How to Use the Australia LMI Calculator
The Australia LMI Calculator computes the cost of Lenders Mortgage Insurance for home loan applications with a deposit of less than 20% (LVR above 80%). LMI protects the lender — not the borrower — against default, but the cost is passed to the borrower, often capitalised into the loan.
Enter your property value, loan amount, and select whether the LMI will be capitalised (added to the loan). The calculator shows your LVR, the LMI premium as a percentage and dollar amount, and the total cost including the capitalised LMI added to your loan if selected.
A critical nuance: LMI is calculated as a percentage of the entire loan — not just the portion over 80% LVR. A small difference in LVR (e.g. 89% vs 90%) can dramatically change the premium tier. For LVRs just above key thresholds (80%, 85%, 90%), it may be worth finding slightly more deposit to drop below the next tier and save thousands.
📊 Worked Example
$600,000 property, $50,000 deposit (LVR 91.67%), LMI comparison:
- Loan amount: $550,000
- LMI premium (~2.9% of loan): $15,950
- Stamp duty on LMI: ~$1,435
- Total LMI cost: ~$17,385
- At 80% LVR ($120k deposit): $0 LMI
Common Use Cases
- ✅ Calculating LMI cost before applying for a home loan
- ✅ Deciding whether to save a larger deposit to avoid LMI
- ✅ Understanding the impact of capitalising LMI on your loan balance
- ✅ Comparing LMI costs at different deposit levels
- ✅ Checking eligibility for government LMI waiver schemes (First Home Guarantee)
- ✅ Factoring LMI into total property acquisition costs
Frequently Asked Questions
What is Lenders Mortgage Insurance (LMI)?
LMI is insurance that protects the lender (bank) if you default on your home loan. Despite being for the lender's benefit, the cost is paid by the borrower. It applies when your deposit is less than 20% of the property value (LVR > 80%). LMI is not the same as home insurance, which protects the building.
How is LMI calculated?
LMI is a percentage of the total loan amount, with the rate depending on your LVR and loan size. Typical rates: 85% LVR ~0.5–0.9%, 90% LVR ~1.2–2.5%, 95% LVR ~2.0–4.0% of the loan amount. The exact rate depends on your lender, loan amount, and property type (standard vs non-standard).
Can I avoid LMI?
Yes: save a 20%+ deposit (eliminating LMI entirely), use a Family Guarantee scheme (parents use their property equity as security), use the government's Home Guarantee Scheme (purchase with 5% deposit without LMI for eligible buyers), or work in certain professions (some lenders waive LMI for doctors, lawyers, and other high-earning professions).
Is LMI tax deductible?
LMI on investment properties may be tax-deductible over 5 years (or the loan term if shorter) under the 'borrowing expenses' provisions. LMI on your own home (principal place of residence) is generally not tax-deductible. Confirm with your accountant as the tax treatment depends on the property use.
Can LMI be refunded if I sell the property?
LMI is generally non-refundable. If you sell the property early and repay the loan, you don't get the LMI premium back. Some insurers offer a partial refund if the loan is fully repaid within a short period, but this is rare. From the lender's perspective, the risk was covered for the period the loan was active.