LMI in 2026: when it's worth paying, when it's not

Lenders Mortgage Insurance can add $20k-$45k to a $700k loan. Here's the broker decision framework — and the legitimate ways to avoid it.

Lenders Mortgage Insurance (LMI) is what your lender charges when you borrow more than 80% of a property's value. It protects the lender, not you — but you pay for it. Depending on the loan amount and LVR, LMI can add $20,000 to $45,000 to the cost of a $700,000 loan.

The good news: there are now more ways to avoid LMI than there were five years ago. The bad news: not all of them are advisable.

How LMI actually works

You pay LMI as either a one-off premium at settlement or, more commonly, capitalised into the loan (you borrow it on top of the loan amount). The premium scales steeply with LVR:

- 80.01-85% LVR: roughly $4,000-$8,000 on a $600k loan - 85.01-90% LVR: roughly $9,000-$15,000 - 90.01-95% LVR: roughly $20,000-$35,000 - 95.01-98% LVR: only some lenders will go this high; premium $30,000-$45,000+

The exact premium depends on the specific LMI provider (most banks use Helia or QBE), the loan amount, and the LVR. Two banks pricing LMI on the same loan can produce quotes that differ by $5k.

The legitimate ways to avoid LMI

There are five, in order of how often they apply:

1. **Save a 20% deposit.** Boring but bulletproof. Takes most first-home buyers in capital cities 5-10 years.

2. **First Home Guarantee Scheme.** If you qualify (income caps + property price caps — see our [FHG article](/news/first-home-guarantee-2026-eligibility-changes)), the federal government guarantees the difference between your deposit and 20%, so the lender doesn't charge LMI.

3. **Professional packages.** If you're a doctor, dentist, vet, accountant or lawyer, several lenders waive LMI up to 90% LVR (some up to 95%) on the basis that your income is stable and high. Worth checking even if you're early-career.

4. **Family guarantee.** A family member uses equity in their home as additional security for your loan, taking your effective LVR back under 80%. This puts their property at risk if you default — needs careful thought.

5. **Genuine equity from a sale or gift.** A gifted deposit from family or proceeds from selling another property both count toward your "genuine deposit" with most lenders.

What you should do now

If your numbers put you above 80% LVR, run the math both ways: paying LMI vs waiting another 12-18 months to save more. With property prices in most capitals still rising 4-7% a year, paying LMI to get into the market sooner often comes out ahead — but not always.

Our [borrowing power calculator](/calculators/borrowing-power) shows what you'd qualify for at different LVRs. A broker consult walks you through which of the five LMI-avoidance options apply to your specific situation.

This article references LMI premium ranges from publicly-available [Helia](https://www.helia.com.au/) and [QBE](https://www.qbe.com/au/about) rate sheets.