Who does LMI protect — me or the bank?

LMI protects the lender. If you default and the property sells short, LMI covers the bank's loss — but you still owe the full debt.

Can I avoid LMI without a 20% deposit?

Yes — through the First Home Guarantee (5% deposit, no LMI), Family Home Guarantee (2%), or professional exemptions for medical/legal/accounting professionals.

Is LMI tax deductible?

For investment properties only — deductible as a borrowing expense over 5 years. Not deductible for owner-occupied homes.

Australian LMI Calculator

Estimate your Lender's Mortgage Insurance premium when your deposit is under 20%. Shows how much extra deposit you need to reduce or eliminate LMI. AUD.

Property Value

Deposit / Savings

$10.0%

Estimated LMI Premium

A$12,600

~2.00% (LVR 85–90%)

LVR

90.0%

Loan Amount

A$630,000

LMI Premium

A$12,600

Total Loan (incl. LMI)

A$642,600

Extra Deposit to Avoid LMI

-A$70,000

Extra for Next Lower Tier

A$35,000

LMI Rate Tiers (approx.):

LVR 80–85%: ~1.00%

LVR 85–90%: ~2.00%

LVR 90–92%: ~3.00%

LVR 92–95%: ~3.50%

LMI rates are estimates. Actual premiums vary by lender (Helia/Arch LMI) and are affected by loan purpose, borrower type, and state. First Home Guarantee recipients avoid LMI with 5% deposit.

How to Use the LMI Calculator

Enter your Property Value and available Deposit. The calculator instantly computes your Loan-to-Value Ratio (LVR), the estimated LMI premium at the applicable rate tier, and how much additional deposit you would need to reach the next lower tier or avoid LMI entirely.

How LMI Is Calculated

LVR = Loan Amount / Property Value × 100
Loan Amount = Property Value - Deposit

LMI Premium = Loan Amount × LMI Rate

LMI Rate by LVR:
LVR ≤ 80%: No LMI
LVR 80–85%: ~1.00% of loan
LVR 85–90%: ~2.00% of loan
LVR 90–95%: ~3.50% of loan

LMI is added to your loan (financed) or can be paid upfront.

LMI is provided by two main insurers in Australia: Helia (formerly Genworth) and Arch LMI (formerly QBE). Your lender chooses which insurer they use. Premiums vary slightly between insurers and are calculated using their proprietary tables.

Example: Sydney Buyer with 12% Deposit

LMI Impact on a $900,000 Property

Property Value	$900,000
Deposit (12% = $108,000)	$108,000
Loan Amount	$792,000
LVR	88%
LMI Rate (85–90% tier)	~2.00%
LMI Premium	~$15,840
Total Loan	$807,840
Extra needed to avoid LMI	$72,000 more

Adding $72,000 to reach 20% deposit ($180,000) eliminates the $15,840 LMI premium — but requires saving for longer. Many buyers choose to pay LMI now and enter the market sooner, betting that property price growth will outpace LMI cost.

Frequently Asked Questions

LMI protects the lender (bank), not you. If you default and the property sells for less than the outstanding loan, LMI covers the lender's loss. You still owe the full debt — the insurer may pursue you for any shortfall. Despite protecting the lender, you pay the premium.

Yes — through the First Home Guarantee (FHG): the government guarantees 15% of the loan, so you only need 5% deposit with no LMI. For family buyers, the Family Home Guarantee requires only 2% deposit. Some lenders offer LMI-waived loans for medical professionals, accountants, and lawyers with 10–15% deposit.

For investment properties only — LMI is considered a borrowing expense and is deductible over 5 years or the loan term (whichever is shorter). For owner-occupied homes, LMI is not tax deductible. Check with your accountant for your specific situation.