What is lenders mortgage insurance?
LMI is a one-off premium that protects the lender (not the borrower) when the LVR is above 80%; typical cost on a $500,000 loan at 90% LVR is $7,000–$11,000 added to the loan balance.
Lenders Mortgage Insurance (LMI) is a one-off insurance premium charged when your loan-to-value ratio is above 80%. It protects the lender's downside if you default and the property's sale price doesn't cover the outstanding loan plus enforcement costs. It does NOT protect you as the borrower.
The premium is calculated on the loan size and the LVR bracket. A $500,000 loan at 90% LVR typically costs $7,000–$11,000 in LMI; at 95% LVR it climbs to $15,000–$22,000. Most lenders let you capitalise the premium into the loan balance rather than pay it in cash on settlement.
LMI is waived under the federal Home Guarantee Scheme for eligible first home buyers, regional buyers, single parents, and key workers — the Government guarantees the lender directly. Some lenders also waive LMI for medical professionals, accountants and lawyers at high LVRs as a competitive feature.
LMI · mortgage insurance · lenders mortgage insurance premium
- Loan-to-value ratio (LVR) — LVR is the size of your home loan expressed as a percentage of the property's appraised value — a $400,000 loan on a $50…
- Home Guarantee Scheme (HGS) — The HGS is a federal scheme where the Government guarantees up to 15% of an eligible buyer's loan, letting them buy with…
General information only — not personal financial advice. Verified against https://ratesniffers.com.au/glossary on 2026-06-01.