Estimate your Lenders Mortgage Insurance premium based on your deposit and property value, compare capitalised vs upfront payment, and see how much extra deposit would avoid LMI entirely.
📖 15 min read · ⏱️ Calculator time: ~30 seconds
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LMI estimates are indicative only, based on simplified LVR bracket rates — actual premiums vary by lender, insurer, loan size and borrower profile. Confirm the exact figure with your lender before proceeding.
Lenders Mortgage Insurance is a one-off insurance premium charged when your deposit is below 20% of the property value (an LVR above 80%). It protects the lender — not you — if you default on the loan and the property sale doesn't cover the outstanding balance. LMI is unique to countries like Australia and Canada; it's what allows lenders to approve loans with smaller deposits than they otherwise would.
LMI is calculated as a percentage of your loan amount, increasing as your LVR rises above 80%. The calculator above estimates this using indicative LVR bracket rates — roughly 0.7% at 85% LVR, rising to around 3% at 95% LVR. Real premiums also vary by loan size, lender, insurer and borrower profile, so treat the figure above as a planning estimate, not a quote.
LVR expresses your loan amount as a percentage of the property's value: LVR = (Loan amount ÷ Property value) × 100. It's the key number that determines whether LMI applies and how much it costs — above 80% LVR, LMI generally applies, and the premium rises steeply as LVR climbs toward 95%. The LVR Gauge in the calculator above shows exactly where your deposit puts you.
The Australian Government 5% Deposit Scheme (formerly the First Home Guarantee) lets eligible first home buyers purchase with as little as a 5% deposit and no LMI — the government guarantees the remaining gap to the lender. There are no income caps under this scheme, though property price caps and lender/eligibility approval still apply. See our dedicated Home Deposit Calculator for a full breakdown of eligibility and savings.
LMI applies the same way regardless of whether you're an owner-occupier or investor — it's driven by LVR, not property purpose. However, first home buyer schemes that waive LMI (like the 5% Deposit Scheme) are generally only available to owner-occupiers purchasing their first home, not investors. Set Loan Type in the calculator above to see relevant guidance for your situation.
Most lenders let you either pay LMI upfront in cash at settlement, or capitalise it into your loan balance. Capitalising is convenient — no extra cash needed at settlement — but costs more overall, since you pay interest on the premium itself for the life of the loan. The Capitalised LMI Impact panel in the calculator above quantifies this precisely: in a typical example, capitalising a $10,800 premium over 30 years adds roughly $13,775 in extra interest.
Every extra dollar of deposit does double duty — reducing your loan amount directly and potentially dropping you into a lower LMI band. The LVR Scenario Comparison in the calculator above shows this clearly: moving from a 5% to a 10% deposit on an $800,000 property roughly halves the LMI premium, not just reduces it by half the deposit gap. This is why even a modest increase in deposit savings can be disproportionately valuable near the higher LVR bands.
| Scenario | Deposit | LVR | What to notice |
|---|---|---|---|
| 5% deposit | 5% | 95% | Highest LMI band, close to some lenders' maximum LVR |
| 10% deposit | 10% | 90% | Common minimum for many lenders |
| 15% deposit | 15% | 85% | Meaningfully lower LMI than 90% |
| 20% deposit | 20% | 80% | No LMI required |
| First-home buyer | 5% (with scheme) | 95% | Potentially $0 LMI via the 5% Deposit Scheme |
| Investment property | 10-20% | Varies | Same LMI mechanics as owner-occupier; no first-home-buyer waivers |
| High-value property | Any % | Varies | Same percentage rates apply, but dollar premium scales with loan size |
| LVR comparison | 5% vs 20% | 95% vs 80% | See LVR Scenario Comparison panel for the full spread |
Enter each of these scenarios into the calculator above (adjusting deposit, loan type and FHB status) to see exact figures for your own numbers.
| Term | Meaning |
|---|---|
| Lenders Mortgage Insurance (LMI) | Insurance protecting the lender (not the borrower) if the loan defaults, generally required above 80% LVR. |
| Loan-to-Value Ratio (LVR) | Loan amount as a percentage of the property's value. |
| Capitalised LMI | LMI added to the loan balance rather than paid in cash, meaning interest accrues on the premium too. |
| 5% Deposit Scheme | Government scheme allowing eligible first home buyers to purchase with a 5% deposit and no LMI. |
| Professional waiver | A lender policy waiving LMI for certain professions (doctors, lawyers, accountants) up to a higher LVR. |
| Genuine savings | Savings held for a period (commonly 3 months) that lenders may require as evidence of saving capacity. |
LMI is a real, often significant cost of buying with a smaller deposit — but it's also a well-understood, quantifiable one. Use the calculator above to see your own estimate, compare deposit scenarios, check scheme eligibility, and weigh capitalised against upfront payment before you commit. Pair it with our Home Deposit and House Affordability calculators for the complete picture of what you can afford and what it will actually cost.
What is Lenders Mortgage Insurance (LMI)?
LMI is a one-off insurance premium charged when your deposit is below 20% of the property value. It protects the lender, not you, if you default on the loan and the property sale doesn't cover the remaining balance.
How is LMI calculated?
LMI is calculated as a percentage of your loan amount, increasing as your LVR rises above 80% — roughly 0.7% at 85% LVR up to around 3% at 95% LVR (indicative rates; actual premiums vary by lender and insurer).
How much is LMI in Australia?
This depends heavily on your LVR and loan size — commonly a few thousand dollars at 85% LVR, rising to tens of thousands at 95% LVR on a larger loan. Use the calculator above for an estimate based on your own numbers.
Do I need to pay LMI with a 20% deposit?
No — a 20% deposit keeps your LVR at or below 80%, which is generally the threshold below which LMI isn't required.
What is LVR and how does it affect LMI?
LVR (Loan-to-Value Ratio) is your loan amount as a percentage of the property's value. LMI generally applies above 80% LVR, and the premium rises steeply as LVR increases toward 95%.
How much deposit do I need to avoid LMI?
Generally 20% of the property value, keeping your LVR at or below 80% — see the Extra Deposit panel in the calculator above for the exact dollar figure based on your property value and current deposit.
Can I avoid LMI with less than a 20% deposit?
Yes, in some cases — eligible first home buyers can use the Australian Government 5% Deposit Scheme, some professionals qualify for lender-specific waivers, and a guarantor arrangement can also eliminate LMI.
What is the Australian Government 5% Deposit Scheme?
A scheme (formerly the First Home Guarantee) allowing eligible first home buyers to purchase with just 5% deposit and no LMI, with the government guaranteeing the gap to the lender — subject to property price caps and lender approval.
Should I pay LMI upfront or capitalise it into my loan?
Paying upfront in cash is cheaper overall since you avoid paying interest on the premium, but capitalising avoids needing extra cash at settlement. See the Capitalised LMI Impact panel above for the exact dollar difference.
Does LMI protect the borrower?
No — LMI protects the lender, not the borrower, if the loan defaults and the property sale doesn't cover the outstanding balance. This is a common misconception.
Is LMI a one-off cost or ongoing?
It's a one-off premium paid (or capitalised) at settlement, not an ongoing cost like an insurance policy you renew annually.
Does LMI apply to investment properties?
Yes — LMI applies the same way regardless of whether the property is owner-occupied or an investment, based purely on LVR. However, first-home-buyer LMI waiver schemes are generally only available to owner-occupiers.
Can I get a refund on LMI if I refinance early?
Some insurers offer a partial refund if you refinance or pay off your loan within the first 1-2 years, though this varies significantly by insurer and policy — check your specific LMI certificate or ask your lender.
Does LMI increase my interest rate?
Not directly — LMI is a separate one-off premium, though lenders sometimes also apply a slightly higher interest rate at higher LVR bands as a separate risk-based pricing decision.
Is LMI tax deductible?
For investment properties, LMI may be deductible over five years (or the loan term if shorter) as a borrowing expense — this calculator provides general information only, not tax advice; consult a registered tax agent about your specific situation.
How accurate is this LMI calculator?
It uses indicative LVR bracket rates calibrated against published mainstream-lender guides, and is a solid planning estimate — not a quote. Actual premiums vary by lender, insurer, loan size and borrower profile; confirm the exact figure with your lender.
Who are the main LMI insurers in Australia?
The Australian LMI market is served by a small number of specialist mortgage insurers that partner with banks and lenders — your specific insurer depends on which one your lender uses, and this affects the exact premium you'll be quoted.
Does a bigger loan mean higher LMI as a percentage?
The percentage rate is primarily driven by LVR, not loan size, though larger loans may see slightly different rates from some insurers. The calculator above applies a consistent percentage rate by LVR band for simplicity.
Can I negotiate my LMI premium?
LMI premiums are generally set by the insurer, not directly negotiable with the lender — however, comparing lenders (who may use different insurers with different rate cards) or adjusting your deposit can change the premium you're quoted.
Does LMI apply if I use a guarantor?
Often not — a guarantor's additional security can bring your effective LVR below 80%, avoiding LMI even though your own cash deposit is smaller.
What professions qualify for an LMI waiver?
This varies by lender, but commonly includes medical professionals, lawyers, and accountants, sometimes allowing borrowing up to 90% LVR (or occasionally higher) without LMI — check directly with lenders for their specific eligible-profession list.
Does LMI apply to every lender?
LMI itself is charged by mortgage insurers, not lenders directly, but virtually all mainstream Australian lenders require it above 80% LVR unless a specific waiver or guarantee scheme applies.
Can first home buyers avoid LMI entirely?
Potentially, yes — via the Australian Government 5% Deposit Scheme, subject to eligibility, property price caps and lender approval. See our Home Deposit Calculator for full details.
Does LMI cost the same across all states?
The premium itself (based on LVR and loan amount) doesn't vary by state, though some states have historically charged stamp duty on the LMI premium itself — check current rules for your state, as this has been progressively abolished or reduced in various jurisdictions.
What happens to my LMI if I sell my property?
LMI isn't refunded or transferred when you sell — it was a one-off cost tied to that specific loan. If your next purchase also has an LVR above 80%, you'll likely need to pay LMI again on the new loan.
Is LMI the same as mortgage protection insurance?
No — these are different products. LMI protects the lender if you default; mortgage protection insurance (income protection or life insurance-style products) protects you and your family by covering repayments if you can't work.
Does paying a bigger deposit always save more than the extra deposit costs?
Not always directly comparable — but the LMI saved from crossing into a lower LVR band can be a meaningful return on that extra deposit. Compare the LVR Scenario Comparison panel above against how long it would take to save the extra amount.
Can I use this calculator for an investment property?
Yes — set Loan Type to "Investment property" above. The LMI mechanics work identically; only the scheme eligibility guidance differs (first-home-buyer waivers generally don't apply to investors).
Does LMI vary between fixed and variable rate loans?
Not directly — LMI is driven by LVR, not by whether your rate is fixed or variable. Your choice of rate type is a separate decision from the LMI cost itself.
What's the maximum LVR most lenders will approve?
Commonly 95%, though some lenders cap at 90% and a small number occasionally go higher in specific circumstances — check directly with lenders, as policies vary and change over time.
Does my credit score affect my LMI premium?
LMI pricing is primarily driven by LVR and loan characteristics rather than credit score directly, though your credit profile affects whether you're approved for the loan and LMI in the first place.
Can I pay off my LMI early to reduce the cost?
No — LMI is a one-off premium paid at settlement (or capitalised), not an ongoing charge you can pay down separately from your loan.
Does refinancing require paying LMI again?
If your LVR is still above 80% at the time of refinancing, yes — the new lender will typically require a fresh LMI premium, even if you already paid it on your original loan. This is an important cost to factor into any refinance decision.
Is LMI charged on the property value or the loan amount?
LMI is calculated as a percentage of the loan amount, not the property value — though the LVR (which determines the rate) is itself a ratio of loan to property value.
Does the LMI premium include GST?
LMI premiums in Australia are subject to GST (typically included in the quoted premium) plus, in some cases, stamp duty on the premium itself — confirm exactly what's included when your lender provides a formal LMI quote.
Can two people combine deposits to avoid LMI?
Yes — for joint applications, the combined deposit determines the LVR, so pooling savings between co-borrowers works the same way as a single borrower's deposit toward avoiding or reducing LMI.
Does LMI cover the full loan amount if I default?
No — LMI typically covers only the lender's shortfall (the gap between the outstanding loan and what the property sale recovers, plus costs), not the full loan amount, and the insurer can potentially pursue the borrower for the LMI payout in some circumstances.
What's the difference between LMI and LVR?
LVR is a ratio (loan amount as a percentage of property value) that determines whether LMI applies and how much it costs — LMI is the actual insurance premium calculated based on that ratio.
Does a larger deposit always mean a proportionally smaller LMI saving?
Not necessarily — because LMI rates increase in bands as LVR rises, moving out of a higher band (e.g., from 95% to 90%) can produce a disproportionately large saving compared to a similar-sized deposit increase at a lower LVR.
Is it worth delaying my purchase to save a bigger deposit and avoid LMI?
This depends on how quickly you can save relative to how fast property prices are rising in your target area — see our Home Deposit Calculator's Growth-Adjusted Savings Goal for a way to model this trade-off directly.
Does this calculator give an exact LMI quote?
No — it provides an indicative estimate for planning purposes based on simplified LVR bracket rates. Your lender will provide the exact premium once they've assessed your specific loan application with their mortgage insurer.
Can LMI be waived entirely for any borrower?
Yes, in specific circumstances — the 5% Deposit Scheme for eligible first home buyers, professional waivers for certain occupations, and guarantor arrangements can all result in $0 LMI despite an LVR above 80%.
Does LMI apply to construction loans?
Yes, generally — construction loans are assessed on the same LVR basis (based on the completed property value or purchase price plus construction costs), so LMI can apply if the deposit is below 20% of that combined value.
Can I add extra repayments to reduce the impact of capitalised LMI?
Yes — extra repayments reduce your loan balance (including the capitalised LMI portion) faster, cutting the extra interest cost shown in the Capitalised LMI Impact panel above. See our Mortgage Payoff Calculator to model this directly.
Does switching lenders affect my LMI cost?
Potentially — different lenders use different mortgage insurers with different rate cards, so the exact premium you're quoted can vary between lenders even at the same LVR and loan amount. Comparing lenders is worthwhile if LMI is a significant cost for you.