What is LMI and when do you pay it?
Lenders mortgage insurance is a one-off cost charged when your loan is more than 80% of the property's value, called the loan-to-value ratio or LVR. It protects the lender if you default. The premium is a percentage of the loan, and that percentage climbs steeply as your deposit shrinks and your loan grows.
How much LMI costs
Estimated LMI including Victorian stamp duty, for different deposits:
| Property price | 15% deposit | 10% deposit | 5% deposit |
|---|---|---|---|
| $400,000 | $3,624 | $7,417 | $13,982 |
| $500,000 | $4,530 | $9,271 | $17,478 |
| $600,000 | $6,536 | $12,949 | $25,067 |
| $700,000 | $7,625 | $16,403 | $33,744 |
| $800,000 | $9,971 | $18,747 | $38,481 |
| $900,000 | $11,840 | $22,418 | $43,291 |
| $1,000,000 | $13,155 | $24,908 | $48,101 |
Typical full-documentation owner-occupier rates. Your lender's insurer may charge more or less.
Worked example: a $90,000 loan at 90% LVR has a premium rate of 1.463%, so LMI is $1,316.70. In Victoria, 10% stamp duty adds $131.67, for a total of $1,448.37.
Stamp duty on LMI by state
| State or territory | Duty on the LMI premium |
|---|---|
| NSW | Nil |
| Victoria | 10% |
| Queensland | 9% |
| Western Australia | 10% |
| South Australia | 11% |
| Tasmania | 10% |
| ACT | Nil |
| Northern Territory | 10% |
This is separate from the stamp duty on buying the property.
The 5% Deposit Scheme: no LMI
Since 1 October 2025, the expanded 5% Deposit Scheme lets eligible buyers purchase with a 5% deposit and no LMI, because the government guarantees up to 15% of the loan. There are no income limits and no cap on places. Single parents and guardians can buy with a 2% deposit. You must be an Australian citizen or permanent resident, and a first home buyer or someone who hasn't owned property in Australia in the past 10 years.
| State or territory | Capital and regional centres | Rest of state |
|---|---|---|
| NSW | $1,500,000 | $800,000 |
| Victoria | $950,000 | $650,000 |
| Queensland | $1,000,000 | $700,000 |
| Western Australia | $850,000 | $600,000 |
| South Australia | $900,000 | $500,000 |
| Tasmania | $700,000 | $550,000 |
| ACT | $1,000,000 | — |
| Northern Territory | $750,000 | $600,000 |
Price caps from 1 October 2025. In NSW, the higher cap also covers regional centres such as Newcastle, Lake Macquarie and Illawarra. Check your postcode at firsthomebuyers.gov.au.
Other ways to avoid or reduce LMI
- Save to 20%: at 80% LVR there's no LMI. Even getting from 95% to 90% can roughly halve the premium.
- Family guarantee: a parent uses equity in their home as extra security.
- Professional waivers: some lenders waive LMI for doctors, lawyers, accountants and other professions.
- Check your borrowing first: use the borrowing power calculator to see what price range works, then the mortgage calculator for repayments.
Common questions
What is lenders mortgage insurance (LMI)?
LMI is a one-off insurance premium that protects the lender, not you, if you can't repay the loan and the sale of the home doesn't cover the debt. Lenders usually charge it when you borrow more than 80% of the property's value.
How much is LMI on a 10% deposit?
On a $600,000 home with a 10% deposit, the $540,000 loan is at 90% LVR, and LMI is about $11,800 in NSW or $12,950 with Victorian stamp duty. Premiums vary between lenders and insurers, so ask your lender for an exact quote.
How can I avoid paying LMI?
Save a 20% deposit, use a family guarantee, or apply for the 5% Deposit Scheme. Some lenders also waive LMI for certain professions, such as doctors, lawyers and accountants, at up to 85% or 90% LVR.
What is the 5% Deposit Scheme?
It's a federal government scheme run by Housing Australia. Since 1 October 2025, first home buyers can buy with a 5% deposit, or 2% for single parents, and pay no LMI. There are no income limits or caps on places, but the home must be under the price cap for its area.
Can I add LMI to my loan?
Most lenders let you add, or capitalise, LMI onto the loan instead of paying it upfront. You'll pay interest on it for the life of the loan, and it pushes your loan-to-value ratio higher.
Do I pay stamp duty on LMI?
In most states, yes. Insurance duty is added to the premium: 9% in Queensland, 11% in South Australia and 10% in Victoria, WA, Tasmania and the NT. NSW and the ACT don't charge duty on LMI.
Is LMI refundable?
Usually not. A few insurers offer a partial refund if you pay the loan out in the first year or two, but most don't. If you refinance to another lender, you may have to pay LMI again if your LVR is still above 80%.
LMI premiums are set by insurers and vary by lender, loan type and your circumstances. This calculator uses typical published rates for owner-occupiers with full documentation and is a guide only. Sources: Housing Australia, 5% Deposit Scheme; state revenue offices for insurance duty.