In short: This calculator estimates the lenders mortgage insurance (LMI) premium you will pay when borrowing more than 80% of a property's value. The cost rises sharply with the loan-to-value ratio: on a $700,000 Melbourne home with a 10% deposit, expect roughly $10,000 to $16,000, and with a 5% deposit closer to $17,000 to $23,000. Eligible first home buyers can avoid it entirely through the First Home Guarantee.
- Loan amount$630,000
- LVR90.0%
- Deposit needed to avoid LMI (20%)$140,000
- Repayment impact if capitalised (30 yrs at 6%)$125.89 / month
Premiums vary by insurer, lender and loan size; many lenders waive LMI for certain professions or at 85% LVR. Treat this as a ballpark.
Estimated LMI premium: $20,998
That is a general estimate on standard assumptions. Every lender applies its own expense benchmarks, income shading and policy, so the real figure moves from lender to lender. Gorakh spent years as a senior credit officer deciding exactly these questions. Send him the numbers above and he will tell you what is realistic and which lenders fit — at no cost to you for home loans.
- A former senior credit officer reads itGorakh assessed loan applications on the lender side before he became a broker.
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LMI protects the lender, not you, yet you pay for it. Knowing the figure helps you decide whether to buy now, save more, or sidestep the premium.
How this calculator works
Insurers price LMI from a rate table driven by two things: the loan-to-value ratio (LVR) and the loan size. The tool calculates your LVR from price and deposit, then applies an indicative premium rate for that band.
The bands, in plain terms
- 80% LVR or below: no LMI.
- 80.01% to 85%: premiums usually run around 0.5% to 1.5% of the loan.
- 85.01% to 90%: roughly 1.5% to 2.5% of the loan, lender-dependent.
- 90.01% to 95%: roughly 2.5% to 3.5% of the loan, with larger loans at the top of the range.
Each lender uses its own table and some self-insure or discount LMI, so treat the figure as a range until a lender quotes you.
The tool also shows what happens if the premium is capitalised, meaning added to the loan rather than paid upfront. A $15,750 premium capitalised onto a 30-year loan at 6.00% p.a. costs about $94 a month and roughly $34,000 over the term.
How to use the result
Compare three paths: pay the LMI and buy now, wait for a 20% deposit, or find a way around it. In Melbourne's growth suburbs, waiting a year to save another $30,000 can cost more in price growth than the premium, so LMI is often rational. But if you qualify for the First Home Guarantee or a family member can act as guarantor, the premium is avoidable. The LVR calculator shows the deposit needed for each band.
Worked example
A $700,000 house in Kalkallo (for illustration, at 6.00% p.a. over 30 years):
| Deposit | Loan | LVR | Indicative LMI | Monthly cost if capitalised |
|---|---|---|---|---|
| $140,000 (20%) | $560,000 | 80% | $0 | $0 |
| $105,000 (15%) | $595,000 | 85% | about $3,000 to $9,000 | about $18 to $54 |
| $70,000 (10%) | $630,000 | 90% | about $9,500 to $16,000 | about $57 to $96 |
| $35,000 (5%) | $665,000 | 95% | about $17,000 to $23,000 | about $102 to $138 |
| $35,000 (5%) with First Home Guarantee | $665,000 | 95% | $0 | $0 |
The jump from 90% to 95% LVR nearly doubles the premium on only $35,000 of extra borrowing, which is why many buyers push for a 10% deposit. The last row shows why eligible first home buyers should check the scheme first.
What this calculator doesn't include
- Stamp duty and other upfront costs, which must be paid on top of the deposit.
- Professional LMI waivers that some lenders offer to doctors, lawyers, accountants and other occupations up to 90% LVR.
- Loadings for loans above $1 million, interest-only or investment loans.
- A low bank valuation, which pushes the LVR and the premium up.
Tips to improve the outcome
- Hit the next band down. Saving enough to move from 95% to 90% LVR can halve the premium.
- Check First Home Guarantee eligibility: 5% deposit, no LMI, no income caps, Melbourne price cap $950,000. Details at Housing Australia.
- Ask about a guarantor. A parent's equity as security can take your LVR to 80% with no premium at all.
- Pay the premium upfront if you can, to avoid 30 years of interest on it.
- Ask a low deposit loan specialist which lenders suit a thin deposit.
Frequently asked questions
How much is LMI on a 90% LVR loan?
On a 90% LVR loan the premium is typically around 1.5% to 2.5% of the loan amount, depending on the lender and insurer. For a $630,000 loan (a $700,000 property with a $70,000 deposit) that is roughly $9,500 to $16,000. Smaller loans sit at the lower end of the range; loans above $1 million attract higher rates.
Is LMI a one-off payment?
Yes. LMI is a single premium charged at settlement, paid from your funds or added to the loan. It is not an annual charge, but it does not transfer between lenders, so refinancing while still above 80% LVR can mean paying a second premium.
Can I avoid LMI with a 10% deposit?
Sometimes. Options include the First Home Guarantee (5% deposit, no LMI, for eligible first home buyers), a family guarantor loan, professional LMI waivers for certain occupations, and a small number of lenders that waive LMI at 85% or 90% LVR for strong applicants. Read our guide to LVR and LMI for the full list.
Does LMI protect me if I can't pay my mortgage?
No. LMI covers the lender's loss if you default and the sale does not clear the debt, and the insurer can still pursue you for the shortfall. Cover for yourself is mortgage protection insurance, a separate product. If repayments become difficult, your financial hardship rights apply regardless of LMI.
Is it better to pay LMI or wait to save 20%?
It depends on how fast prices move against how fast you save. If a $700,000 home rises 4% in a year, that is $28,000 of extra price, more than most 90% LVR premiums. If you are close to 20% or eligible for a government scheme, waiting or using the scheme usually wins. The deposit savings calculator shows your timeline.
Talk to GNT Finance
GNT Finance compares LMI premiums across lenders, checks your First Home Guarantee and guarantor options, and finds the cheapest path into your first Melbourne home, at no cost to you in most cases. Book a free consultation or call Gorakh on 0426 403 703.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.