LMI Calculator — Lenders Mortgage Insurance Australia
Estimated lenders mortgage insurance premium from your loan-to-value ratio, the extra repayment and lifetime cost when capitalised, the deposit needed to avoid it and the Home Guarantee Scheme alternative.
| Loan-to-value ratio | — |
|---|---|
| Premium band | — |
| Loan with premium capitalised | — |
| Extra repayment caused by LMI | — |
| True cost over the loan (premium + interest on it) | — |
| Deposit needed to avoid LMI (20%) | — |
| Saving the gap vs paying LMI | — |
In short
Lenders mortgage insurance applies when the deposit is under 20%: typically about 1.2% of the loan at 80–85% LVR, 2.2% at 85–90% and 4% at 90–95% plus stamp duty — around $17,266 on a $720,000 loan at 90% LVR — and capitalising it adds about $102 a month and $36,800 over 30 years; first-home buyers with a 5% deposit can avoid it through the Home Guarantee Scheme.
Who this is for: Buyers with less than a 20% deposit estimating LMI, and first-home buyers comparing it with the Home Guarantee Scheme.
Lenders mortgage insurance explained
When a deposit is under 20% of the price, the lender insures itself against your default and charges you the premium — lenders mortgage insurance. The premium rises steeply with the loan-to-value ratio: roughly 1–1.5% of the loan at 81–85% LVR, 2–2.5% at 85–90% and 3.5–4.5% at 90–95%, plus state stamp duty on the premium, and it also rises with loan size. Most borrowers capitalise it onto the loan, which adds interest for 30 years and makes the true cost nearly double the premium.
The calculator estimates the premium from typical bands, shows the extra monthly repayment and lifetime cost, and compares it with saving the rest of a 20% deposit. Ways around it: the federal Home Guarantee Scheme (first-home buyers with 5%, no LMI), professional waivers, and a family guarantor on the deposit gap.
See also: Borrowing Power Calculator — How Much Can I Borrow?, Home Loan Repayment Calculator — Australia, First Home Super Saver Calculator.
Assumptions
- Premium = loan × band rate by LVR (0% to 80%, ~1.2% to 85%, ~2.2% to 90%, ~4% to 95%) × 1.09 for stamp duty on the premium.
- Capitalised premium adds to the loan and is amortised over the term; extra repayment and lifetime cost follow.
- Home Guarantee Scheme removes the premium entirely when selected; waivers and guarantor options are noted, not modelled.
- Actual premiums vary by insurer, loan size, property type and borrower — estimate only.
Worked example
Loan $720,000, LVR 90% → ~2.2% band: premium about $17,266 including 9% stamp duty. Capitalised, the loan becomes $737,266 and the repayment rises by about $102 a month — roughly $36,800 over 30 years. A 20% deposit would need $160,000, $80,000 more; a first-home buyer could instead use the Home Guarantee Scheme and pay no LMI.
Frequently asked questions
Who does LMI protect?
The lender. If you default and the sale does not cover the loan, the insurer pays the lender and can pursue you for the shortfall.
How much is LMI on a 10% deposit?
Typically 2–2.5% of the loan — around $17,000 on a $720,000 loan — more for larger loans and investors.
Can I avoid LMI with a 15% deposit?
Only through a waiver (professional packages, some lenders at 85% LVR) or a guarantor; otherwise a reduced premium applies at 80–85%.
Is LMI refundable?
Partly, with some insurers, if the loan is discharged within the first 1–2 years; otherwise no.
Is the Home Guarantee Scheme the same as LMI?
No — the government guarantees up to 15% of the loan so the lender needs no LMI; places are limited and price caps apply by city.
Does LMI count toward my LVR?
Yes when capitalised — a 90% loan becomes about 92%, and some lenders cap the capitalised LVR at 95%.
Is LMI tax-deductible?
For an investment property, yes — as a borrowing expense spread over five years or the loan term; not for your own home.
Can I pay LMI in instalments?
Some lenders offer monthly LMI; most add it to the loan or take it upfront.
Related calculators
See all Australia calculators → · All free online calculators
Found an error? Report it — tell us the inputs, the result you got, what you expected and the rule or source. Confirmed corrections are published within a week.