- Published on
Lenders Mortgage Insurance (LMI) Guide: Costs, Waivers & Deposit Rules
- Authors
- Name
- Charlotte Smith
- https://x.com/CharlotteSmithAU
Lenders Mortgage Insurance (LMI) Guide
When buying a home in Australia with a deposit of less than 20% (LVR > 80%), lenders generally require you to pay Lenders Mortgage Insurance (LMI).
What is Lenders Mortgage Insurance?
LMI protects the lender (not the borrower) against financial loss if you default on your home loan.
The cost of LMI depends on:
- Loan-to-Value Ratio (LVR): Higher LVR means exponentially higher LMI premiums.
- Loan Amount: Larger loan principals incur higher premium brackets.
- Property Purpose: Investment property loans carry higher LMI than owner-occupier loans.
How to Avoid or Reduce LMI
- Save a 20% Deposit: Reaching an 80% LVR eliminates LMI completely.
- First Home Guarantee Scheme: Federal government guarantees up to 15% of the deposit, waiving LMI for eligible first home buyers.
- Professional Waivers: Qualified professionals (doctors, lawyers, accountants) can often obtain LMI waivers up to 90% LVR.
Calculate your LMI costs using our free LMI Calculator and Home Deposit Calculator.