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.
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.
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.
🔥 Tip: You can capitalise your LMI premium and pay it off over time
You don't have to pay your LMI upfront. You can also borrow it along with your loan. This way, the big upfront cost is gone and you pay it off each month along with your home loan.
This slightly increases your monthly repayments and costs you more in interest over time, but it can help you get into the property market sooner.
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:
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.
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