LMI Calculator Australia — Lenders Mortgage Insurance Estimate
This article provides general information only and does not constitute financial advice. For advice tailored to your situation, consult a licensed financial adviser. Learn more.
Contents
LMI (Lenders Mortgage Insurance) applies when your deposit is less than 20% of the property purchase price. Use this calculator to estimate your LMI premium based on your property value and deposit amount.
LMI Premium Calculator
What Is LMI?
Lenders Mortgage Insurance (LMI) is an insurance premium you pay to protect the lender — not you — if you default on your home loan and the property is sold for less than the outstanding loan balance.
LMI is required when your loan-to-value ratio (LVR) exceeds 80% — meaning your deposit is less than 20% of the purchase price. For a $750,000 property, LMI kicks in if your deposit is less than $150,000.
LMI is provided by two main insurers in Australia:
- Helia (formerly known as Genworth)
- QBE LMI
The insurer your lender uses depends on the lender. You don’t choose the insurer — the lender does. Despite this, you pay the premium.
LMI Costs by LVR and Property Price
The following table shows indicative LMI premiums for owner-occupier P&I loans at different LVR tiers. Actual premiums vary between insurers and lenders.
| Property price | 5% deposit (95% LVR) | 10% deposit (90% LVR) | 15% deposit (85% LVR) |
|---|---|---|---|
| $400,000 | ~$10,200 | ~$4,900 | ~$2,050 |
| $500,000 | ~$12,700 | ~$6,100 | ~$2,560 |
| $600,000 | ~$15,300 | ~$7,300 | ~$3,080 |
| $750,000 | ~$19,100 | ~$9,200 | ~$3,850 |
| $900,000 | ~$22,900 | ~$11,000 | ~$4,620 |
| $1,000,000 | ~$25,400 | ~$12,200 | ~$5,130 |
Estimates only, inclusive of approximate stamp duty on LMI premium. Figures for owner-occupier P&I loans.
Key Facts About LMI in Australia
LMI Protects the Lender, Not You
This is the most important thing to understand about LMI. If you default and the lender sells your property for less than your outstanding debt, the LMI insurer pays the shortfall to the lender. The insurer can then pursue you personally to recover their loss. LMI does not protect you from the consequences of default.
You Can Capitalise LMI Into Your Loan
Instead of paying LMI as a lump sum at settlement, most lenders allow you to capitalise the LMI premium — adding it to your loan balance. This avoids the upfront cash payment but means you pay interest on the LMI amount over the life of your loan.
Example: On a $600,000 loan with $15,300 LMI capitalised, at 6.00% over 30 years, you pay an additional ~$17,000–$18,000 in interest on top of the LMI premium itself.
LMI Is Not Transferable
LMI does not carry across if you refinance. If you refinance to a new lender while your LVR is still above 80%, you generally pay LMI again with the new lender. This is one reason why refinancing with a high LVR has limited benefit.
LMI Rate Depends on LVR Tier, Not Just LVR
LMI premiums are calculated in LVR tiers, not on a sliding scale. Common tiers:
- LVR 80.01%–85% — lowest LMI rate
- LVR 85.01%–90% — moderate LMI rate
- LVR 90.01%–92% — higher LMI rate
- LVR 92.01%–95% — highest standard LMI rate
Lenders rarely go above 95% LVR without a guarantor structure.
How to Avoid or Reduce LMI
1. Save a 20% Deposit
The cleanest solution — a 20% deposit takes you to an 80% LVR and avoids LMI entirely. For a $750,000 property, that’s a $150,000 deposit. Use our savings for a deposit guide for strategies.
2. Use a Guarantor
A family guarantee from a parent uses equity in their property to secure your loan — potentially eliminating LMI even with a small deposit. See our guarantor home loans guide for how this works and the risks involved.
3. Use the First Home Guarantee (FHLDS)
The federal government’s First Home Guarantee scheme allows eligible first home buyers to purchase with just a 5% deposit — without paying LMI. The government guarantees the remaining 20% (meaning no LMI is charged). Places are limited to 35,000 per year. See our First Home Guarantee guide.
4. Qualify for a Professional LMI Waiver
Many lenders waive LMI for certain professions — including doctors, nurses, pharmacists, lawyers, accountants and some engineers — on loans up to $1.5–$2 million, even at 90–95% LVR. See our professional LMI waivers guide for the full list.
5. Use the First Home Owner Grant
In most states, the First Home Owner Grant (FHOG) can supplement your deposit, potentially reducing your LVR below 80% or to a lower LMI tier.
Is It Worth Paying LMI to Buy Sooner?
This is a genuine trade-off question that many Australian buyers face.
The case for buying with LMI: If property prices in your target market are rising faster than you can save, buying now with LMI may leave you better off than waiting. The property price growth may outweigh the LMI cost.
The case for waiting for 20%: If property prices are flat or falling, saving to avoid LMI makes clear financial sense. You also avoid capitalising a large cost into your loan.
There’s no universal answer — it depends on market conditions, your savings trajectory, and the property you’re buying. For a structured comparison, see our rent vs buy calculator.
Important: Lenders are required to act in your best interests. An LMI decision should be discussed with a mortgage broker who can present all available options, including guarantor structures and government schemes.
FAQ — LMI Australia
Can I claim LMI as a tax deduction?
For investment properties, LMI may be deductible. Historically, LMI for investment purposes was treated as a borrowing cost and deducted over 5 years (or the loan term, whichever is shorter). For owner-occupiers, LMI is generally not deductible. Tax rules change — confirm with your accountant.
Is LMI the same as mortgage protection insurance?
No. LMI protects the lender against default. Mortgage protection insurance (or income protection insurance) protects you if you lose your income and can’t make repayments. They are completely separate products. See our mortgage protection insurance guide.
Does LMI cover me if property prices fall?
No. LMI covers the lender if you default and they sell the property for less than the outstanding loan. If you remain current on your repayments, LMI has no relevance — even if your property falls in value.
Does every lender charge the same LMI?
No. LMI premiums vary between Helia and QBE, and individual lenders may negotiate different rates with their insurer. Some lenders also absorb LMI costs as part of a promotional offer. Comparing lenders through a broker may uncover meaningfully different LMI costs on the same loan.
LMI estimates are based on approximate published insurer schedules and are indicative only. Actual premiums depend on your lender, loan type, location, and LMI insurer. For advice tailored to your situation, speak with a licensed mortgage broker. Find one through the ASIC financial advisers register or MoneySmart.