How Much Is LMI in Australia in 2026? Deposit Examples by Property Price

The short answer

Lenders mortgage insurance can cost a few thousand dollars or tens of thousands of dollars.

There is no single national LMI price list because premiums vary by lender, insurer, loan size, loan-to-value ratio, borrower type and sometimes whether the loan is owner-occupied or investment.

The big driver is LVR. The closer you get to borrowing 95% of the property value, the more expensive LMI usually becomes.

What LMI actually protects

LMI protects the lender, not the borrower.

If a borrower defaults and the property sale does not cover the outstanding loan, LMI can protect the lender against that shortfall. The borrower usually pays the premium, but the lender is the party insured.

That is why buyers should not treat LMI as a safety net for themselves.

When LMI usually applies

LMI commonly applies when the loan is above 80% LVR.

In plain English, that usually means your deposit is below 20%, before allowing for stamp duty, legal fees and other buying costs.

Some government schemes and professional packages can change the outcome, but the normal rule remains: below 80% LVR is usually the cleaner zone.

Deposit examples

Assume a buyer is purchasing an $800,000 property.

The premium does not usually rise in a straight line. The jump from 90% to 95% LVR can be much more painful than buyers expect.

Can LMI be added to the loan?

Often, yes. This is called capitalising LMI.

Capitalising LMI reduces the cash needed at settlement, but it increases the loan balance. You then pay interest on the LMI amount over time.

That can be useful if cash is tight, but it is not free. A capitalised premium can cost more over the life of the loan because interest is charged on it.

LMI and first home buyer schemes

Some eligible buyers can avoid LMI with a smaller deposit through government-backed schemes.

The Australian Government 5% Deposit Scheme can help eligible first home buyers buy with a 5% deposit and no LMI through participating lenders. Eligible single parents or legal guardians may qualify with a 2% deposit.

Help to Buy is different. It is shared equity, where the government contributes part of the purchase price and holds a corresponding equity share.

If you are comparing the two, read Help to Buy vs 5% Deposit Scheme.

Bottom line

LMI is not automatically bad. It can help a buyer enter the market earlier. But it should be a conscious cost, not something discovered after pre-approval.

Use the LMI Calculator to test the premium at different deposits, then check repayments with the Mortgage Repayment Calculator.

Sources: ASIC MoneySmart guidance on lenders mortgage insurance; Housing Australia and firsthomebuyers.gov.au guidance on the Australian Government 5% Deposit Scheme. This article is general information, not credit or financial advice.