What is LMI in Australia?

LMI stands for lenders mortgage insurance. It is an insurance premium paid by the borrower that protects the lender (not the borrower) if the borrower defaults. LMI is payable when the loan-to-value ratio (LVR) exceeds 80%. The premium is a percentage of the loan amount that varies by LVR band and loan size, and is typically capitalised into the loan rather than paid upfront.

How much does LMI cost in Australia?

LMI varies by LVR and loan size. As indicative figures: at 80.01–85% LVR, around 0.70–0.76% of the loan amount. At 85.01–90% LVR, around 1.43%. At 90.01–95% LVR, around 2.77–3.09%. On an $800,000 loan at 90% LVR, LMI might be approximately $11,440. Most borrowers capitalise LMI into the loan rather than paying it upfront.

Is LMI tax deductible in Australia?

For investment properties, LMI is generally deductible over the life of the loan (not in the year paid). For owner-occupier properties, LMI is not tax deductible. GetReal does not model tax deductibility — consult a tax adviser.

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GetReal — Methodology

Lenders mortgage insurance (LMI)

v1.0 — rates updated May 2026

LMI is an insurance premium paid by the borrower that protects the lender if the borrower defaults. It is payable when LVR exceeds 80%. The premium varies by LVR band and loan size, and is typically capitalised into the loan.

LMI is not optional at high LVR — it's a lender requirement. It protects the lender, not the borrower. The two main LMI providers in Australia are Helia (formerly Genworth) and QBE. GetReal uses indicative rates sourced from Home Loan Experts (May 2026).

LMI premium rates

LVR band	Loan <$300k	$300k–$500k	$500k–$750k	$750k–$1M	Over $1M
80.01–85%	0.70%	0.70%	0.76%	0.76%	0.76%
85.01–90%	1.43%	1.43%	1.43%	1.43%	1.43%
90.01–95%	2.77%	2.77%	3.09%	3.09%	3.09%

Indicative only. Actual rates depend on lender and insurer.

LMI premium = loan_amount × lmi_rate_pct LMI stamp duty = lmi_premium × state_lmi_sd_rate Total LMI cost = lmi_premium + lmi_stamp_duty // When capitalised (most common): Total loan = base_loan + lmi_premium // LMI stamp duty is paid upfront — not capitalised

LMI stamp duty by state

Most states charge stamp duty on the LMI premium itself. This is a small additional upfront cost, not capitalised.

Worked example — $700,000 purchase, 10% deposit, NSW

Purchase price: $700,000 Deposit (10%): $70,000 Base loan: $630,000 LVR: 90.0% LMI rate (85.01–90%, loan $500k–$750k): 1.43% LMI premium: $630,000 × 1.43% = $9,009 LMI stamp duty (NSW, 9%): $9,009 × 9% = $811 Total loan (capitalised LMI): $639,009 Effective LVR: 91.3%

LMI can be avoided by: (1) reaching 20% deposit, (2) using a guarantor, or (3) qualifying for the First Home Guarantee (eligible FHBs only). GetReal does not currently model guarantor loans.

↗ Source: Home Loan Experts — indicative LMI rates (May 2026)