Lenders mortgage insurance (LMI) calculator

How do you calculate LMI?

Lenders mortgage insurance is calculated based on your loan-to-value ratio (LVR). That is, how much of the value of the property you want to borrow. Calculations can vary between lenders and depend on property prices, but it is generally worked out as a percentage of the amount you want to borrow. As your LVR decreases (and your deposit increases) you will pay less in LMI.

LMI calculator

Enter your borrowing amount and the price of the property you're purchasing below. Enter estimates if you don't have exact figures. This will give you an estimate of how much lenders mortgage insurance will cost you.

Note that this calculator provides an estimate only and does not include stamp duty or other costs. You may also have the option to borrow your LMI premium cost along with your loan (more info below).

How to use the calculator

Here's a simple example showing you how to use the lenders mortgage insurance calculator.

• Property value: $650,000
• 10% deposit: $65,000
• Borrowing amount: $585,000
• LMI estimate = $12,753

In this example, you need to enter the property value into the calculator and the borrowing amount (the property price minus your deposit).

Now let's try the calculator again with a 15% deposit. Now your borrowing amount will be smaller and your LMI cost will drop too.

• Property value: $650,000
• 15% deposit: $97,500
• Borrowing amount: $552,500
• LMI estimate = $6,437

And remember: if you have a 20% deposit or higher, you won't pay LMI at all.

How this LMI calculator works

We benchmarked our calculator against multiple LMI estimates and created a tool that takes into account your property value and your loan-to-value ratio (LVR). This results in a premium estimate that takes into account the following:

• The cost of the property
• Your deposit size, relative to the overall property cost
• The total loan amount

With LMI, you pay a higher premium as your property value increases. This means the premium on a $1 million property with a 10% deposit will be higher than the premium on a $500,000 property with a 10% deposit.

You also pay a high premium for a smaller deposit.

Learn all about LMI with our complete guide

How to avoid LMI premiums

There are a few ways borrowers can avoid or minimise LMI costs.

Buy with a guarantor

You can avoid LMI by getting a guarantor to back your home loan. This requires a family member who owns a property to support your loan application. You can borrow more than 80% and avoid LMI.

But if you can't repay your loan, your guarantor may have to pay back part of it or sell their property (in a worst-case scenario).

Save a bigger deposit

If you can stretch your savings to bring your deposit up to 20%, you can avoid LMI. Even going from a 5% deposit to a 10% deposit is safer and reduces the LMI premium.

Use a government home buyer scheme

There are some federal government Home Guarantee Schemes like the First Home Guarantee that allows eligible first home buyers to buy a home with just a 5% deposit while avoiding LMI.

There's also the Regional First Home Buyer Guarantee if you're buying your first home in a regional area.

Your occupation might qualify you for an exemption

Borrowers in several highly paid professions may qualify for an LMI exemption. This may include the following:

• Doctors
• Accountants
• Lawyers

It's worth asking your lender if your profession qualifies you for an exemption.

A qualified mortgage broker can also help you navigate the ins and outs of LMI and will know which lenders may let you get a discount. A broker can also negotiate with your lender on your behalf.

Talking to a mortgage broker is free.

Does LMI change depending on your location?

Yes, the amount of LMI does change depending on your state or territory. The premium itself is the same, but you have to pay stamp duty on the LMI premium.

The calculator above doesn't include stamp duty, so you'll have to add an estimate for duty on top. These are the rates of stamp duty:

• ACT: no stamp duty on the LMI premium
• NSW: 9% of the LMI premium
• NT: 10% of the LMI premium
• QLD: 9% of the LMI premium
• SA: 11% of the LMI premium
• TAS: 10% of the LMI premium
• VIC: 10% of the LMI premium
• WA: 10% of the LMI premium

Frequently Asked Questions

• How do you calculate LMI?

  Lenders Mortgage Insurance (LMI) is calculated based on the loan amount and the loan-to-value ratio (LVR). Use an LMI calculator to estimate your LMI costs.

• How much is an LMI on a $500,000 loan?

  LMI on a $500,000 loan can range from $5,000 to $20,000, depending on the lender and the size of the deposit. The smaller the deposit, the higher the LMI premium, so LMI on a $500,000 loan with a 5% deposit will be much higher than LMI on a $500,000 loan with a 16% deposit.

• How do I avoid LMI with 10% deposit?

  To avoid LMI with a 10% deposit, you could use a guarantor loan, get a loan with a lender that offers LMI waivers, or if you're eligible, apply via the federal government's LMI waiver scheme. Those employed in certain industries like medical professionals and engineers can also qualify for LMI waivers, as lenders deem these industries to be "less risky" than other jobs.

• Do you have to pay LMI if you have 20% deposit?

  No, if you have a 20% deposit, you do not need to pay LMI, as the loan-to-value ratio is 80% or less.

• How is LMI charged?

  LMI is charged as a one-time fee and the amount is either added to your loan amount or you pay it upfront. It protects the lender if the borrower defaults on the loan.

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Written by

Richard Whitten

Editor

Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio

Richard's expertise

Richard has written 562 Finder guides across topics including:

• Home loans
• Property
• Personal finance
• Money-saving tips