LMI Calculator

Lenders Mortgage Insurance (LMI) is a one-off premium charged when you borrow more than 80% of a property's value. It protects the lender — not you — against the risk of default. The cost is determined by your Loan-to-Value Ratio (LVR) and loan amount, with additional factors like property type and loan purpose affecting the final figure.

In Australia, LMI is provided by two main insurers: Helia (formerly Genworth) and QBE. Each insurer publishes premium rate tables that lenders use to calculate your LMI cost. The rate is expressed as a percentage of your loan amount and increases as your LVR rises and your loan gets larger.

For example, a $675,000 loan at 90% LVR will attract a higher premium rate than a $400,000 loan at 85% LVR — both because the LVR band is higher and the loan amount falls in a higher bracket. This tiered structure means small changes in your deposit can have a significant impact on your LMI cost.

What's included in the LMI total?

The final LMI figure you pay includes more than just the base premium. After the insurer's rate is applied to your loan amount, three additional components are added:

• GST (10%) is added to the base premium, as LMI is a financial service subject to goods and services tax.
• Reduced Input Tax Credit (RITC) offsets a small portion of the GST — typically around 7.55% of the GST amount — reducing the premium slightly.
• State stamp duty is charged on the post-GST premium at rates that vary by state (e.g., 9% in NSW and QLD, 10% in VIC and WA, 11% in SA, and 0% in the ACT).

Most borrowers choose to capitalise LMI onto their loan rather than paying it upfront at settlement. While this avoids an out-of-pocket expense, it means you pay interest on the LMI amount for the life of the loan — which can more than double the effective cost over 30 years. If you've already capitalised LMI, refinancing to remove capitalised LMI could save you thousands in ongoing interest. For a broader view of your borrowing costs, ASIC's Moneysmart mortgage calculator is a useful companion tool.

There are several strategies to avoid or reduce LMI on your home loan. The right approach depends on your savings, profession, and financial situation.

1. Save a 20% deposit

The most straightforward way to avoid LMI is to save enough to keep your LVR at or below 80%. On a $750,000 property, that means a deposit of at least $150,000. While this is the safest option, it can take years of saving — especially in high-cost markets like Sydney and Melbourne.

2. Professional LMI waivers

If you work in a qualifying profession, many lenders will waive LMI entirely — even with deposits as low as 5%. Eligible professions typically include doctors, lawyers, and other professionals that lenders view as low-risk borrowers.

3. Guarantor loans

A family member (usually a parent) can use equity in their own property as security for your loan, effectively reducing your LVR below 80%. This avoids LMI without requiring you to save a full 20% deposit, though it does place a financial obligation on the guarantor.

4. Reduce your LVR band

Even if you can't get below 80%, reducing your LVR to a lower band can significantly cut your LMI. For example, moving from 90% LVR to 85% LVR on a $750,000 property could save you $5,000–$8,000 in LMI — see how a 90% LVR waiver works. Our calculator above shows you exactly how much extra deposit you'd need to drop to the next band.