Lenders Mortgage Insurance (LMI) in Australia: 2025 Guide

Author: Tepuy Solutions | Date: August 2025
Category: Home Buying, Property Finance

What Is LMI?

Lenders Mortgage Insurance (LMI) is a one-off insurance premium that borrowers pay when their home loan deposit is typically below 20% of the property’s value. It protects the lender — not the borrower — if the borrower defaults and the sale of the property doesn’t cover the outstanding loan.

When Is LMI Required?

• LMI is usually required if your Loan-to-Value Ratio (LVR) is above 80%.
• In some cases, professional packages (e.g. for doctors, accountants) may be eligible for LMI waivers up to 90–95% LVR.

How Much Does LMI Cost?

LMI is not a flat fee. It scales based on your:

• Property purchase price
• Loan size
• LVR bracket

The LMI premium can range from $1,500 (for low LVR loans) to over $25,000+ for high-LVR loans above $800,000. It is often capitalised into the loan (added to your mortgage) but can also be paid upfront.

LMI Calculation Example (2025)

Here’s an example for a $750,000 property:

• Loan: $712,500 (5% deposit)
• LVR: 95%
• LMI Estimate: $22,000–$24,000 (varies by insurer)

You can estimate your LMI using lender-specific calculators or our upcoming LMI Estimator Tool (coming soon).

Can I Avoid LMI?

Yes, here are some strategies:

• Save a 20% deposit — the simplest way to avoid LMI altogether.
• First Home Guarantee — a government scheme that lets eligible first home buyers borrow up to 95% without LMI.
• Guarantor loan — using a family member’s property equity to cover the shortfall.
• Professionals — some lenders offer waived LMI for select professions.

Is LMI Refundable?

Partially. If you refinance or pay off your loan early (usually within 2 years), some lenders offer a partial LMI refund — but most do not. Check your lender's refund policy before refinancing.

Can I Claim LMI on Tax?

Only if the property is used to produce income (i.e. an investment property). LMI can be claimed over five years as a tax deduction.

Should I Wait to Save 20%?

It depends. In rising markets, delaying your purchase to avoid LMI might cost you more in missed capital growth than the LMI premium itself. Use our Property vs Shares Calculator to model scenarios.

LMI Providers in Australia

• Genworth Financial (now Helia)
• QBE LMI
• Westpac LMI
• CBA LMI
• Bank-backed internal insurers

Conclusion

LMI is a necessary cost for many buyers entering the market with low deposits. While it adds to upfront costs, it also enables earlier access to the property market. Use tools like Tepuy’s property calculators to assess trade-offs between waiting and paying LMI.

Disclaimer

This article is for general information only and does not constitute financial or lending advice. Please speak to a mortgage broker or licensed financial adviser to assess your specific circumstances.