Lenders mortgage insurance, or LMI, is a one-off cost most lenders charge when you borrow more than 80 per cent of a property’s value.
Lenders mortgage insurance protects the lender, not you, if you default with less than a 20 per cent deposit. You pay a one-off premium, at settlement or added to the loan, and it rises steeply as the deposit shrinks.
You avoid it with a 20 per cent deposit, the 5% Deposit Scheme, a family guarantee or a professional waiver.
Part of the first home buyer loans guide.
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No LMI: an estimated $22,800 premium avoided (a broad guide; real premiums vary by lender and loan).
Stamp duty: $0 for eligible NSW first home buyers (saves $30,187).
Indicative only. The deposit excludes stamp duty, legal and inspection costs, and a participating lender, not this calculator, confirms 5% Deposit Scheme eligibility.
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Charles Touma from Links Property Finance was a great help with buying my first home. I had plenty of questions and he took the time to explain things clearly without making me feel rushed. He kept me updated throughout and made the process much less stressful. Really appreciated his patience and would happily recommend him to other first home buyers.
Charles at Links Property Finance made buying our first home so much easier than we expected. As first home buyers, we had a lot of questions around borrowing capacity, our deposit and the different government schemes available to us. Charles explained everything clearly, compared different lenders and kept us updated throughout the whole process. He was always easy to reach and made sure we understood what was happening from pre approval right through to getting our home loan approved. We would definitely recommend Links Property Finance to anyone looking for a mortgage broker, especially first home buyers who want someone to guide them through the process.
Charles and the team at links property finance recently assisted me with my purchase of my first property in Burwood. As a first home buyer, Charles made the process simple and easy. I would recommend Charles to all first home buyers
Charles Touma, Mortgage Broker.
The names cause confusion. LMI protects the lender if you default. Mortgage protection or income protection insurance is cover you take out yourself, so repayments can continue if you cannot work.
Paying LMI does not protect you from anything, and it does not replace your own insurance.
LMI generally does not move with you to a new lender. As the balance falls and the property’s value grows, the LVR drops and the question usually goes away.
If you refinance while the loan is still above 80 per cent of the property’s value, the new lender may charge LMI again, so a refinance at a high LVR needs a closer look at whether the saving outweighs a second premium.
Not necessarily. Paying LMI to buy a few years sooner can make sense if prices are rising faster than you can save, or if the alternative is paying rent for longer. Some lenders charge a low deposit premium instead, which works differently.
It is a cost to weigh against the alternatives, not a rule to avoid at any price.
A one-off insurance premium the lender charges when your deposit is under 20 per cent. It covers the lender, not you, if you cannot repay and the property sells for less than you owe.
Often one to two per cent of the loan at a 90 per cent loan-to-value ratio, and more at 95 per cent; the exact figure depends on the loan size, the LVR and the lender’s insurer.
The premium rises sharply as the deposit shrinks, and on a Sydney loan with a 10 per cent deposit it can run to well over ten thousand dollars. Charles can price it across lenders on your actual numbers.
Often, yes. The 5% Deposit Scheme, a family guarantee, a professional waiver, the 2% single parent option of the 5% Deposit Scheme, or a 20 per cent deposit each remove it. Which one fits depends on your situation.
Generally not, and it does not move with you to a new lender. If you refinance while the loan is still above 80 per cent of the property’s value, you may pay LMI again.
Usually, yes. Most lenders let you add the premium to the loan, which avoids paying it in cash but adds interest over the term. It also lifts your LVR slightly, which lenders allow for within their limits.
Work out where your deposit sits with the LVR and LMI calculator, or see which professions qualify on our waived LMI page.
Charles can price LMI across lenders on your deposit and loan size, and check whether a scheme, a guarantor or a waiver removes it altogether.
Prefer a callback?Charles calls back within one business day. No documents needed yet.
General information only, not credit or financial advice. LMI pricing, thresholds and waiver policies vary between lenders and insurers and change over time. Government scheme eligibility is confirmed against the current criteria.
Official sources for the figures on this page: Moneysmart (ASIC), lenders mortgage insurance · Housing Australia, Australian Government 5% Deposit Scheme. Scheme rules change; the official pages are the final word. Checked against these sources on 12 October 2026.
