Estimate your Lenders Mortgage Insurance (LMI) premium based on your property value and deposit size. LMI applies when your deposit is less than 20% of the property value (LVR above 80%). Enter your details below to see your LVR and estimated premium.
Lenders Mortgage Insurance (LMI) is a one-off insurance premium that protects your lender — not you — if you default on your loan. It's required when your deposit is less than 20% of the property's value, meaning your Loan-to-Value Ratio (LVR) is above 80%.
Despite the name, LMI does not protect you as the borrower. If you default, the insurer pays the lender, but you can still be pursued for any shortfall. LMI is a cost of borrowing with a smaller deposit — it enables you to buy a home sooner, but it adds a significant upfront cost.
| LVR Range | LMI Required? | Typical Premium (% of loan) |
|---|---|---|
| Up to 80% | No | 0% |
| 80.01% – 85% | Yes | ~1.0% – 1.5% |
| 85.01% – 90% | Yes | ~1.5% – 2.2% |
| 90.01% – 95% | Yes | ~2.2% – 3.0% |
| Above 95% | Rare | ~3.0% – 4.0% |
Actual premiums vary by lender, loan size, borrower profile, and whether the property is owner-occupied or an investment. These figures are indicative only.
LMI premiums are determined by three main factors:
Most lenders allow you to capitalise the LMI premium into your loan — meaning it's added to your mortgage and paid off gradually over the life of the loan. This means you pay interest on the LMI premium, increasing the total cost. Some lenders require LMI to be paid upfront at settlement.
Scenario: Sarah buys a property for $800,000 with a $80,000 deposit (10%). Her loan is $720,000 at 90% LVR.
At 90% LVR, the estimated LMI premium is approximately 1.8% of the loan amount: $720,000 × 1.8% = $12,960. If capitalised into the loan, Sarah's total loan becomes $732,960, and she'll pay interest on the LMI premium over the life of the loan — adding roughly $15,000–$20,000 in additional interest over 30 years.
Scenario: Mark and Lisa buy a property for $1,200,000 in Sydney with a $180,000 deposit (15%). Their loan is $1,020,000 at 85% LVR.
At 85% LVR, the estimated LMI premium is approximately 1.2% of the loan amount: $1,020,000 × 1.2% = $12,240. Because their LVR is lower than Sarah's, their premium percentage is lower, but the larger loan amount means the dollar cost is similar.
If they instead waited 12 months and saved another $60,000 (reaching 20% deposit), they would avoid LMI entirely. The question is whether property prices rise by more than $12,240 in that time — in Sydney, a 1% increase on a $1.2M property is $12,000, so it's a close call. This is the core decision every buyer with less than 20% deposit faces.
One of the most common questions borrowers ask is whether it's better to pay LMI and buy now, or wait until they have a 20% deposit. The answer depends on three factors: how fast property prices are rising, how fast you can save, and how long you plan to hold the property.
| Scenario | LMI Cost | Property Price Growth (1yr) | Net Position After 1 Year |
|---|---|---|---|
| Buy now at 90% LVR ($800K property) | ~$12,960 | +5% ($40,000 gain) | +$27,040 better off |
| Buy now at 90% LVR ($800K property) | ~$12,960 | +0% ($0 gain) | -$12,960 worse off |
| Wait 12 months, buy at 80% LVR | $0 | +5% (now $840K, need $168K deposit) | Must save $8K more for deposit |
The table above illustrates why there's no universal answer. In a rising market, paying LMI to enter sooner can be the better financial decision. In a flat or declining market, waiting to reach 20% deposit avoids a cost that may never be recovered.
In Australia, there are two main LMI providers: Helia (formerly Genworth) and QBE Lenders' Mortgage Insurance. Most major banks use one or the other, and the premium can differ by thousands of dollars for the same loan. Here's a general guide:
Because LMI premiums are not standardized, the same borrower could pay meaningfully different LMI costs depending on which lender they choose. A mortgage broker can obtain indicative LMI quotes from multiple lenders before you apply, so you can compare the total cost of the loan including LMI.
LMI premiums are typically higher for investment loans than for owner-occupied loans at the same LVR. This is because lenders and insurers consider investment loans to carry higher default risk — if the tenant stops paying or the property is vacant, the borrower still needs to cover the mortgage from their own income.
As a rough guide, expect investment LMI premiums to be 0.2%–0.5% higher than owner-occupied at the same LVR. Some lenders also cap investment LVRs at 90% (rather than 95% for owner-occupied), meaning you may need a larger deposit for an investment property.
For investors, LMI on an investment property loan is generally tax-deductible as a borrowing cost. However, it must be apportioned over 5 years or the loan term (whichever is shorter), not claimed in full in the first year. For owner-occupiers, LMI is not tax-deductible.
The lender. If you default, the LMI insurer pays the lender for any shortfall after the property is sold. You can still be pursued for any remaining debt.
Rarely. Some insurers offer a partial refund if you refinance within the first 2 years, but most do not. When you refinance to a new lender, you may need to pay LMI again if your LVR is still above 80%.
It depends on property values and your circumstances. If property prices are rising faster than you can save, paying LMI to buy sooner may be financially better than waiting to reach 20% deposit.
Lenders Mortgage Protection (LMP) is an insurance that covers the borrower's repayments in case of death, illness, or disability. It's a separate product. LMI covers the lender against default.
LMI premiums are set by the insurer, not the lender, so there's limited room to negotiate the rate itself. However, some lenders offer LMI waivers or discounts as part of professional package loans (typically for doctors, lawyers, accountants, and other professionals). These waivers can save $10,000–$30,000 on a typical loan.
If you capitalise LMI into the loan, your total loan amount increases, which means your monthly repayments are higher. This can slightly reduce your borrowing capacity. If you pay LMI upfront, it doesn't affect your loan amount or borrowing capacity.
LMI is a one-off premium tied to the original loan. If you sell the property and discharge the loan, the LMI is not refunded. If you buy a new property with a new loan and your LVR is still above 80%, you'll need to pay LMI again on the new loan.
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