LMI Calculator
Australia 2026

LMI is a one-off insurance premium paid by the borrower that protects the LENDER (not the borrower) against loss if the borrower defaults on a high-LVR loan and the eventual property sale doesn't recover the outstanding debt. Australian banks typically require LMI when the Loan-to-Value Ratio (LVR) exceeds 80%. The two main LMI providers are Helia (formerly Genworth Australia, ASX:HLI) and QBE Lenders' Mortgage Insurance. Some lenders also self-insure for certain loan profiles. LMI is non-refundable and non-portable — if you refinance to another lender within the LMI period, you typically pay a new LMI premium with the new lender.

LMI premium is a percentage of the LOAN amount (not property value), determined by an LMI risk grid that considers: (1) LVR band — premium rises sharply as LVR climbs from 81% to 95%. (2) Loan size — premiums scale up for loans above $500k and again above $750k. (3) Borrower profile — owner-occupier vs investor, employment type (PAYG vs self-employed), genuine savings vs gifted deposit, credit history. A typical PAYG owner-occupier at 90% LVR on a $600k loan pays roughly $14,000-$18,000 LMI. At 95% LVR same loan: $20,000-$28,000. The premium grid is updated periodically by Helia and QBE based on actuarial loss data.

Most Australian lenders allow LMI to be capitalised — added to the loan principal rather than paid as cash at settlement. This is helpful when you don't have cash-on-hand for the LMI but does increase total interest paid over the loan life. Example: $500k loan + $10k LMI capitalised = $510k loan; at 6.5% over 30 years, the LMI portion accumulates ~$13k extra interest. Some lenders cap the maximum capitalised LVR at 95% (so the LMI plus loan can't push LVR above 95%), which can effectively reduce your maximum borrowing capacity.

Several legitimate paths to skip LMI: (1) Save a 20%+ deposit. (2) First Home Guarantee Scheme (formerly First Home Loan Deposit Scheme) — 35,000 government-backed places per year for owner-occupier first-home buyers with 5%+ deposit; income caps $125k single / $200k couple, property price caps by city. (3) Family Home Guarantee — for single parents, 2% deposit. (4) Regional First Home Buyer Guarantee — limited regional places. (5) Professional waiver — most lenders waive LMI up to 90% LVR for medical doctors, dentists, accountants, lawyers (with valid AHPRA/CA-CPA/legal practising certificate); some extend to 95%. (6) Family guarantor loan — parent/family member uses their property as additional security so combined LVR drops below 80%. (7) Use a non-bank lender that self-insures (typically higher rate but no LMI fee).

Yes — LMI on an investment property loan is a deductible borrowing expense under section 25-25 of the Income Tax Assessment Act 1997. Deduction is amortised over the lesser of (a) 5 years or (b) the loan term, whichever is shorter. So $10,000 LMI on a 30-year investment loan = $2,000/year deduction for 5 years. LMI on owner-occupier loans is NOT deductible since the property is personal-use, not income-producing. If the property is later converted from owner-occupier to investment, deduction may be available for the remaining unamortised portion from the conversion date forward (but not retrospectively).

Partial refunds are possible but limited and narrow: only available if you refinance or pay out the loan within 1-2 years of taking it out (varies by LMI provider). Refunds drop sharply over time — Helia typically refunds 40% in year 1, 20% in year 2, 0% beyond. After that, LMI is fully consumed regardless of refinance, sale, or rapid LVR reduction below 80%. This is why people commonly refer to LMI as a 'sunk cost' once you've held the loan beyond 12-24 months. Some lenders offer 'loyalty repricing' that effectively rebates LMI value if you stay with the same lender — worth asking at refinance.

Eligibility for the First Home Guarantee (FHG) under Housing Australia (formerly NHFIC): (1) Australian citizen or permanent resident, single or couple. (2) Single income ≤$125,000 (FY 2024-25, indexed annually); couple combined ≤$200,000. (3) First-time home buyers (haven't owned residential property in Australia in past 10 years). (4) Property price under regional cap: $900k (Sydney/regional NSW), $800k (Melbourne/regional VIC), $700k (Brisbane), $600k (Adelaide), $600k (Perth/ACT), $600k (regional QLD). (5) Have at least 5% deposit saved. (6) Owner-occupier (must occupy within 6 months and continue to occupy). 35,000 places per FY allocated. Apply via participating lender (most major banks + many non-banks).

The Family Home Guarantee (FHG) is a separate scheme for eligible single parents (or single legal guardians) with at least one dependent child to buy with as little as 2% deposit, with the government guaranteeing the difference between the deposit and 20%. 5,000 places per FY. Eligibility: Australian citizen or permanent resident, single, with at least one dependent child. Income cap: $125,000 (indexed). Same property price caps as First Home Guarantee. The buyer must not own any other property in Australia at the time of application. Applies to both newly built and existing properties. Owner-occupier only — investment properties not eligible.

The trade-off is opportunity cost: paying LMI to enter the market sooner vs continuing to save while property prices rise. Indicative comparison: in Sydney 2014-2024, average property prices rose ~75%, while saving the additional 15% of deposit (from 5% to 20%) on a $1M property = $150k saved but property is now $1.75M, requiring $350k+ deposit at 20%. In high-growth markets, paying LMI to enter sooner has historically beaten saving longer in CASH for many cohorts. In flat or declining markets the opposite. Other factors: rent paid during the saving period (sunk cost), interest paid on a larger loan when bought sooner, property growth assumption, household income trajectory.

The actuarial loss data shows non-linear default risk: LMI claims experience above 90% LVR is materially higher than 80-90% LVR — defaulted properties at 95% LVR often sell for less than the outstanding debt, generating an LMI claim against the insurer. Helia and QBE price this risk into the premium grid. The 90% LVR jump is therefore an actuarial cliff, not a regulatory threshold. Some lenders also have stricter serviceability buffers above 90% LVR (e.g. 3%+ rate buffer instead of 3%) which reduces approved loan size. The combination — higher LMI cost + stricter serviceability — is why many buyers target the 88-90% LVR sweet spot.