Australian LMI Calculator (Lenders Mortgage Insurance)

Last updated: May 2026. Reflects current Australian metrics.

If your deposit is less than 20%, Australian banks typically charge Lenders Mortgage Insurance (LMI). Estimate your premium based on guidelines from major providers like Genworth and QBE.

Loan Details

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Estimated LMI Premium

LMI is required for this loan.

$0
Loan-to-Value Ratio (LVR) 0%
Base Loan Amount $0
Total Loan with LMI Capitalised $0

Most lenders allow you to add the LMI premium to your loan balance instead of paying it upfront.

LVR Threshold (80% is the goal)

Understanding Lenders Mortgage Insurance in Australia

Lenders Mortgage Insurance (LMI) is one of the most misunderstood costs of buying property in Australia. It is an insurance premium paid by the borrower, but it protects the bank, not you, in the event that you default on the loan and the property is sold for a loss.

When is LMI Required?

Australian banks, regulated by APRA, generally require you to pay LMI if your Loan-to-Value Ratio (LVR) exceeds 80%. This means if your deposit is less than 20% of the property's purchase price (or valuation, whichever is lower), you will be charged LMI. The major providers of this insurance in Australia are Genworth (now Helia) and QBE.

Capitalising LMI vs Paying Upfront

Because LMI can easily cost $10,000 to $20,000+, most lenders allow you to 'capitalise' the premium. This means the LMI cost is added to your total loan amount. While this saves you from needing the cash upfront, it means you will pay interest on the LMI premium for the 30-year life of your mortgage.

How to Avoid LMI

The simplest way to avoid LMI is to save a 20% deposit. However, there are Australian government schemes available:

Genuine Savings Requirement

If you are applying for a loan with an LVR over 80%, banks will heavily scrutinise your deposit. You must usually prove at least 5% of the deposit comes from 'genuine savings'—money held or accumulated in your account over 3 to 6 months—rather than a sudden cash gift or personal loan.

Related Calculators

Mortgage Calculator Borrowing Power Stamp Duty

For more information on purchasing property, visit ASIC MoneySmart Home Loans.

10 Frequently Asked Questions

1. What is the current RBA cash rate?
As of 2026, the RBA cash rate influences all variable home loans. Check the official RBA website for the exact daily rate, but currently, variable rates sit around the low 6% mark.
2. How does the 3% serviceability buffer work?
APRA mandates that banks assess your ability to repay a loan at an interest rate 3% higher than the rate you are applying for. This ensures you can handle future rate hikes.
3. What is Lenders Mortgage Insurance (LMI)?
LMI is insurance that protects the lender if you default. It is usually required if your deposit is less than 20% of the property's value (LVR > 80%).
4. Should I choose a fixed or variable rate?
A variable rate offers flexibility (like offset accounts), while a fixed rate provides repayment certainty for a set period (usually 1-5 years).
5. What is a Comparison Rate?
Required by Australian law, the comparison rate rolls the interest rate and most fees into a single percentage to show the true cost of a loan.
6. What is an offset account?
An offset account is a savings account linked to your loan. Its balance is subtracted from your loan principal before interest is calculated, saving you money.
7. Can I make extra repayments?
Yes, most variable loans allow unlimited extra repayments. Fixed loans usually cap extra repayments (e.g., $10k/year) and charge break fees if exceeded.
8. What is negative gearing?
Negative gearing is an Australian tax strategy where the costs of owning an investment property exceed its rental income, allowing you to deduct the loss from your taxable income.
9. What are stamp duty concessions?
Each Australian state offers stamp duty exemptions or concessions for First Home Buyers purchasing below a certain price threshold.
10. How is interest calculated?
In Australia, home loan interest is generally calculated daily on your outstanding balance and charged monthly.