How much does LMI cost in Australia?

LMI costs vary depending on your loan to value ratio (LVR), the size of the loan, and which insurer your lender uses. As a rough guide, for a $500,000 property with a 10% deposit, you could be looking at around $15,000 to $16,000 in LMI. At a 5% deposit, that figure can jump above $24,000. The higher your LVR, the more you pay because the insurer takes on more risk. Presm lets you see these numbers instantly so there are no surprises.

Can you add LMI to your home loan?

Yes, most Australian lenders will let you capitalise (add) your LMI premium onto the loan itself. This means you do not need to pay it upfront out of pocket. The trade off is that you will pay interest on that amount over the life of the loan, which increases your total cost. For example, adding $15,000 of LMI to a 30 year loan at 6% could cost you an extra $17,000 in interest over the full term. Still, capitalising LMI is a popular option for buyers who want to get into the market sooner rather than waiting to save a bigger deposit.

Is LMI tax deductible for investment property?

If the property is an investment (rented out or genuinely available for rent), then yes, LMI is tax deductible. However, you cannot claim the full amount in the year you pay it. The ATO requires you to spread the deduction over five years or the term of the loan, whichever is shorter. So if you paid $20,000 in LMI on an investment loan, you would typically claim $4,000 per year for five years. This is one of the reasons investors sometimes choose to enter the market with a smaller deposit, because the LMI cost is partially offset by the tax deduction.

How can first home buyers avoid LMI?

First home buyers in Australia have several ways to sidestep LMI. The most straightforward is saving a 20% deposit, but that is not always realistic in today's market. The First Home Guarantee (now called the Australian Government 5% Deposit Scheme) lets first home buyers purchase with just a 5% deposit and no LMI. Since October 2025, there are unlimited places, no income caps, and significantly higher property price caps (e.g. $1.5M in Sydney). Family guarantees are another popular route, where a parent uses equity in their home to guarantee part of your loan. Some lenders also waive LMI for certain professions like doctors, lawyers, and accountants. It is worth exploring all your options before assuming LMI is unavoidable.

Is LMI a one-off payment or ongoing?

LMI is a one-off cost. You pay it once at settlement (or capitalise it into your loan) and that is it. There are no annual renewals or monthly premiums. Once paid, your LMI policy covers the lender for the life of that particular loan. However, if you refinance to a different lender and your LVR is still above 80%, you may need to pay LMI again with the new lender. That is something to keep in mind when comparing refinance offers.

Understand what LMI actually costs, and when you can skip it

Lenders mortgage insurance is the price of borrowing with less than 20% deposit. See exactly how much it adds at different deposit levels, and whether paying it now or saving longer makes more financial sense.

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How this is different

Most LMI calculators show you the cost. Presm shows you the trade-off: is it smarter to pay LMI now and buy earlier, or wait until you hit 20%? That question depends on growth rates, savings rate, and time in market — and it is the question that actually matters.

What the calculator covers

Every LVR tier

From 95% down to 80%. See how LMI drops as your deposit grows and find the sweet spot for your situation.

Cost breakdown

See the lump sum, the capitalised cost if added to your loan, and the total interest impact over the loan term.

Break-even analysis

Compare paying LMI now versus saving to 20%. Factor in property growth, savings rate, and time out of the market.

Pay now or save longer?

The real question is not how much LMI costs — it is whether waiting costs you more in missed growth. We show you both sides.

What is Lenders Mortgage Insurance?

A one-off insurance premium that protects the lender if you default on your home loan. LMI protects the bank, not you — yet you pay for it. It is required whenever you borrow more than 80% of the property value.

The two main providers are Helia (formerly Genworth) and QBE. Each has its own premium schedule, and different lenders use different insurers — which is why quotes vary between banks for the same property.

Think of LMI as the cost of getting into the market sooner. Rather than waiting years to save 20%, LMI lets you purchase with as little as 5% down. Whether that trade-off makes sense depends on your situation, the market, and how fast prices are moving.

When Do You Pay LMI?

The trigger is 80% LVR. Deposit below 20%, you pay LMI. The scale is not linear — the jump from 85% to 90% LVR is steep, and 90% to 95% is steeper again.

On a $750,000 property, moving from a 15% deposit to 10% can nearly double LMI. Dropping to 5% can triple it. Even a small deposit increase saves thousands.

LMI is charged once at settlement. Most lenders let you capitalise it onto the loan, but that increases your total borrowing and the interest you pay over time.

Approximate LMI Costs in Australia

Ballpark LMI costs at different deposit levels for three common price points. Estimates based on typical 2024/2025 insurer schedules — actual premiums vary between lenders.

LVR	Deposit	$500K Property	$750K Property	$1M Property
85%	15%	$8,000	$12,500	$17,000
90%	10%	$15,500	$24,000	$32,500
95%	5%	$24,000	$37,000	$50,000

Estimates only. Actual LMI premiums depend on your lender, insurer, loan amount, and individual circumstances. Use Presm for a personalised calculation.

How to avoid or reduce LMI

Save a bigger deposit

Every extra percent reduces your LVR and your premium. Going from 90% to 85% LVR can save $7,000+ on a $500K property. Getting to 80% eliminates LMI entirely.

Use a family guarantee

A parent uses equity in their home to guarantee part of your loan, effectively dropping your LVR below 80% without a larger cash deposit. One of the most common LMI avoidance strategies in Australia.

Check for profession-based waivers

Some lenders waive LMI for doctors, lawyers, accountants, and other high-income professionals — often up to 90% or even 95% LVR. Ask your broker.

Use the government 5% Deposit Scheme

The Australian Government guarantees the remaining 15% to the lender. Since October 2025, places are unlimited with no income caps and higher price caps (e.g. $1.5M in Sydney).

Frequently asked questions

: LMI costs vary depending on your loan to value ratio (LVR), the size of the loan, and which insurer your lender uses. As a rough guide, for a $500,000 property with a 10% deposit, you could be looking at around $15,000 to $16,000 in LMI. At a 5% deposit, that figure can jump above $24,000. The higher your LVR, the more you pay because the insurer takes on more risk. Presm lets you see these numbers instantly so there are no surprises.
: Yes, most Australian lenders will let you capitalise (add) your LMI premium onto the loan itself. This means you do not need to pay it upfront out of pocket. The trade off is that you will pay interest on that amount over the life of the loan, which increases your total cost. For example, adding $15,000 of LMI to a 30 year loan at 6% could cost you an extra $17,000 in interest over the full term. Still, capitalising LMI is a popular option for buyers who want to get into the market sooner rather than waiting to save a bigger deposit.
: If the property is an investment (rented out or genuinely available for rent), then yes, LMI is tax deductible. However, you cannot claim the full amount in the year you pay it. The ATO requires you to spread the deduction over five years or the term of the loan, whichever is shorter. So if you paid $20,000 in LMI on an investment loan, you would typically claim $4,000 per year for five years. This is one of the reasons investors sometimes choose to enter the market with a smaller deposit, because the LMI cost is partially offset by the tax deduction.
: First home buyers in Australia have several ways to sidestep LMI. The most straightforward is saving a 20% deposit, but that is not always realistic in today's market. The First Home Guarantee (now called the Australian Government 5% Deposit Scheme) lets first home buyers purchase with just a 5% deposit and no LMI. Since October 2025, there are unlimited places, no income caps, and significantly higher property price caps (e.g. $1.5M in Sydney). Family guarantees are another popular route, where a parent uses equity in their home to guarantee part of your loan. Some lenders also waive LMI for certain professions like doctors, lawyers, and accountants. It is worth exploring all your options before assuming LMI is unavoidable.
: LMI is a one-off cost. You pay it once at settlement (or capitalise it into your loan) and that is it. There are no annual renewals or monthly premiums. Once paid, your LMI policy covers the lender for the life of that particular loan. However, if you refinance to a different lender and your LVR is still above 80%, you may need to pay LMI again with the new lender. That is something to keep in mind when comparing refinance offers.

See what LMI will cost you, and whether it is worth paying

Compare deposit levels, model the break-even, and make the call with real numbers.