LMI Calculator
Estimate your Lenders Mortgage Insurance premium based on your deposit size, property value, and state.
How Lenders Mortgage Insurance Works in Australia
How it works
Lenders Mortgage Insurance (LMI) is a one-off premium that protects the lender — not you — if you default on your home loan. It's required when your deposit is less than 20% of the property value, which means your loan-to-value ratio (LVR) exceeds 80%. The premium is charged at settlement and is typically added to your loan balance, meaning you pay interest on the LMI amount as well.
LMI in Australia is underwritten by two main insurers: Helia (formerly Genworth) and QBE. Each has its own premium schedule, but the factors that determine the cost are the same: the property value, the LVR, the loan amount, whether you're a first home buyer, the property's state or territory, and the loan type (owner-occupier P&I, investor, or interest-only). Premiums scale steeply with LVR — borrowing at 85% LVR might cost 0.5–1.0% of the loan amount, while borrowing at 95% LVR can cost 2.5–4.5%.
Some borrowers can avoid LMI through specific programs. The Australian Government's Home Guarantee Scheme (HGS) allows eligible first home buyers to purchase with as little as 5% deposit (or 2% for single parents) without paying LMI, as the government guarantees the portion above 80% LVR. Certain professions — particularly medical practitioners, lawyers, and accountants — can also access LMI waivers from some lenders at up to 90% LVR.
When to use this calculator
- You're buying a property with less than a 20% deposit and want to estimate the LMI premium you'll pay
- You want to compare the cost of buying now with a small deposit plus LMI versus waiting to save a full 20% deposit
- You want to see how much additional deposit you'd need to drop into a lower LVR bracket and significantly reduce (or eliminate) LMI
- You're checking whether you qualify for the Home Guarantee Scheme or a professional LMI waiver
- You're deciding whether to capitalise LMI into the loan (increasing the balance) or pay it upfront from savings
Key concepts
- Loan-to-Value Ratio (LVR)
- The loan amount divided by the property value, expressed as a percentage. A $480,000 loan on a $600,000 property is 80% LVR. LMI is triggered when LVR exceeds 80%. The premium rate increases at each LVR bracket — 80.01–85%, 85.01–90%, 90.01–95%, and 95.01%+.
- Capitalising LMI
- Most borrowers add the LMI premium to their loan balance rather than paying it upfront. This means you pay interest on the LMI amount for the life of the loan. A $12,000 LMI premium capitalised at 6.2% over 30 years costs an additional $14,500 in interest — so the true cost is roughly $26,500, not $12,000.
- Home Guarantee Scheme (HGS)
- A Federal Government program that guarantees the portion of a home loan above 80% LVR, removing the need for LMI. The First Home Guarantee allows 5% deposits, the Regional First Home Buyer Guarantee also allows 5%, and the Family Home Guarantee allows 2% deposits for single parents. Places are capped each financial year and eligibility criteria apply.
- LVR breakpoints
- LMI premiums jump at specific LVR thresholds. Moving from 89% to 91% LVR can roughly double the premium. Being just above a breakpoint (e.g. 80.5% LVR) means paying thousands in LMI that could be avoided by finding a few thousand dollars more in deposit. This calculator shows you exactly how much extra deposit eliminates or reduces LMI.
Worked example — LMI on a $750,000 property with 10% deposit
David is buying a $750,000 apartment in Sydney with a $75,000 deposit (10%), giving him a loan of $675,000 at 90% LVR. He's an owner-occupier taking a P&I variable loan.
| Detail | Value |
|---|---|
| Property value | $750,000 |
| Deposit | $75,000 (10%) |
| Loan amount | $675,000 |
| LVR | 90.0% |
| Estimated LMI premium | $14,580 |
| Loan after capitalising LMI | $689,580 |
How extra deposit changes the picture:
| Deposit | LVR | LMI premium | Saving vs 10% deposit |
|---|---|---|---|
| $75,000 (10%) | 90.0% | $14,580 | — |
| $90,000 (12%) | 88.0% | $9,990 | $4,590 |
| $112,500 (15%) | 85.0% | $5,400 | $9,180 |
| $150,000 (20%) | 80.0% | $0 | $14,580 |
By increasing his deposit from $75,000 to $112,500 — an extra $37,500 — David saves $9,180 in LMI. The marginal savings are strongest near the LVR breakpoints. If David capitalises the $14,580 LMI and pays interest on it for 30 years at 6.2%, the true cost of LMI is closer to $32,000 — making the case for saving a larger deposit or exploring the Home Guarantee Scheme.
LMI Frequently Asked Questions
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