§ 09 — Property
The insurance you pay to protect the bank.
LMI kicks in when your deposit is below 20%. It can add thousands to your purchase cost — and it protects the lender, not you. See exactly what it will cost at your deposit level.
Your inputs
Indicative Genworth-tier rates. Actual LMI varies by lender.
The result
Enter your property price and deposit to see whether LMI applies and how much it will cost.
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How LMI works
LMI is a one-time premium calculated as a percentage of the loan amount. The rate rises sharply with LVR — moving from an 85% LVR to a 90% LVR can nearly double the premium. Most lenders capitalise LMI, meaning they add it to your loan balance. You then pay interest on the LMI for the entire loan term.
On a $540,000 loan (10% deposit on a $600,000 property) the base LMI premium at 85% LVR is around $6,900. Add 9% NSW stamp duty on the premium ($621) and you're paying about $7,500 — which at 6.5% over 30 years costs roughly $17,000 total in interest.
The most cost-effective path is reaching 20% deposit before buying. If you can't, the First Home Guarantee scheme lets eligible first home buyers purchase with as little as 5% deposit with no LMI — the government guarantees 15% of the loan.
Frequently Asked Questions
What is Lenders Mortgage Insurance (LMI)?+ open
LMI is insurance paid by the borrower to protect the lender if the borrower defaults and the property sells for less than the loan balance. It is required when the LVR exceeds 80% — that is, when the deposit is less than 20% of the purchase price. Despite the borrower paying it, the policy covers the lender, not the borrower.
How much does LMI cost in Australia?+ open
LMI cost depends on the loan size and LVR. On a $600,000 property with a 10% deposit ($60,000), LMI typically costs $7,000–$12,000 for owner-occupiers. Investor premiums are higher. LMI is usually capitalised — added to the loan — so you don't pay it upfront but do pay interest on it for the life of the loan.
Can LMI be avoided?+ open
Yes — save a 20% deposit (the LVR must be 80% or below). Alternatively, a guarantor loan uses a parent's property as additional security so the effective LVR drops below 80%. Some lenders waive LMI for certain professions (medical, legal, accounting) up to an 85–90% LVR. The First Home Guarantee scheme allows eligible buyers to purchase with 5% deposit without LMI, with the government guaranteeing 15% of the loan.
Is LMI tax-deductible for investors?+ open
Yes — for investment properties, LMI is deductible but must be amortised over the shorter of the loan term or 5 years. You cannot claim the full amount in year one. For owner-occupied properties, LMI is not deductible. Consult your tax agent for your specific situation.