How much is LMI is a question most buyers ask far too late, usually when the loan offer arrives and the figure is larger than expected.
How much is LMI depends almost entirely on your loan to value ratio. At 85% the premium is modest.
How much is LMI in practice? Anywhere from about $4,000 on a modest loan with a fifteen percent deposit, to well over $40,000 on a large Sydney purchase with a five percent deposit.
How much is LMI depends almost entirely on your loan to value ratio. At 85% the premium is modest. At 90% it becomes significant. At 95% it is frequently the largest single cost of buying after the deposit itself. Loan size then multiplies whatever tier you land in.
The difference between a 90% and a 95% loan is often twenty thousand dollars of premium. Finding another five percent deposit is the highest return on effort available to any first home buyer.
All figures are indicative only. Premium tables differ between insurers and change over time, so treat these as a planning range rather than a quote.
How much is LMI is answered by rate tables rather than a formula, and lenders apply the table that matches their insurer.
Because the tables are tiered rather than linear, a small change in deposit can move you into a materially cheaper band.
This is where how much is LMI stops behaving predictably, and it catches buyers out when they compare two similar scenarios.
Premium tables step at set loan to value thresholds, commonly at 85%, 90%, 92% and 95%. Landing at 90.4% costs the same as 91.9%, but crossing into the next band adds thousands instantly.
The following shows how the same loan size behaves across ratios.
Any lmi premium table australia lenders use will follow this shape, though the exact figures differ by insurer. Note that the 95% column is roughly double the 90% column throughout.
Online tools tell you roughly how much is LMI. Only your lender can give you the binding figure.
Use an lmi calculator to orient yourself, then ask for a written lmi cost estimate against a specific lender before you commit to a purchase price.
Most borrowers add the premium to the loan rather than paying cash, which changes how much is LMI over the full term.
A $25,000 premium capitalised at 6% over thirty years costs well over $50,000 in total. It also increases your loan balance, which can push your ratio into a higher band and raise the premium itself.
You have more control over how much is LMI than most buyers realise.
If your deposit is genuinely small, our low deposit home loans Sydney page covers the schemes that substitute for the premium.
Sometimes clearly yes, sometimes clearly no. The market direction decides it.
These errors distort how much is LMI in a lot of first home buyer budgets.
Four questions to settle before you make an offer.
At around 90% of the property value, expect roughly $20,000 to $30,000. At 95% the same loan can attract $38,000 or more. The exact figure depends on the insurer your lender uses and the property type.
Insurers publish tiered rate tables rather than a formula. The rate is set by your loan to value ratio, then applied to the loan amount. Property type, borrower type and the insurer itself all adjust the result.
Yes, and it steps rather than climbs. Tables move at thresholds around 85%, 90%, 92% and 95%. Crossing a threshold adds thousands instantly, which is why a small extra deposit can produce a very large saving.
The 95% premium is commonly around double the 90% premium on the same loan size. On $800,000 that might mean $19,000 at 90% against $38,000 at 95%, which is the single strongest argument for finding more deposit.
On the loan amount, with the rate determined by the loan to value ratio. Budgeting it as a percentage of the purchase price is a common mistake that understates the figure considerably.
They can. Some insurers apply loadings to units, high density apartments and rural properties because resale risk differs. Most online calculators do not reflect these loadings.
No. It is a single one-off premium. Your only choice is paying it in cash at settlement or capitalising it into the loan, where you then pay interest on it for the life of the loan.
Sometimes. Certain insurers apply higher rates to investment lending because default patterns differ. The gap is usually smaller than the difference between loan to value tiers.
How much is LMI on your specific purchase is a question we can answer precisely, across several lenders, before you make an offer.
This guide was reviewed by Paritosh Wadhwani, Director and principal broker at APW Finance Pty Ltd, Bella Vista NSW. Paritosh structures residential, commercial, SMSF and self-employed lending for clients across Sydney and the Hills District.
APW Finance Pty Ltd delivers expert lending solutions with personalised service, empowering clients across residential, commercial, and business sectors.