guarantees up to 15% of an eligible FHB's loan, letting buyers borrow up to 95% LVR with no LMI. Income caps apply (single $125K, couples $200K for FY26), as do property price caps that vary by state and capital-city vs. regional. The scheme is limited to a number of places each financial year — apply through a participating lender.
Related schemes: the Regional First Home Buyer Guarantee for non-capital-city buyers, and the Family Home Guarantee for eligible single parents (2% deposit, no LMI).
5. Negotiate or use a smaller lender
Some lenders — particularly customer-owned banks (Bank Australia, Heritage, ME Bank) and niche lenders — run occasional LMI specials or have lower LMI rates than the major banks. The differences aren't huge but can save several thousand dollars on a large loan. Brokers usually have visibility on which lenders are currently running these.
Capitalising LMI vs paying upfront
You can almost always add LMI to the loan balance instead of paying it upfront. This is called "capitalising" the LMI:
| Option | What you pay at settlement | What you borrow |
|---|---|---|
| Pay upfront | $18,000 LMI from savings | $720,000 |
| Capitalise | $0 LMI from savings | $738,000 |
Capitalising preserves cash for moving costs, furniture, and emergency reserves — which is usually the right call for FHBs. The trade-off is that you pay interest on the $18,000 of LMI for the life of the loan: at 6% over 30 years that's about $20,000 in additional interest.
One catch: capitalising can push your effective LVR above 95%, which some lenders won't allow. Most lenders cap capitalisation so the post-capitalisation LVR stays at or below 95%. The calculator above shows both pre- and post-capitalisation LVR so you can see whether you'll hit the cap.
LMI by state
LMI premiums themselves are insurer-set and don't vary by state — Helia and QBE charge the same rate for a $700K loan at 90% LVR whether the property is in Sydney, Melbourne, Brisbane, or Perth.
However, state-specific factors influence whether you even need LMI:
- NSW — First Home Buyer Choice lets eligible buyers pay annual property tax instead of stamp duty, freeing up deposit cash that can go toward a larger initial deposit and lower LVR.
- Victoria — full stamp duty exemption for FHBs under $600K, partial exemption $600K–$750K. The saved stamp duty can fund a bigger deposit.
- Queensland — full FHB stamp duty concession under $700K, partial up to $800K. The largest stamp duty concession of any state for typical FHB price points.
- Western Australia — FHB stamp duty exemption under $430K, partial up to $530K. Lower thresholds than the eastern states.
- South Australia, Tasmania, ACT, NT — each has its own FHB grant and concession structure.
State-specific LMI calculator pages with full premium examples for each state's median property price are being rolled out separately.
What this calculator does
Inputs:
- Property price — the purchase price (or lower of price and valuation)
- Loan amount — what you'll borrow, before any LMI capitalisation
Outputs:
- LVR percentage — your loan-to-value ratio
- LMI required (yes/no) — flags whether your LVR is in the LMI band (80–95%)
- LMI premium estimate — based on standard insurer rate tables
- Premium rate — the percentage applied to your loan
- Loan with LMI capitalised — total loan if rolling LMI into the loan
- Post-capitalisation LVR — effective LVR after adding the premium
- Deposit to avoid LMI — extra cash needed to reach 80% LVR
For just the LVR thresholds without LMI calculation, use the dedicated LVR Calculator. For broader borrowing capacity context, see the Borrowing Power Calculator. For stamp duty — the other major upfront cost on top of LMI — use the Stamp Duty Calculator. For refinancing scenarios where you'd want to check whether LVR has dropped enough to drop LMI, see the Refinance Calculator.
Frequently asked questions
What is Lenders Mortgage Insurance (LMI)?
LMI is a one-off insurance premium charged by Australian lenders when you borrow more than 80% of a property's value. It protects the lender — not the borrower — against losses if you default and the property sells for less than the outstanding loan. You pay the premium; the bank holds the policy. Helia (formerly Genworth) and QBE LMI underwrite most policies in Australia.
How is LMI calculated in Australia?
LMI is a percentage of your loan amount. The percentage (the premium rate) depends on two factors: your LVR and your loan size. Premium rates start near 0.5% at 81% LVR and climb to roughly 4.5% at 95% LVR. A $720,000 loan at 90% LVR pays approximately 3.0% × $720,000 = $21,800. The insurers (Helia, QBE) publish rate tables and lenders generally pass them through, though some lenders negotiate small discounts for their book.
How much is LMI on a 10% deposit?
A 10% deposit means a 90% LVR loan. At 90% LVR the premium rate is roughly 2.4–3.0% depending on loan size. Indicative premiums: $400K loan ~$9,800; $500K loan ~$12,260; $700K loan ~$18,850; $1M loan ~$30,410. Exact figures depend on which insurer your lender uses and any negotiated discount.
How much LMI on a $700,000 loan?
Entirely depends on your LVR. At 81% LVR ~$3,325; at 85% LVR ~$7,630; at 90% LVR ~$18,850; at 95% LVR ~$28,950. The higher your deposit, the lower (or zero) the LMI. Saving an extra 5% of the purchase price typically cuts LMI by $10–15K on this loan size.
How much is LMI on a $500,000 loan?
At common deposit levels: 5% deposit (95% LVR) ~$19,550; 10% deposit (90% LVR) ~$12,260; 15% deposit (85% LVR) ~$4,565; 20% deposit (80% LVR) $0. The most expensive band is 95% LVR — going from a 5% to a 10% deposit cuts LMI by over $7,000 on a $500K loan.
How can I avoid paying LMI?
Five legitimate paths: (1) save a 20% deposit and borrow at 80% LVR or less, (2) qualify for a professional industry waiver — most lenders waive LMI for doctors, lawyers, accountants and similar professions up to 90–95% LVR, (3) use a guarantor or family pledge where a relative's property equity secures the loan above 80%, (4) use the First Home Guarantee Scheme which lets eligible FHBs borrow up to 95% LVR with no LMI, (5) negotiate — some smaller banks and credit unions discount or waive LMI on specific products. A broker can match your situation to the right path.
Which professions get LMI waivers in Australia?
Most major lenders waive LMI for medical professionals (doctors, dentists, specialists, optometrists, veterinarians — often 95% LVR, sometimes 100%), legal professionals (solicitors, barristers — typically 90% LVR), and accounting and finance professionals (CAs, CPAs, chartered accountants — typically 90%). Some lenders extend waivers to engineers, mining engineers, and actuaries. Eligibility usually requires professional body membership and a minimum income (often $150K–$200K). Each lender's eligible profession list is different — a broker can match the lender to the profession.
What is a guarantor or family pledge loan?
A guarantor loan (also called 'family pledge' or 'security guarantee') is where a close family member — usually parents — uses equity in their own property to secure a portion of your loan. From the lender's perspective, your effective LVR drops below 80% so no LMI is required. The guarantor's exposure is limited to a specific amount (typically 20% of the property value), not the whole loan. Pros: lets buyers with little deposit enter the market. Cons: the guarantor's property is at risk if you default, and releasing the guarantee later requires re-valuation and refinancing.
Can I capitalise LMI into my loan?
Yes — almost all lenders let you add the LMI premium to the loan balance instead of paying it upfront. On a $720K loan with $18K LMI, capitalising means you borrow $738K and pay nothing upfront at settlement. Trade-off: you pay interest on the premium for the life of the loan, so total cost is higher. Most borrowers capitalise to preserve cash for moving costs, furniture, and reserves. Some lenders cap capitalisation if it would push your LVR above 95%.
Is LMI refundable if I pay the loan out early?
Partially, and only in limited circumstances. If you pay out the loan within 12–24 months of settlement (typically because you sold, refinanced, or paid down the loan significantly), some insurers refund a portion of the premium on a sliding scale. The refund shrinks sharply with time — after about two years there's usually no refund at all. Refund terms vary by insurer, so check your LMI policy details at settlement.
Does LMI protect me as the borrower?
No — this is the most common misconception. LMI protects the lender against loss if you default. If the property is repossessed and sold for less than the loan balance, the insurer pays the bank — and then has the legal right to chase you, the borrower, for the shortfall. LMI does not protect your home, your income, your job, or your ability to make repayments. For borrower protection, look at income protection insurance, mortgage protection insurance, and life insurance — different products entirely.
Does LMI vary by state (NSW, Vic, Qld, WA)?
The LMI premium itself does not vary by state — Helia and QBE charge the same rates Australia-wide for the same LVR and loan size. However, state-specific factors influence whether you need LMI at all: NSW's First Home Buyer Choice scheme frees up deposit cash, Victoria offers stamp duty concessions for FHBs under $750K, Queensland has a full FHB concession under $700K, and each state's FHB grant differs. State-specific LMI examples and concession breakdowns for NSW, VIC, QLD, and WA are coming soon.
Is LMI tax-deductible?
For investment properties, yes — LMI is treated as a borrowing expense and deductible over 5 years (or the loan term, whichever is shorter) under ATO rules. For owner-occupied home loans, LMI is not tax-deductible. If you later convert an owner-occupied property to an investment, the unused portion of LMI's 5-year amortisation can be claimed against rental income from the conversion date. Worth confirming with your accountant — it's a meaningful deduction in year 1–5 of an investment loan.
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Last updated: 16 May 2026