Estimate the Lenders Mortgage Insurance premium on your home or investment loan. Includes state stamp duty on the premium and the extra deposit needed to avoid LMI entirely.
01 —INPUTS
Loan Details
Currently 10.00% of price. 20% deposit avoids LMI entirely.
Investor rates are ~10% higher than owner-occupier
Eligible first home buyers can buy with a 5% deposit and no LMI under the Australian Government 5% Deposit Scheme, if the price is at or below the cap for the area.
02 —RESULTS
Estimated total LMI premium
$18,207
2.53% of loan · LVR 90.00% · Owner-occupier
03 —BREAKDOWN
Breakdown
Loan amount$720,000
Base LMI premium$16,704
Stamp duty on premium (NSW)$1,503
Total LMI payable$18,207
Avoid LMI: Deposit Target
Deposit for 80% LVR$160,000
Extra deposit needed$80,000
Saving an extra $80,000 eliminates $18,207 of LMI. Effective return on that extra deposit: ~22.76%.
Lenders Mortgage Insurance is a one-off insurance premium you pay to protect the lender. If you default and the property sells for less than the outstanding debt, the insurer covers the lender's shortfall — and can then pursue you for it. It buys you nothing except access to a loan you would otherwise be refused, which is a real benefit when it lets you buy years earlier, but it is not cover for the borrower.
What it does
Lets a lender approve a loan above 80% LVR by transferring the shortfall risk to an insurer — in Australia, almost always Helia or QBE, or a lender's own in-house arrangement.
What it does not do
It is not income protection, not mortgage protection insurance, and not a waiver of your debt. The insurer's right of subrogation means it can recover the shortfall from you after paying the lender.
Whether you pay it turns entirely on your loan-to-value ratio (LVR) — the loan divided by the lender's valuation of the property, expressed as a percentage. Note the denominator: lenders use their own valuation, not your contract price, so a valuation that comes in under the purchase price pushes your LVR up and can trigger LMI you had not budgeted for.
On an $800,000 purchase, here is what each deposit size means:
Deposit
Cash needed
Loan
LVR
LMI?
5%
$40,000
$760,000
95%
Yes
10%
$80,000
$720,000
90%
Yes
12%
$96,000
$704,000
88%
Yes
15%
$120,000
$680,000
85%
Yes
20%
$160,000
$640,000
80%
No
Deposit percentages here are of the purchase price. Remember that stamp duty, conveyancing and inspections are paid on top — money spent on those is not deposit, so budget them separately with the home buying costs calculator .
How LMI premiums scale with LVR
LMI rates rise non-linearly with LVR. Every 1% higher LVR meaningfully increases the premium, and there are cliffs at 85%, 90%, and 95% LVR.
LVR
Owner-occupier (% of loan)
Investor (% of loan)
81%
0.83%
0.91%
85%
1.19%
1.31%
90%
2.32%
2.55%
92%
3.33%
3.66%
95%
3.97%
4.37%
Tip: The cliff from 90% to 91% LVR adds ~0.9% of the loan to your premium — on a $500k loan, that's $4,380. If you're close to a cliff, the extra few thousand in deposit pays for itself many times over.
Worked example
$800k Sydney purchase, 10% deposit
Property price$800,000
Deposit$80,000 (10%)
Loan amount$720,000
LVR90%
Owner-occupier LMI rate2.32%
Base premium$720,000 × 2.32% = $16,704
NSW stamp duty on premium (9%)$1,503
Total LMI$18,207
Extra deposit to reach 80% LVR$80,000
Saving another $80,000 avoids $18,207 in LMI — an effective 23% return on the deposit increase. For most buyers this is a strong argument for delaying the purchase to build deposit.
Paying it upfront vs adding it to the loan
Most lenders let you capitalise the premium — roll it into the loan instead of paying cash at settlement. It solves a cash-flow problem at settlement and creates an interest problem for the next thirty years, because the premium then accrues interest at your home loan rate like any other borrowed dollar.
Loan before LMI$720,000
Premium capitalised$18,207
Monthly repayment, premium paid upfront (6.2% over 30 years)$4,410
Monthly repayment, premium capitalised$4,521
Extra per month$112
Extra paid over the full 30-year term$40,144
Carried the whole term, a $18,207 premium costs about $40,144 — roughly 2.2 times the sticker price. Capitalising is still often the right call when the alternative is not buying at all, but treat the capitalised premium as the first thing to attack with extra repayments or an offset balance, not as a sunk cost.
Capitalising also nudges your LVR up, since the premium is added to the loan while the valuation stays put. Most lenders allow the LMI to push the loan past their normal ceiling, but confirm it — a policy that does not can force you back a tier and change the premium itself. Model the repayment either way in the mortgage calculator .
How to avoid LMI
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20% deposit — The standard path. Takes longer but saves significant cost.
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Professional package — Doctors, dentists, lawyers, accountants, and some other professions qualify for LMI waivers up to 90% LVR with some lenders.
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5% Deposit Scheme — The Australian Government 5% Deposit Scheme lets eligible first home buyers (and single parents, at 2%) buy with no LMI at all — no income caps, no waitlists — provided the price is at or below the cap for the property's area.
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Family guarantor loan — A parent or close relative uses their own property equity as additional security, bringing your LVR under 80%.
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Gifted deposit — A genuine gift from family (not a loan) can bridge the deposit gap.
FAQ
What is LMI (Lenders Mortgage Insurance)?
LMI is insurance the borrower pays to protect the lender if the borrower defaults and the sale of the property doesn't cover the loan. It's typically required when your loan-to-value ratio (LVR) exceeds 80% — i.e., deposit under 20%. LMI protects the lender, not you.
When is LMI payable in Australia?
Most lenders require LMI when the LVR exceeds 80%. Some low-deposit schemes, professional-package exemptions (doctors, lawyers, accountants), and the Australian Government 5% Deposit Scheme can waive LMI with as little as 5% deposit — check with your lender or mortgage broker.
How is LMI calculated?
LMI is calculated as a percentage of your loan amount, with the rate rising sharply as LVR increases. At 85% LVR, the premium is roughly 1.2% of the loan; at 95% LVR, it can approach 4%. Investor loans attract rates around 10% higher than owner-occupier loans. State stamp duty is added on top of the premium.
Can LMI be added to the loan?
Yes — most lenders allow you to capitalise LMI into the loan amount rather than paying it upfront. This increases the total loan balance slightly but avoids a large upfront cost. You'll pay interest on the LMI over the loan term as a result.
Is LMI tax-deductible?
For an investment property loan, LMI is a borrowing expense and is tax-deductible — claimed over five years, or the loan term if shorter. For an owner-occupied home, LMI is not deductible.
How can I avoid LMI?
Four main paths: (1) save a 20% deposit to bring LVR to 80% or below; (2) qualify for a professional-package exemption in a specific industry; (3) as an eligible first home buyer, use the Australian Government 5% Deposit Scheme — no income caps, no waitlists — where a participating lender waives LMI entirely for a purchase price at or below your area's price cap; (4) get a family guarantor whose equity acts as additional security.
How do I calculate my LVR?
Divide the loan amount by the lender's valuation of the property and multiply by 100. On an $800,000 valuation with a $640,000 loan, the LVR is 80% and no LMI applies; a $720,000 loan on the same valuation is 90% LVR and LMI does. The lender uses its own valuation, not your contract price, so a valuation shortfall raises your LVR and can trigger a premium you had not budgeted for.
Do I pay LMI again if I refinance?
Possibly. LMI is not transferable between lenders — the policy covers your original lender, so if you refinance while still above the new lender's LVR threshold, the new lender generally requires a fresh premium in full. This is why it is usually worth waiting until repayments and price growth have brought your LVR under 80% before switching. Some insurers offer a partial refund if you cancel within the first one to two years, but the amount tapers quickly and refinancing alone often does not qualify.
Is it better to pay LMI upfront or add it to the loan?
Paying upfront is cheaper if you have the cash. Capitalising a $18,207 premium into a $720,000 loan at 6.2% over 30 years adds about $112 a month, or roughly $40,144 over the full term — more than double the premium itself. Capitalising still makes sense when the alternative is delaying the purchase in a rising market, but the capitalised amount should be the first target for extra repayments or an offset balance.
Does LMI protect me if I lose my job?
No. LMI protects the lender only. If you default and the sale does not cover the debt, the insurer pays the lender and can then recover that shortfall from you. If you want cover for your own income, that is mortgage protection or income protection insurance — a completely separate product you buy separately.
How accurate is this estimate?
This calculator uses indicative rates from Helia's public LMI fee estimator, current as at August 2026, for loans in the $500k–$1m band. Actual LMI quoted by your lender can vary based on loan size (loans under $500k price cheaper, loans over $1m dearer), your credit profile, the property type, first-home-buyer status, and the lender's specific insurer arrangements. Treat this as an indicative planning figure — always confirm with your lender or broker.
LMI rates used in this calculator are indicative rates from Helia's public LMI fee estimator (sampled August 2026, $500k–$1m loan band; premiums include GST and exclude stamp duty). Actual lender LMI quotes vary by loan size, borrower profile, property type, and insurer. Stamp duty on LMI premiums varies by state and is based on general insurance duty rates. Always confirm with your lender or mortgage broker.
