Lenders Mortgage Insurance (LMI) Explained — Australia
By Colson · Reviewed by Abodemic Editorial Standards · Updated June 1, 2026
Lenders Mortgage Insurance protects the lender (not you) when your deposit is under 20% in Australia. The premium varies by lender and loan size and is often added to the loan. You can avoid it with a 20% deposit, a guarantor, or eligible government schemes.
What is LMI?
Lenders Mortgage Insurance protects the lender — not you — when your deposit is under 20% of the property price in Australia. It lets you buy with a smaller deposit, but you pay the premium. Estimate your repayment in the Australia mortgage calculator.
How much is LMI and how is it paid?
The premium varies by lender, loan size, and loan-to-value, and can run into the thousands. It can usually be paid upfront or "capitalised" — added to your loan and paid off over time. Each lender uses its own insurer and pricing, so quotes differ.
How to avoid LMI
- Save a 20% deposit.
- Use a guarantor (often a parent) to cover part of the deposit.
- Check eligibility for government schemes that waive or reduce LMI for eligible buyers.