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LMI Calculator
Estimate Your Lenders Mortgage Insurance Costs Before You Apply
An LMI calculator helps you estimate how much Lenders Mortgage Insurance you may need to pay when your deposit is below 20%. FS Loan helps you understand potential costs so you can plan your home purchase more effectively.
What is the cost of LMI?
LMI costs can vary a lot depending on your LVR and loan size. The higher your LVR, the higher your LMI.
Here is a general breakdown of how LMI increases with LVR
LMI Cost Breakdown by LVR
(General guide only — actual costs vary by lender and policy)
| Loan-to-Value Ratio (LVR) | Deposit Size | Estimated LMI Cost (Approx.) |
|---|---|---|
| 80% or less | 20% deposit | $0 (No LMI) |
| 85% LVR | 15% deposit | $6,000 – $7,500 |
| 90% LVR | 10% deposit | $10,000 – $12,500 |
| 95% LVR | 5% deposit | High (can exceed $20,000–$30,000) |
For example, on a $600,000 property:
- At 90% LVR, LMI may cost around $10,000–$18,000
- At 95% LVR, it can increase to $20,000+ depending on lender policy
The exact premium varies between lenders and mortgage insurers, which is why quotes often differ for the same borrower profile.
What Affects Your LMI Premium?
LMI is not a fixed charge. It is calculated using multiple risk-based factors.
Loan-to-Value Ratio (LVR)
The most important factor. Higher LVR = higher risk = higher LMI.
Loan Amount
Larger loans attract higher LMI premiums because the insured risk is greater.
Occupation Category
Certain professionals (such as doctors, accountants, or engineers) may qualify for reduced or waived LMI due to lower default risk.
Property Type
Some properties may increase risk:
- Rural properties
- High-density apartments
- Off-the-plan properties
Credit Profile
A strong credit history can reduce risk and improve LMI pricing.
Example of LMI Cost Impact
Here is a simplified comparison to show how LMI changes based on deposit size:
| Property Value | Deposit | LVR | Estimated LMI |
|---|---|---|---|
| $500,000 | 20% ($100,000) | 80% | $0 |
| $500,000 | 10% ($50,000) | 90% | ~$9,000–$15,000 |
| $500,000 | 5% ($25,000) | 95% | ~$18,000–$28,000 |
This example highlights why saving even a small additional deposit can significantly reduce upfront costs.
Stamp Duty on LMI
In Australia, stamp duty is also applied to LMI premiums depending on the state or territory where the property is located. This is an additional cost on top of LMI.
Stamp Duty Rates on LMI
| State/Territory | Stamp Duty Rate on LMI |
|---|---|
| NSW | 9.0% |
| VIC | 10.0% |
| QLD | 9.0% |
| SA | 11.0% |
| WA | 10.0% |
| NT | 10.0% |
| TAS | 10.0% |
| ACT | 6% (historically applicable, now abolished in most cases) |
This means if your LMI premium is $10,000, additional stamp duty may add up to $1,100 depending on the state.
Can You Avoid Paying LMI?
Yes, in certain cases borrowers can avoid LMI completely.
1. 20% Deposit Rule
The most common method is saving at least a 20% deposit.
2. Professional LMI Waivers
Some lenders waive LMI for low-risk professions such as:
- Doctors and specialists
- Lawyers and barristers
- Accountants and finance professionals
- Engineers in selected industries
3. Guarantor Loans
A family member may use their property equity to help you avoid LMI.
4. Special Lender Policies
Some lenders offer 85–90% LVR loans without LMI for eligible borrowers.
Could You Qualify for an LMI Waiver?
Certain professionals may be eligible for LMI waivers with select lenders – borrowing up to 90% LVR without paying LMI.
Eligible professions typically include:
- Medical doctors and specialists
- Dentists and dental specialists
- Lawyers and solicitors
- Accountants (CPA or CA qualified)
- Engineers (chartered)
Eligibility criteria and LVR thresholds vary by lender. Speak to a broker to find out which lenders offer profession-based waivers.
Why LMI Exists
LMI exists to protect lenders when borrowers have less equity in a property. From a lender’s perspective, a low-deposit loan carries higher risk because:
- Property values may fall
- Borrower default risk is higher
- Recovery value may not cover the full loan amount
LMI allows lenders to approve more loans while transferring risk to the insurer.
Can You Get an LMI Refund?
In most cases, LMI refunds are no longer available in Australia. Previously, some lenders offered partial refunds if loans were repaid early, but this practice has largely been discontinued.
Instead of refunds, lenders now:
- Adjust LMI pricing upfront
- Offer lower premiums for eligible borrowers
- Provide professional discounts or waivers
This makes comparing lenders more important than ever.
How to Reduce Your LMI Cost
Even if you cannot avoid LMI, there are ways to reduce it:
- Increase your deposit slightly (even 2–5% can help)
- Improve your credit score before applying
- Choose a lender with competitive LMI policies
- Check if you qualify for professional waivers
- Use a mortgage broker to compare multiple insurers
Small changes in your application can sometimes save thousands of dollars.
Conclusion
Lenders Mortgage Insurance is one of the biggest initial costs when purchasing a home with a low deposit. It lets borrowers enter the property market sooner, but it also makes the loan more expensive overall.
If you know how LMI is calculated, what affects it, and how you may be able to reduce or avoid it, you can make a big difference to your financial outcome. Buying your first home? Shopping around for the best mortgage, getting your finances in order and checking out waiver options can all help you avoid overpaying.
