Lenders Mortgage Insurance (LMI) Explained: Complete 2026 Guide
Everything you need to know about LMI - what it is, how much it costs, and strategies to avoid paying it.
Raj Bhangu
Principal Mortgage Broker
Key Takeaways
- 1LMI protects the lender (not you) if you default - required when borrowing over 80% LVR
- 2LMI costs: 5% deposit = $28,000-$35,000; 10% deposit = $12,000-$16,000 on $700K property
- 3Avoid LMI: save 20% deposit, use First Home Guarantee, family guarantee, or professional packages
- 4First Home Guarantee allows 5% deposit purchase without paying LMI
Lenders Mortgage Insurance (LMI) is often misunderstood. This guide explains exactly what it is, when you need to pay it, and how to avoid it altogether.
What Is LMI?
LMI is an insurance policy that protects the lender (not you) if you default on your mortgage. It's required when you borrow more than 80% of the property's value.
How Much Does LMI Cost?
LMI costs vary based on your loan amount and Loan-to-Value Ratio (LVR). For a $700,000 property:
- 5% deposit ($35,000) = LMI of $28,000-$35,000
- 10% deposit ($70,000) = LMI of $12,000-$16,000
- 15% deposit ($105,000) = LMI of $5,000-$8,000
How to Avoid LMI
- Save a 20% deposit: The most straightforward way
- First Home Guarantee: Government scheme allowing 5% deposit without LMI
- Family guarantee: Parents use equity in their home as security
- Professional packages: Some lenders waive LMI for certain professions
Use our LMI calculator to see your potential costs, or speak with our team about LMI waiver strategies.
Sources & References
This article references information from the following authoritative sources:
Raj Bhangu
Principal Mortgage Broker
Expert mortgage broker helping Australians achieve their property dreams with personalized home loan solutions.