LMI Calculator

What LMI actually is (and who it protects)

Lenders Mortgage Insurance is a one-off premium your lender makes you pay when you borrow more than 80% of a property's value, in other words, when your deposit is under 20%. Here's the bit that trips almost everyone up: it protects the lender, not you. As ASIC's MoneySmart puts it plainly, LMI does not benefit the borrower, it only protects the lender. If you default and the sale of the property doesn't cover what's owed, the insurer pays your bank the shortfall, then can come after you for it. You've paid the premium and you're still on the hook. That's why it's worth reading our full guide to what LMI actually is if you want the deeper dive.

In Australia, LMI is provided by two main insurers, Helia (formerly Genworth) and QBE, not by your bank directly. Your lender picks the insurer and may add its own margin on top, which is one reason the exact premium can vary between lenders for what looks like an identical loan.

How your premium is actually calculated

Two things drive the number: your loan-to-value ratio (LVR) and your loan size. It's not a flat percentage, the rate climbs steeply as your LVR rises, with noticeable jumps once you cross 85%, 90% and 95% LVR. That's because a thinner equity buffer means more risk for the insurer if property prices fall. In practice, saving even a few extra percentage points of deposit, say getting from a 12% deposit to a 15% deposit, can meaningfully cut what you pay, even though you're still below the 20% threshold either way.

LMI is a one-off charge calculated when your loan is approved, not an ongoing fee. Most borrowers add it to their loan balance rather than paying it in cash at settlement, which avoids a big upfront outlay but means you pay interest on the premium for the life of the loan, so the true cost ends up higher than the sticker price. Some states also charge stamp duty on the LMI premium itself, on top of the stamp duty you already owe on the property, which our Stamp Duty Calculator can help you work out.

Worked example: LMI on a $750,000 property

Here's what our calculator estimates for a $750,000 property at a few different deposit sizes, showing exactly how much the premium jumps as your deposit shrinks:

The jump from a 15% deposit to a 5% deposit is roughly five times the premium, on a loan that's only about 12% bigger. That's the steep-band effect in action. These are estimates based on typical published premium patterns, real quotes from Helia or QBE can land higher or lower depending on your lender, loan purpose and state, and if you're financing an investment property, expect to pay more again. Punch your own numbers into the calculator above for a figure closer to yours.

5 ways to avoid or reduce LMI

LMI isn't compulsory if you don't want to pay it, or at least not always. Here are the main ways people sidestep it, or cut the bill down:

1. 1. Save a full 20% deposit. The simplest fix. Get your LVR to 80% and LMI doesn't apply at all. It takes longer to save, but you also tend to unlock sharper interest rates at lower LVRs, which compounds nicely over a 30-year loan.
2. 2. Use a guarantor loan. A family member, usually a parent, offers equity in their own property as extra security, which can push your effective LVR below 80% without you needing a bigger cash deposit. It's powerful, but it puts the guarantor's property on the line, so independent legal advice is a must. Our guarantor home loans guide covers how it actually works.
3. 3. Ask about a profession-based waiver. Some lenders waive LMI entirely for certain professions considered lower-risk, doctors, dentists, pharmacists, lawyers and accountants (CA/CPA) most commonly, sometimes nurses, paramedics and ADF members too. These waivers usually get you to 90% LVR without LMI, and aren't widely advertised, so it's worth asking a broker directly.
4. 4. Check the Australian Government 5% Deposit Scheme. Eligible first home buyers can purchase with as little as a 5% deposit and pay no LMI, the government guarantees up to 15% of the property value to the lender instead. As of October 2025, the scheme has no income caps and no waiting list, single parents and legal guardians can get in with just a 2% deposit. You apply through a participating lender, not directly through Housing Australia, and property price caps apply depending on your state.
5. 5. Aim for the next LVR band down. If 20% isn't realistic right now, even nudging from 95% LVR to 90%, or 90% to 85%, can save you thousands, because the premium jump between bands is so steep at the top end. Run a few deposit sizes through the calculator above to see exactly where the next band saves you real money.

Common LMI misconceptions

• "LMI protects me if I can't repay my loan." It doesn't. LMI protects the lender. If you default, the insurer pays your bank the shortfall and can then pursue you for that same amount. You're not covered, and you've already paid for the privilege.
• "LMI is refundable if I sell or refinance early." Mostly false. LMI premiums are generally non-refundable. If you refinance to a new lender while your LVR is still above 80%, you'll typically pay LMI again on the new loan, it doesn't transfer between lenders.
• "All lenders charge the same LMI." No. Helia and QBE run different premium schedules, and lenders can add their own loading on top. The same deposit and property value can produce meaningfully different quotes depending on the lender and insurer.
• "LMI is the same thing as mortgage protection insurance." Different products entirely. Mortgage protection insurance covers your repayments if you lose your job, get sick or pass away, it protects you. LMI only ever protects the lender.