When buying a home, many borrowers come across the term LMI (Lender’s Mortgage Insurance). If you’re purchasing with less than a 20% deposit, chances are you’ll need to pay it.
In this guide, we’ll explain what LMI is, how it works, how much LMI costs in Australia, and when it applies. We’ll also show you ways to reduce or avoid it.
What is LMI?
Lender’s Mortgage Insurance (LMI) is a one-off insurance premium that protects the lender, not the borrower. If a borrower defaults on their home loan and the sale of the property doesn’t cover the outstanding balance, LMI covers the lender for the shortfall.
Although LMI is for the lender’s benefit, it allows buyers to enter the property market sooner. Without LMI, most banks would require at least a 20% deposit. With LMI, some lenders will accept deposits as low as 5%.
How much is LMI in Australia?
The cost of LMI depends on:
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The property value
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The size of your deposit (LVR)
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The lender’s insurer (Helia/Genworth or QBE)
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Your loan amount
As a general guide:
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Buying a $600,000 property with a 10% deposit (LVR 90%) can result in an LMI premium of around $12,000–$15,000.
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With a 15% deposit (LVR 85%), the LMI premium might drop to $6,000–$8,000.
You can estimate your premium using tools like the QBE LMI Calculator or Helia (Genworth) LMI Calculator.
At Loanbrite, we go beyond calculators. We compare lenders and show you strategies that can minimise or even avoid paying LMI.
Use the Helia LMI Fee Estimator to calculate your premium:
Who provides LMI in Australia?
There are two main providers of LMI:
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Helia (formerly Genworth)
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QBE LMI
The lender chooses which insurer to use, and the premium varies depending on risk factors such as LVR and loan amount.
When is LMI required?
LMI usually applies when the loan-to-value ratio (LVR) is above 80%.
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Example: Buying a $600,000 property with a $120,000 deposit = 80% LVR → no LMI required.
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Example: Buying the same property with a $60,000 deposit = 90% LVR → LMI will apply.
Want to understand LVR in detail? Read our guide: How LVR works: loan-to-value ratio explained.
How is LMI paid?
Borrowers typically have two options:
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Upfront payment at settlement.
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Capitalised into the loan, which spreads the cost over the life of the loan.
The premium is charged once and protects the lender for the full loan term.
Pros and cons of LMI
Pros:
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Allows buyers to purchase sooner with a smaller deposit.
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Enables loans with deposits as low as 5%.
Cons:
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Can add thousands to the cost of buying a property.
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Protects the lender, not the borrower.
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Non-refundable and non-transferable if you refinance.
How to avoid or reduce LMI
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Save a larger deposit – aim for 20%.
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Use a family guarantee – a parent or relative can use equity in their home as security.
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Profession-based exemptions – some lenders waive LMI for doctors, accountants, and lawyers even below 20% deposit.
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Government schemes – initiatives like the First Home Guarantee allow eligible buyers to purchase with as little as 5% deposit without paying LMI.
Final thoughts
LMI is an extra cost, but for many borrowers it’s the key to getting into the property market sooner. By understanding what LMI is in Australia and how much it costs, you can decide whether to pay it or look for ways to avoid it.
At Loanbrite, we specialise in helping borrowers structure loans strategically. Whether you want to reduce your LMI premium, qualify for a waiver, or compare lenders, we’ll guide you every step of the way.
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