Lenders mortgage insurance calculator

If you’re borrowing more than 80% of the purchase price of a home, you’ll need to pay Lender's Mortgage Insurance (LMI).

Loan details
$
$
LMI Estimate
LVR
$0.00
0.00 %

This cost is based on a loan amount of $0, a property value of $0 and a deposit of $0 for a first home buyer.

Not all LMI calculations are the same. They vary between lenders based on a number of factors.

Saving that elusive 20% deposit can be a struggle, but it is possible to purchase a property with less than this if you’re willing to cop an additional fee: Lender’s Mortgage Insurance (LMI).

While LMI may seem like yet another cost meant to burden home buyers, LMI can actually help those with the bare minimum 5% deposit get into the market sooner before property prices rise even further.

What is Lender’s Mortgage Insurance?

LMI is an insurance policy that covers the mortgage lender against any losses they may incur if the borrower defaults on the loan. LMI does NOT cover the borrower - it only covers banks and lenders.

LMI is widely considered a win for those carving out the path to home ownership because it allows the borrower to go in with a smaller deposit, enabling them to get into the market sooner.

There are two main LMI providers in Australia: Genworth Financial and QBE.

Lender

Variable
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LIMITED TIME OFFER
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LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

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Variable
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100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
  • Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
  • Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)
Variable
More details
REFINANCE IN MINUTES, NOT WEEKS
  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • test ymca
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (LVR < 80%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • test ymca
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
Variable
More details
NO ONGOING FEES
  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • test ymca
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
NO ONGOING FEES

Budget Home Loan (Principal and Interest) (LVR < 80%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • test ymca
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
Variable
More details
UNLIMITED EXTRA REPAYMENTS
UNLIMITED EXTRA REPAYMENTS

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. Rates correct as of August 19, 2022.

How much does LMI cost?

LMI can be a big expense and can cost anywhere from a few thousand dollars up to tens of thousands of dollars. This is why it’s important to factor this cost into your overall buying budget.

The cost of LMI can vary based on a few factors including:

  • If you’re a first-home buyer

  • Which state your property is in

  • If you’re an owner occupier or investor

  • The size of the loan

  • Your loan-to-value-ratio (LVR)

  • Your job/industry

Using the Genworth LMI calculator, here’s how much LMI could cost you depending on the property value and the size of your deposit.

Property value

Deposit $

Deposit %

Loan term

Upfront LMI premium

Monthly LMI premium

$400,000

$20,000

$40,000

$60,000

5%

10%

15%

Up to 30 years

$11,897.45

$6,943.91

$3,770.13

$292.12

$145.25

$84.59

$600,000

$30,000

$60,000

$90,000

5%

10%

15%

Up to 30 years

$23,954.25

$13,284.00

$6,463.09

$438.19

$217.88

$126.89

$800,000

$40,000

$80,000

$120,000

5%

10%

15%

Up to 30 years

$31,939.00

$17,712.00

$8,617.45

$607.62

$318.68

$190.09

These estimates are for first home buyers on an owner occupied loan.

How to use our LMI calculator

Prior to applying for a home loan with a lender, it’s a good idea to find out how much LMI could cost you, and the earlier you know this, the more financially prepared you can be for it.

Forward planning will also help you to decide how you will go about paying for LMI, whether you will pay it upfront or in increments as part of your monthly repayments.

Your Mortgage’s LMI calculator can help you understand how much you will need to pay for over a 30-year loan term.

All you need to do is select whether you are a first-time homebuyer and provide the value of the property and the total amount you will need to take out on the home loan.

Here's a sample: Assuming you are a first-home buyer who are planning to buy a $800,000 home and borrow with only a 15% deposit ($120,000), you will need to pay around $8,700 for LMI.

How to avoid LMI

LMI can be a big expense and one most borrowers would prefer to avoid. But without it, a lot of first home buyers would be locked out of the market because of the time it takes to save a 20% deposit.

If you’re not prepared to factor LMI into your overall buying budget, or you’re not in a position to cover its costs but you still want to borrow more than 80% of a property’s purchase price, there are a few ways to get around paying the premium or lessen its cost:

  • Use your profession to your advantage. There are some banks and lenders that have a list of accepted professionals, who they will consider waiving or reducing LMI for. Those employed in the medical, accounting, finance, legal or engineering fields may be able to avoid paying it, or may be able to access a cheaper premium. Regardless of your career, before entering into a home loan contract you need to be confident you are financially equipped to tend to repayments for the entire life of the home loan.

  • First Home Loan Deposit Scheme. Government grants like the First Home Loan Deposit Scheme (FHLDS) allow first home buyers to purchase a property with a deposit as little as 5% and the government will essentially act as guarantor for the remaining amount meaning the buyer doesn’t have to fork out for LMI.

  • Have a guarantor. Another way to get around paying LMI is by having a guarantor. Many lenders will waive LMI if the borrower is backed by a quality guarantor who will accept responsibility for the loan repayments if the borrower is unable to make them.

  • Apply with certain lenders. Some lenders offer discounts or even waive LMI fees for some borrowers. ME Bank has a special 25% LMI discount for first home buyers, while St. George has reduced LMI to just $1 for eligible first home buyers with an LVR of up to 85%.

For more details click here: Avoid paying LMI

Frequently Asked Questions

When you buy a new house or refinance to a new lender, it’s highly unlikely you’ll be able to get your LMI refunded. If your LVR is still above 80% when you refinance or buy a new property, you’ll probably have to pay for LMI again.

However, if your loan is terminated early, you may be able to get a partial refund of LMI depending on the lender.

There are two ways you can pay for LMI. Some lenders will allow you to capitalise LMI onto your loan (add the LMI onto your home loan) so it can be paid gradually over time with your mortgage repayments. However, this means that interest will accrue on the LMI, costing you more over time.

The alternative is to pay LMI as an upfront cost, which is generally preferred by lenders.

Because LMI allows borrowers to purchase a property with a smaller deposit, it can be a real facilitator for investors who want to build a diverse portfolio with multiple properties. For many investors, LMI is seen as the cost of doing business, and because it is usually capitalised back into the loan amount, the impact on monthly cashflow is minimal.

The full LMI premium on an investment property is tax-deductible as a borrowing cost that can be amortised over the first five years of the investment.

LMI is payable in two ways: as an upfront lump-sum payment, or by capitalising it into the loan. Capitalising your LMI fee means adding it to the total loan amount, and paying it off in regular installments with your home loan. This means your monthly mortgage repayments will be higher because it includes your LMI.