LMI Calculator Australia | Lenders Mortgage Insurance

Lenders mortgage insurance (LMI) is a one-off cost that may apply when you borrow more than 80% of a property’s value. This calculator estimates the LMI premium based on your property price, deposit, and loan type. Enter your details above to see your estimated LMI cost.

What is lenders mortgage insurance?

LMI is insurance that protects the lender — not you — if you default on your home loan and the sale of the property does not cover the outstanding debt. Despite protecting the lender, the borrower pays the premium. LMI is required by most Australian lenders when the loan-to-value ratio (LVR) exceeds 80%.

In Australia, LMI is provided by two main private insurers:

• Helia (formerly Genworth Financial) — the largest LMI provider
• QBE Insurance — the second-largest provider

When is LMI required?

LMI is triggered when your deposit is less than 20% of the property purchase price, resulting in an LVR above 80%. The threshold is straightforward:

How much does LMI cost?

LMI premiums vary significantly based on three factors:

1. Loan-to-value ratio (LVR) — higher LVR means higher premium
2. Loan amount — larger loans attract higher rates as a percentage
3. Loan purpose — investor loans are typically 10-20% more expensive than owner-occupier loans

Worked example: $700,000 property with different deposit sizes

Scenario: Purchasing a $700,000 property in Sydney as an owner-occupier.

Monthly impact based on capitalising the LMI at 6.5% over 30 years. These are estimates — actual premiums vary between lenders.

The difference between a 10% and 20% deposit on a $700,000 property is $70,000 in additional savings but approximately $12,700 in avoided LMI. If saving an extra $70,000 would take 2-3 years, the LMI cost may be worthwhile compared to waiting (and potentially paying more for the same property due to price growth).

How to avoid LMI

There are several strategies to avoid paying LMI:

1. Save a 20% deposit

The most straightforward way to avoid LMI. On a $700,000 property, this means $140,000 in savings (not counting stamp duty and other costs).

2. Family guarantee (guarantor loan)

A family member (usually a parent) uses equity in their own property as additional security for your loan. This allows you to borrow up to 100% of the property value without LMI. The guarantor’s property is at risk if you default, so this should be carefully considered.

3. Government schemes

The First Home Guarantee (formerly First Home Loan Deposit Scheme) allows eligible first home buyers to purchase with as little as 5% deposit without LMI. The government guarantees the gap between the deposit and 20%. Places are limited each financial year.

4. Professional packages

Some lenders offer LMI waivers for borrowers in certain professions (typically medical professionals, lawyers, accountants, and engineers). The LVR limit for these waivers varies but is commonly up to 85-90%.

5. LMI-free loans

Some lenders offer loans without LMI at higher interest rates. The break-even depends on the LMI cost versus the interest rate premium over the loan term.

Can you capitalise LMI into the loan?

Yes. Most lenders allow you to add the LMI premium to your loan balance rather than paying it upfront. This is called capitalisation.

Pros:

• No large upfront cash outlay
• Preserves your cash for stamp duty, moving costs, or a buffer

Cons:

• You pay interest on the LMI amount for the life of the loan
• Your LVR increases slightly (which could affect your ability to refinance later)
• Total cost is higher than paying upfront

Example: $10,000 LMI capitalised at 6.5% over 30 years adds approximately $63 per month to your repayments and costs approximately $22,800 in total (LMI + interest).

LMI for investment properties

Investor loans attract higher LMI premiums than owner-occupier loans — typically 10-20% more. This is because lenders consider investment loans riskier. Some lenders also:

• Cap maximum LVR for investors at 90% (not 95%)
• Require a larger deposit for investment property purchases
• Apply stricter serviceability assessments for investors

If you are purchasing an investment property, the LMI premium becomes a borrowing cost for tax purposes. It can be claimed as a tax deduction over 5 years (or the loan term if shorter). See our investment property tax deductions calculator for details.

How LMI rates are determined

LMI premiums in Australia are set by the private insurers (Helia and QBE) and are not publicly disclosed in a standard rate card. The rates used in this calculator are industry-standard approximations based on:

• Published lender disclosure documents
• APRA reporting on LMI prevalence and claims
• Industry guidance from mortgage broker associations
• Comparison site aggregated data

Actual premiums may differ from estimates. Factors that affect the exact premium include:

• Your specific lender’s arrangement with their LMI provider
• Your credit history and serviceability assessment
• The property location and type
• Whether you capitalise the LMI or pay upfront

Always obtain a formal LMI quote from your lender before making financial decisions.

Stamp duty and LMI: total upfront costs

When budgeting for a property purchase, LMI is just one component of your upfront costs. Use our stamp duty calculator to estimate transfer duty in your state, then add LMI and other costs:

• Stamp duty — varies by state and property price
• LMI — if LVR exceeds 80%
• Conveyancing — typically $1,500–$3,000
• Building and pest inspection — typically $500–$800
• Loan establishment fees — varies by lender

Go deeper with the full spreadsheet

This calculator estimates LMI as a one-off cost. For comprehensive property investment analysis including cash flow projections, negative gearing, depreciation, and hold-versus-sell modelling, see our premium property investment spreadsheet.