How LMI works
LMI is insurance the lender takes out, and you pay for, when your deposit is less than 20% of the property's value. CommBank describes it as a one-off, non-refundable and non-transferable premium, usually added to your home loan, which means you pay interest on it too. It protects the lender, not you: if you can't repay and the sale of the home doesn't cover the debt, the insurer may seek to recover the shortfall from you.
The premium rises with your LVR and loan size. Helia says it can be paid upfront at settlement or added to the loan, and that the fee is typically 1% to 2% of the loan amount. CommBank's example is a $500,000 loan with a 10% deposit, where LMI could cost over $10,000.
LVR at common prices and deposits
Your LVR is the loan as a percentage of the property's value. CommBank says that with a deposit of 20% or more you typically won't need to pay LMI, and that the more you contribute, the lower the cost.
| Deposit | $600,000 property | $800,000 property | $1,000,000 property |
|---|---|---|---|
| 5% | $30,000 deposit, $570,000 loan (95% LVR) | $40,000 deposit, $760,000 loan (95% LVR) | $50,000 deposit, $950,000 loan (95% LVR) |
| 10% | $60,000 deposit, $540,000 loan (90% LVR) | $80,000 deposit, $720,000 loan (90% LVR) | $100,000 deposit, $900,000 loan (90% LVR) |
| 15% | $90,000 deposit, $510,000 loan (85% LVR) | $120,000 deposit, $680,000 loan (85% LVR) | $150,000 deposit, $850,000 loan (85% LVR) |
| 20% | $120,000 deposit, $480,000 loan (80% LVR) | $160,000 deposit, $640,000 loan (80% LVR) | $200,000 deposit, $800,000 loan (80% LVR) |
Avoiding LMI with the 5% Deposit Scheme
Through the Australian Government 5% Deposit Scheme, eligible first home buyers can buy with a 5% deposit, and single parents or legal guardians with 2%, and pay no LMI. Since 1 October 2025 there are no income caps or waitlists. The price, and the lender's valuation, must be at or under the cap for the area, and you apply through a participating lender. If you stop living in the home, the lender may then ask you to pay LMI.
| State or territory | Capital city and regional centres | Rest of the state |
|---|---|---|
| New South Wales | $1,500,000 | $800,000 |
| Victoria | $950,000 | $650,000 |
| Queensland | $1,000,000 | $700,000 |
| Western Australia | $850,000 | $600,000 |
| South Australia | $900,000 | $500,000 |
| Tasmania | $700,000 | $550,000 |
| Australian Capital Territory | $1,000,000 | Same (all areas) |
| Northern Territory | $750,000 | $600,000 |
Our first home buyer schemes and grants guide covers the scheme's rules and the lenders that offer it, and low deposit home loans covers guarantors and other ways around LMI.
Is there stamp duty on LMI?
In NSW, no: Revenue NSW exempts lenders mortgage insurance over NSW property from insurance duty for premiums paid on or after 1 July 2017. Helia's estimator shows its premiums including GST but excluding stamp duty, so ask your lender how duty is handled in other states. Stamp duty on the purchase itself is separate: the stamp duty calculator works it out for every state.
LMI questions
How much is LMI on a 10% deposit?
It depends on the loan size and lender. CommBank's own example is a $500,000 loan with a 10% deposit, where LMI could cost over $10,000. For your figure, use Helia's LMI fee estimator or your lender's calculator.
How is LMI calculated?
The premium is set by the LMI insurer for the lender, mainly from your LVR and loan size, along with the loan purpose, borrower type and property. The higher the LVR, the higher the premium. CommBank says it is a one-off, non-refundable premium usually added to the loan.
How much is LMI on a $900k property?
It depends on your deposit. With 10% down the loan is $810,000 at 90% LVR; with 15% down it is $765,000 at 85%. Helia says LMI is typically 1% to 2% of the loan amount and CommBank says 1% to 5%, so get a figure from an LMI estimator or your lender.
How do I avoid paying LMI?
Borrow 80% or less of the property's value, use the 5% Deposit Scheme if you are an eligible first home buyer (a 5% deposit, or 2% for single parents, under the price cap), or use a family guarantee. Our low deposit home loans guide covers each option.
Does LMI protect me?
No. LMI protects the lender if you can't repay and the sale of the home doesn't cover the debt. CommBank notes its LMI provider may then seek to recover the shortfall from you.
Is there stamp duty on LMI in NSW?
No. Revenue NSW exempts lenders mortgage insurance over NSW property from insurance duty for premiums paid on or after 1 July 2017. Helia's estimator shows its premiums including GST but excluding stamp duty, so check the rules in other states with your lender.
