LMI Calculator

Insurers price LMI as a percentage of your loan, set by two things: your loan-to-value ratio (LVR - the loan divided by the property's value) and the size of the loan. The percentage steps up sharply at each 5% LVR threshold, which is why the calculator draws the bands as a cliff. Moving from a 90.5% LVR to 89.9% can change the rate band and cut thousands off the premium, while the extra deposit needed to get there might be only a few thousand dollars. That threshold effect is the single most useful thing to understand about LMI before you settle on a deposit.

Two smaller mechanics also matter. Insurers apply a minimum premium (around $1,150 including GST) whenever LMI is payable at all, so very small loans never round down to nothing. And most states add insurance duty on top of the premium: nothing in NSW and the ACT, 2% in Tasmania, 9% in Queensland, 10% in Victoria, Western Australia and the Northern Territory, and 11% in South Australia. The calculator applies both automatically. At or under 80% LVR there is no LMI at all, and above 95% LVR most lenders won't write a standard loan.

Almost nobody pays LMI in cash at settlement. Lenders let you capitalise the premium - add it to the loan balance - so a $13,005 premium becomes a slightly larger loan rather than a bill. Capitalising doesn't increase the premium itself, but you do pay interest on it for the life of the loan, so the true cost is higher than the sticker figure. One more thing worth knowing before you commit: LMI is generally not refundable. If you refinance to another lender two years in, the new loan above 80% LVR means paying LMI again, and the old premium stays spent - refunds are rare and usually limited to loans repaid within the first 12 months.

The obvious route is a 20% deposit, but it is not the only one. A guarantor loan lets a family member offer equity in their own property as extra security, which can remove LMI entirely even on a 5% deposit. The government's First Home Guarantee does the same job for eligible first home buyers: since October 2025 it has no income caps and no limit on places, so any Australian citizen over 18 buying their first home to live in can purchase with as little as 5% deposit and no LMI, within the property price caps for their city or region. And many lenders waive LMI for eligible professions - doctors and other medical professionals often up to 95% LVR, lawyers and accountants typically up to 90% - as a commercial policy rather than an advertised product, which is exactly the kind of thing a broker checks across the panel for you.

Whether avoiding LMI is worth it depends on the alternative. Waiting another year to save a full 20% deposit costs you a year of the market moving without you; paying LMI gets you in now. There is no universal answer - run your numbers in the calculator above, then check what you could actually buy with our home affordability calculator, and weigh the premium against the waiting.

One quirk in LMI's favour if you are buying to rent the property out: the ATO treats the premium as a borrowing expense, deductible over five years or the term of the loan, whichever is shorter. That doesn't make LMI free, but it softens the real cost materially for investors - and it is one of several reasons the buy-now-with-LMI decision often lands differently for an investment property than for a home you plan to live in. For owner-occupiers the premium is not deductible.