How Much Does LMI Cost in Australia? Full Cost Guide With Examples
See exactly how much LMI costs in Australia for properties from $500K to $1M at 85%, 90%, and 95% LVR. Real examples, cost tables, and how to reduce or avoid it.
Lenders Mortgage Insurance is one of the largest hidden costs of buying a home in Australia. It can add anywhere from $3,000 to $60,000+ to your purchase, depending on your deposit size and property price — and unlike stamp duty, many buyers don’t factor it in until it’s too late.
This guide provides a full breakdown of LMI costs across every common scenario: from $500,000 starter properties to $1,000,000+ homes, at 85%, 90%, and 95% LVR. We’ll cover how LMI is calculated, what factors affect your premium, the difference between paying upfront and capitalising, and how to reduce or eliminate the cost entirely.
How Is LMI Calculated?
Lenders Mortgage Insurance (LMI) premiums are determined by two primary factors:
- Your loan-to-value ratio (LVR) — the percentage of the property value you’re borrowing
- Your loan amount — the dollar value of the loan
LMI is not calculated on a smooth sliding scale. Instead, it uses a matrix of LVR bands and loan amount thresholds that create step changes in the premium. This means a small change in your deposit or loan amount can sometimes cause a disproportionate jump in LMI cost.
LVR Bands
LMI premiums increase at these key LVR thresholds:
| LVR Range | Risk Level | Premium Impact |
|---|---|---|
| 80.01%–85.00% | Lower risk | Lowest LMI premiums |
| 85.01%–90.00% | Medium risk | Moderate premiums — roughly 2–3x the 85% tier |
| 90.01%–95.00% | Higher risk | Highest premiums — roughly 2–3x the 90% tier |
Loan Amount Thresholds
Within each LVR band, premiums also jump at loan amount thresholds. The exact thresholds vary by insurer, but common breakpoints include:
- $300,000
- $500,000
- $600,000
- $750,000
- $1,000,000
A loan of $501,000 at 90% LVR can attract a noticeably higher premium rate than a loan of $499,000 at the same LVR — simply because it crosses the $500,000 threshold.
LMI Cost Tables: Real Examples
The following tables show indicative LMI premiums for owner-occupied, principal and interest loans. These are based on typical Helia and QBE rate tables and should be used as a guide — your actual premium may differ based on your lender’s insurer and specific policies.
LMI Costs at 85% LVR (15% Deposit)
| Property Price | Deposit (15%) | Loan Amount | Estimated LMI |
|---|---|---|---|
| $500,000 | $75,000 | $425,000 | $3,500–$4,200 |
| $600,000 | $90,000 | $510,000 | $4,700–$5,500 |
| $700,000 | $105,000 | $595,000 | $5,400–$6,200 |
| $750,000 | $112,500 | $637,500 | $5,500–$6,400 |
| $800,000 | $120,000 | $680,000 | $6,200–$7,400 |
| $900,000 | $135,000 | $765,000 | $7,200–$8,600 |
| $1,000,000 | $150,000 | $850,000 | $7,800–$9,200 |
At 85% LVR, LMI is at its lowest — but still represents thousands of dollars. For a $750,000 property, you’re looking at approximately $5,500–$6,400.
LMI Costs at 90% LVR (10% Deposit)
| Property Price | Deposit (10%) | Loan Amount | Estimated LMI |
|---|---|---|---|
| $500,000 | $50,000 | $450,000 | $7,500–$8,800 |
| $600,000 | $60,000 | $540,000 | $9,500–$11,000 |
| $700,000 | $70,000 | $630,000 | $12,000–$14,000 |
| $750,000 | $75,000 | $675,000 | $13,000–$15,200 |
| $800,000 | $80,000 | $720,000 | $14,000–$16,500 |
| $900,000 | $90,000 | $810,000 | $16,500–$19,500 |
| $1,000,000 | $100,000 | $900,000 | $18,500–$21,500 |
The jump from 85% to 90% LVR is significant — premiums roughly double. A nurse, doctor, or other professional who qualifies for an LMI waiver at this LVR saves the full amount shown.
LMI Costs at 95% LVR (5% Deposit)
| Property Price | Deposit (5%) | Loan Amount | Estimated LMI |
|---|---|---|---|
| $500,000 | $25,000 | $475,000 | $17,500–$21,000 |
| $600,000 | $30,000 | $570,000 | $22,500–$27,000 |
| $700,000 | $35,000 | $665,000 | $28,000–$33,000 |
| $750,000 | $37,500 | $712,500 | $30,000–$35,000 |
| $800,000 | $40,000 | $760,000 | $32,000–$38,000 |
| $900,000 | $45,000 | $855,000 | $38,000–$44,000 |
| $1,000,000 | $50,000 | $950,000 | $42,000–$49,000 |
At 95% LVR, LMI costs are staggering. On a $750,000 property, you could pay $30,000–$35,000 in LMI alone — almost as much as your 5% deposit. This is why avoiding LMI at high LVR is so valuable.
Use the LMI calculator for a more precise estimate based on your specific scenario.
How the LMI Insurer Affects Your Cost
You don’t choose your LMI insurer — your lender does. But the insurer your lender uses can significantly affect the premium you pay.
Australia’s Three LMI Providers
| Provider | Market Position | Typical Pricing | Used By |
|---|---|---|---|
| Helia (formerly Genworth) | Largest provider | Mid-range to higher | CBA (partially), NAB, various others |
| QBE LMI | Major provider | Competitive on some LVR tiers | ANZ, Westpac (partially), various others |
| Arch LMI | Growing provider | Often competitive | Non-bank lenders, some second-tier banks |
How Pricing Differs Between Insurers
The difference between insurers can be 10–20% on the same loan scenario. For example, on a $700,000 loan at 90% LVR:
- Insurer A: $13,200
- Insurer B: $12,000
- Insurer C: $14,100
That’s a $2,100 spread on the same loan — simply based on which insurer the lender uses.
Self-Insured Lenders
Some larger banks (notably CBA and Westpac) self-insure a portion of their high-LVR lending. This means they don’t use an external insurer for all loans above 80% LVR — instead, they charge their own internal LMI premium or, in the case of professional waivers, absorb the risk themselves.
Self-insured lenders have more flexibility to offer waivers, adjust premiums, or create profession-specific policies because they’re not constrained by an external insurer’s risk appetite.
Owner-Occupied vs Investor LMI Costs
If you’re purchasing an investment property, expect to pay more for LMI — typically 15–25% higher than owner-occupied premiums for the same LVR and loan amount.
Comparison: $750,000 Property
| LVR | Owner-Occupied LMI | Investor LMI | Difference |
|---|---|---|---|
| 85% | ~$5,900 | ~$7,100 | +$1,200 |
| 90% | ~$14,400 | ~$17,300 | +$2,900 |
| 95% | ~$32,000 | ~$38,400 | +$6,400 |
Investors face higher premiums because investment properties carry a statistically higher default risk — if borrowers face financial stress, they’re more likely to default on an investment loan than their home loan.
The silver lining for investors is that LMI on investment properties is generally tax-deductible, spread over the life of the loan or a minimum of five years. Consult a tax professional for advice specific to your situation.
Upfront Payment vs Capitalised LMI: The True Cost
How you pay your LMI premium significantly affects the total cost over the life of the loan.
Option 1: Pay Upfront
The LMI premium is paid at settlement — either from your savings or deducted from loan proceeds.
- Advantage: You pay the premium once and never accrue interest on it
- Disadvantage: Requires additional cash at settlement (or reduces available loan funds)
Option 2: Capitalise (Add to Loan)
The premium is added to your loan balance. You repay it with interest over the full 30-year loan term.
- Advantage: No additional cash required at settlement
- Disadvantage: The true cost balloons due to 30 years of compounding interest
The Real Cost of Capitalised LMI
Here’s what capitalised LMI actually costs over a 30-year loan at different interest rates:
| Upfront LMI Premium | Total Cost at 5.5% p.a. | Total Cost at 6.0% p.a. | Total Cost at 6.5% p.a. |
|---|---|---|---|
| $5,000 | $10,200 | $10,800 | $11,400 |
| $10,000 | $20,400 | $21,600 | $22,800 |
| $15,000 | $30,600 | $32,400 | $34,200 |
| $20,000 | $40,800 | $43,200 | $45,600 |
| $30,000 | $61,200 | $64,800 | $68,400 |
| $40,000 | $81,600 | $86,400 | $91,200 |
A $15,000 LMI premium capitalised at 6% interest costs approximately $32,400 over 30 years — more than double the original premium. A $40,000 premium at 6.5% costs over $91,000 in total repayments.
This is why avoiding LMI entirely — through a professional waiver, government scheme, or 20% deposit — delivers such significant long-term savings.
Which Payment Method Is Better?
If you have the cash available: Pay upfront. It’s always cheaper in the long run.
If paying upfront would reduce your deposit below a key threshold: Capitalise the LMI to maintain your deposit level. For example, if you have $80,000 cash and the LMI premium is $15,000, paying upfront would reduce your deposit to $65,000. On a $750,000 property, that drops your LVR from 89.3% to 91.3% — potentially moving you into a higher LMI band and triggering an even larger premium. In this scenario, capitalising may be the smarter choice.
If you can avoid LMI entirely: This is always the best outcome. Professional waivers, the First Home Guarantee, and guarantor loans all eliminate LMI with no upfront or capitalised cost.
Factors That Affect Your LMI Premium
Beyond LVR and loan amount, several factors influence how much you’ll pay:
1. Loan Purpose
- Owner-occupied, principal and interest: Lowest premiums
- Owner-occupied, interest only: Higher premiums (5–15% more)
- Investment, principal and interest: Higher premiums (15–25% more)
- Investment, interest only: Highest premiums (20–30% more)
2. First Home Buyer Status
Some LMI insurers charge a small premium loading for first home buyers, while others offer no difference. The impact is typically modest (5–10%).
3. Property Type
- Established houses: Standard premiums
- Units/apartments: May attract higher premiums in some postcodes (particularly in high-density areas or postcodes flagged by insurers for oversupply)
- New builds / off-the-plan: Standard premiums, but valuation methodology may affect your effective LVR
- Rural or regional properties: Some insurers have restrictions or loadings for remote postcodes
4. Loan Structure
- Single loan: Standard premium assessment
- Split loan (fixed + variable): LMI assessed on the total borrowing across both splits
- Multiple securities: Can sometimes reduce the effective LVR across both properties, lowering LMI
5. Location
Some insurers apply postcode-specific restrictions or loadings in areas they consider higher risk — typically high-density inner-city apartment markets or remote regional areas. This doesn’t affect most borrowers, but if your target property is in a flagged area, the premium may be higher or the maximum LVR may be reduced.
How to Reduce LMI (Even If You Can’t Avoid It)
If you don’t qualify for an LMI waiver and can’t avoid LMI entirely, these strategies can reduce the cost:
1. Increase Your Deposit Even Slightly
Because LMI uses step-change bands, a small deposit increase can produce a disproportionate premium reduction. Moving from 90.5% LVR to 89.9% LVR (less than 1% change) could save you $2,000–$5,000 if it drops you into a lower premium band.
Sources of additional deposit funds:
- Small bonus or tax refund
- Gift from family (most lenders accept genuine gifts with a statutory declaration)
- Selling an asset
- Accessing First Home Super Saver Scheme (FHSSS) funds
2. Negotiate the Purchase Price
A $10,000 reduction in purchase price on a $750,000 property reduces your LVR from 90.0% to 89.3% (with a $75,000 deposit). If that crosses a threshold, it can save thousands in LMI.
3. Choose a Lender With a Cheaper Insurer
Different lenders use different LMI insurers, and premiums can vary by 10–20%. A broker can compare the LMI cost at multiple lenders and recommend the most cost-effective option.
4. Structure Your Loan Carefully
If your loan amount is near a threshold (e.g., $501,000), consider structuring the borrowing to sit just below it. This might mean reducing the loan by a small amount and covering the difference from savings, or splitting the loan structure.
5. Use the First Home Super Saver Scheme (FHSSS)
If you’re a first home buyer, the FHSSS allows you to withdraw voluntary super contributions (up to $50,000) to use as a deposit. This can boost your deposit enough to drop your LVR into a lower LMI band — or eliminate LMI entirely.
6. Consider Paying LMI Upfront Instead of Capitalising
While this doesn’t reduce the premium itself, it eliminates the interest compounding effect — potentially saving you $10,000–$50,000+ over the life of the loan compared to capitalising.
How to Avoid LMI Entirely
The most effective strategy is avoiding LMI altogether. The main pathways:
Professional LMI Waivers
Eligible professionals can borrow up to 85%, 90%, or even 95% of a property’s value with no LMI charged. Qualifying professions include doctors, lawyers, accountants, engineers, nurses, dentists, and others. Check your eligibility here.
Save a 20% Deposit
If your LVR is 80% or below, no LMI applies. This is the most straightforward method but requires the largest deposit. On a $750,000 property, that’s $150,000. Explore our deposit options page for strategies.
First Home Guarantee Scheme
Eligible first home buyers can purchase with as little as a 5% deposit with no LMI, backed by a government guarantee.
Guarantor Loan
A family member’s property equity secures part of your loan, eliminating the need for LMI. You can potentially borrow up to 100% of the property value.
Lender-Specific Thresholds
Some lenders don’t trigger LMI until 85% LVR (rather than 80%), giving buyers with 15–20% deposits an automatic exemption.
LMI Cost by Australian Capital City
Property prices vary significantly across Australia, which directly affects LMI costs. Here’s what you might expect in each capital city at 90% LVR:
| City | Median House Price (Approx.) | 10% Deposit | Estimated LMI at 90% LVR |
|---|---|---|---|
| Sydney | $1,150,000 | $115,000 | $22,000–$26,000 |
| Melbourne | $900,000 | $90,000 | $17,000–$20,000 |
| Brisbane | $820,000 | $82,000 | $15,000–$18,000 |
| Perth | $750,000 | $75,000 | $13,000–$15,500 |
| Adelaide | $730,000 | $73,000 | $12,500–$15,000 |
| Canberra | $850,000 | $85,000 | $16,000–$19,000 |
| Hobart | $650,000 | $65,000 | $11,000–$13,000 |
| Darwin | $550,000 | $55,000 | $8,500–$10,000 |
These are approximate figures based on current median prices and typical LMI rates. Actual costs depend on the specific property price, lender, and insurer.
In Sydney, where median prices exceed $1 million, LMI at 90% LVR routinely exceeds $20,000. At 95% LVR, it can surpass $45,000. For a Sydney buyer in an eligible profession, a professional LMI waiver represents a massive saving.
Frequently Asked Questions
How much does LMI cost on a $600,000 house?
On a $600,000 property, LMI typically costs approximately $5,100 at 85% LVR (15% deposit), $10,400 at 90% LVR (10% deposit), or $25,000 at 95% LVR (5% deposit). These are indicative figures for owner-occupied, principal and interest loans. Use the LMI calculator for a more precise estimate.
How much does LMI cost on a $750,000 house?
For a $750,000 property, expect approximately $5,900 at 85% LVR, $14,400 at 90% LVR, or $32,000 at 95% LVR. The jump between LVR tiers is significant — dropping from 95% to 90% LVR saves roughly $18,000 in LMI.
How much does LMI cost on a $1 million house?
On a $1,000,000 property, LMI costs approximately $8,500 at 85% LVR, $20,100 at 90% LVR, or $45,000 at 95% LVR. At this price point, the cost of LMI can exceed the deposit itself (at 5% LVR). A professional LMI waiver at this loan size saves $20,000+ at 90% LVR.
Can I add LMI to my home loan?
Yes. Most lenders allow you to capitalise (add) the LMI premium to your loan balance. This means you don’t pay it upfront, but you’ll pay interest on the LMI amount over the life of your loan. A $15,000 premium capitalised at 6% over 30 years costs approximately $32,400 in total — more than double the original amount.
Is LMI a one-off payment?
Yes. LMI is a single, one-off premium — not an ongoing monthly cost. It’s paid once (either upfront at settlement or capitalised into your loan). The insurance covers the lender for the life of that particular loan. However, if you refinance to a new lender while your LVR is still above 80%, you may need to pay LMI again.
Why does LMI cost more at 95% LVR than 90%?
LMI premiums increase steeply as LVR rises because the lender’s risk increases. At 95% LVR, the borrower has only 5% equity — meaning even a small drop in property values could leave the lender exposed. At 90% LVR, the 10% equity buffer provides more protection. The premium reflects this higher risk at 95%.
Can I get a refund on LMI if I sell early?
Some LMI providers offer partial refunds if the loan is repaid within the first one to two years. After this period, refunds are extremely unlikely. The refund amount decreases the longer you’ve held the loan. Check with your specific LMI provider for their refund policy.
Does LMI cost more for apartments?
In most cases, the standard LMI premium applies regardless of property type. However, some insurers apply higher premiums or lower maximum LVR limits in specific postcodes — particularly high-density inner-city areas where apartment oversupply is a concern. If your target property is in such an area, your LMI cost could be higher or your maximum LVR could be reduced.
Is LMI tax-deductible?
For investment properties, LMI is generally tax-deductible over the life of the loan or a minimum of five years, whichever is shorter. For owner-occupied properties (your home), LMI is not tax-deductible. Consult a tax professional for advice relevant to your circumstances.
How can I avoid paying LMI altogether?
The main ways to avoid LMI are: save a 20% deposit (80% LVR), qualify for a professional LMI waiver through your occupation, use the First Home Guarantee scheme, or get a guarantor loan. Each has different eligibility criteria and trade-offs. Check your eligibility for a professional waiver — it takes 60 seconds.
Next Steps
Understanding LMI costs is the first step toward either budgeting for it or eliminating it entirely:
- Calculate your LMI cost — enter your property price and deposit for a personalised estimate
- Check if you qualify for an LMI waiver — free, 60 seconds, no credit check
- Explore deposit options — compare pathways to reduce or avoid LMI
- Learn how LMI works — understand the full picture before you apply
Every dollar you save on LMI is a dollar that goes toward your home — not the bank’s insurance policy.