LMI calculator
What mortgage insurance costs on a low deposit, including any duty on the premium and the deposit needed to avoid it.
Estimated LMI, including duty
Estimate$9,509.00
90.0% loan-to-value on a 702,000 loan
- Premium
- $9,056.00
- Stamp duty on the premium
- $453.00
- Extra deposit to avoid it
- $78,000
| Property value | $780,000 |
|---|---|
| Deposit | -$78,000 |
| Loan | $702,000 |
| Loan-to-value | 90% |
| Premium | $9,056.00 |
| State duty on the premium | $453.00 |
| Interest if capitalised into the loan | $11,235 |
| Total upfront cost | $9,509.00 |
- This premium is an indicative estimate. Insurers do not publish rate cards — your lender must give you the quoted figure before you commit.
- Saving another 78,000 of deposit reaches 80% and removes the premium completely.
At a 10% deposit on $780,000 the loan-to-value is 90%, and premium bands step sharply — crossing 90% can roughly double the cost.
Do you qualify
How this is calculated
Premiums step at loan-to-value bands
Rates are banded rather than continuous, so a small change in deposit can move you a whole band. Crossing 90% loan-to-value roughly doubles the premium, from about 1.29% to 2.6% of the loan.
premium = loan × rate(LVR band, loan size band)Duty on the premium is often omitted
Where the premium is treated as insurance it usually attracts regional duty — around 5% in New South Wales and 10% in Victoria — which most published figures leave out entirely.
Government guarantees can remove it
Some markets guarantee the gap above a small deposit so no insurance is charged. In Australia that is the Home Guarantee Scheme, available with a 5% deposit.
Worked example: $780,000 property with a $78,000 deposit
| Value | $780,000 |
|---|---|
| Deposit | $78,000 (10%) |
| Loan | $702,000 |
|---|---|
| Loan-to-value | 90% |
Mortgage insurance rules differ by country. Pick a country above for the thresholds and any government guarantee that applies.
What this assumes
- A standard owner-occupier loan.
- A market-average premium rather than a specific quote.
- Premium capitalised into the loan.
- The premium figure is indicative only.
Where this commonly goes wrong
- Mortgage insurance protects the lender rather than the borrower, and the insurer may still pursue you for a shortfall.
- Premiums are rarely portable or refundable, so refinancing early often means paying again.
- Some lenders waive the premium for particular professions or products, which can outweigh a rate difference.
Questions
What is mortgage insurance and who does it protect?
Cover the lender requires when the deposit is below about 20%. It protects the lender, not you — if the property sells at a loss the insurer can still pursue the borrower for the shortfall.
How can it be avoided?
A 20% deposit is the direct route — $156,000 on a $780,000 property. A government guarantee scheme, a family guarantor or a profession-based waiver can each remove it with a smaller deposit.
Should the premium be added to the loan?
Only if the cash is genuinely unavailable. Capitalising means paying interest on the premium for the full term, which over 30 years commonly costs more than the premium itself.
Related tools
Sources
General estimate based on published ATO rates for the the current period. Not tax advice, and it does not consider your objectives, financial situation or needs. Confirm your position with the ATO or a registered tax agent.
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