How to avoid paying LMI

LMI is charged when you borrow more than 80% of the property’s value. Each option below gets around it a different way, with different trade-offs. See how much each saves on your purchase with the LMI calculator.

1. Save a 20% deposit

With a 20% deposit your LVR is 80% and standard loans need no LMI. The downside is time: on a $750,000 home, 20% is $150,000 before stamp duty and fees. If prices rise faster than you save, waiting can cost more than the LMI would have.

2. Use the 5% Deposit Scheme

Eligible first home buyers can buy with a 5% deposit and no LMI, because the government guarantees up to 15% of the property’s value. Since 1 October 2025 there is no income cap and no limit on places, though price caps apply (for example $1,500,000 in Sydney and $950,000 in Melbourne). Single parents can buy with 2%.

On a $750,000 home this avoids an estimated $27,000 in LMI. Read the full 5% Deposit Scheme guide.

3. Use a family guarantee

A parent or close family member offers equity in their own property as extra security for part of your loan. That brings the lender’s risk below 80% LVR, so no LMI is charged, and some lenders allow you to borrow up to the full price plus costs.

• The guarantor is liable for the guaranteed amount if you can’t pay.
• The guarantee is usually limited to a set amount and can be released once your equity reaches 20%.
• Guarantors should get independent legal advice before signing.

4. Check for a profession waiver

Some lenders waive LMI for borrowers in certain professions, typically up to 85% or 90% LVR. Eligible jobs often include medical practitioners, dentists, lawyers, accountants and some other professionals with registration and minimum income requirements. Policies change often and vary widely, so ask a broker which lenders currently offer waivers.

5. Consider Help to Buy

Under the federal Help to Buy scheme, the government takes up to 40% equity in a new home or 30% in an existing one, and you need just a 2% deposit with no LMI. Income limits and price caps apply. See Help to Buy explained.

6. Reduce the LMI instead

If none of the above fit, you can still cut the premium:

• Moving from a 5% to a 10% deposit roughly halves LMI in our examples.
• A cheaper property means a smaller loan and a lower premium rate.
• Pay LMI upfront rather than adding it to the loan to avoid paying interest on it.

Which option is right for you?

Option	Best for	Main trade-off
20% deposit	Buyers with time and strong savings	Takes longer to save
5% Deposit Scheme	Eligible first home buyers under the price cap	Larger loan and repayments
Family guarantee	Buyers with family who own property	Puts the guarantor’s equity at risk
Profession waiver	Eligible professionals	Limited lenders and LVR caps
Help to Buy	Lower and middle income buyers	Government shares in any capital gain

Remember LMI does not carry over if you refinance, so a later switch while above 80% LVR can trigger a new premium. See when refinancing is worth it, read what LMI costs, and compare your options in the LMI and upfront costs calculator.

Frequently asked questions