If you’re buying your first home in Perth with less than a 20% deposit, you’ve probably come across lenders mortgage insurance. It’s one of the most common costs first home buyers face. It’s also one of the most misunderstood. This guide covers what it is, how much it can cost, and what options Perth buyers have to reduce or avoid it.
What Is Lenders Mortgage Insurance?
Lenders mortgage insurance (LMI) is a type of insurance your lender takes out to protect themselves if you default on your home loan and the property sells for less than the outstanding balance.
LMI protects the lender, not you. Even though you pay for it, the policy exists entirely for the bank’s benefit. It gives you nothing in return.
LMI kicks in when your deposit is less than 20% of the purchase price. Lenders measure this using the loan-to-value ratio (LVR), which is the percentage of the property’s value you’re borrowing. The lower your deposit as a share of the purchase price, the higher the LVR, and the more LMI is likely to cost.
How Much Does Lenders Mortgage Insurance Cost?
LMI is not a flat fee. Premiums are calculated as a percentage of your loan amount and rise steeply as your LVR increases. Based on current market estimates, the approximate cost for a 30-year loan term includes:
| Property Value | Deposit | Deposit (%) | Approximate LMI Premium |
|---|---|---|---|
| $500,000 | $25,000 | 5% | $15,888 |
| $500,000 | $50,000 | 10% | $8,428 |
| $750,000 | $37,500 | 5% | $32,867 |
| $750,000 | $75,000 | 10% | $15,977 |
| $1,000,000 | $50,000 | 5% | $43,728 |
| $1,000,000 | $100,000 | 10% | $22,644 |
Estimates only. Source: Finder LMI Premium Estimator. Actual premiums vary by lender and LMI provider.
For Perth buyers, a home purchased at approximately $850,000 with a 10% deposit could attract an LMI premium of approximately $18,819, based on estimates from Helia, one of Australia’s two major LMI providers.
One Perth-specific cost to factor in: Western Australia charges 10% stamp duty on the LMI premium itself. On a premium of approximately $18,819, that adds roughly another $1,882, bringing the total closer to approximately $20,700. The figures in the table above don’t include this duty, so add 10% when estimating your real out-of-pocket cost.
LMI can be paid upfront as a lump sum or added to your loan, which is called capitalising. If you capitalise LMI, you pay interest on it for the life of the loan, so the total cost ends up higher.
LMI also doesn’t carry over between lenders. If you refinance later and your LVR is still above 80%, a new policy may be required.
How Is LMI Calculated?
Two factors drive your premium:
- Your LVR. The higher the percentage you borrow, the higher the cost. An LVR of 95% (5% deposit) attracts a significantly higher premium than 85% (15% deposit).
- Your loan amount. LMI is a percentage of your total loan, so larger loans mean larger absolute costs.
In Australia, LMI is calculated by one of two major providers: Helia (formerly Genworth) or QBE LMI. Premiums vary between providers and lenders, so the exact figure for your situation is best confirmed with your broker.
Can Perth First Home Buyers Avoid LMI?
Yes, in several situations. Here are the four main options.
1. Save a 20% Deposit
Once your deposit hits 20% of the purchase price, LMI disappears. For many Perth buyers, that means saving approximately $140,000 or more depending on the suburb and property type.
The trade-off is time. Perth property prices can move while you’re saving, and in some cases the growth you’d have captured during those extra years exceeds the LMI cost itself. A mortgage broker can help you run the numbers. Our guide on how much you can borrow for your mortgage is a useful starting point.
2. The Australian Government 5% Deposit Scheme
The Australian Government 5% Deposit Scheme lets eligible first home buyers purchase with a minimum 5% deposit and no LMI. The federal government provides a guarantee to the lender in place of the insurance.
Since the 1 October 2025 expansion:
- No income caps apply
- Places are unlimited with no waitlist
- First home buyers need a minimum 5% deposit
- Single parents and legal guardians may qualify with a minimum 2% deposit
The current property price caps for Western Australia are:
| Location | Price Cap |
|---|---|
| Perth (capital city) | $850,000 |
| Other WA areas | $600,000 |
Caps can change and may vary by suburb. Use the official price cap tool as a guide, and confirm the cap with your participating lender before committing to a price.
For a full breakdown of how the Scheme works, including eligibility, lender requirements and ongoing obligations, read our guide to the 5% Deposit Scheme for Perth first home buyers.
3. A Professional LMI Waiver
Many of Australia’s major lenders waive LMI for borrowers in certain high-income professions. Eligible professionals may be able to borrow between 90% and 95% of a property’s value with no LMI payable. The table below covers current eligibility across the major lenders.
4. A Guarantor Home Loan
A family guarantor arrangement lets a parent or close family member use equity in their own property as additional security for your loan. This can help you borrow without a 20% deposit while avoiding LMI, because the guarantor’s equity reduces the lender’s risk.
Guarantor arrangements have real financial consequences for the guarantor, including potential liability if repayments aren’t met. Both parties should get independent legal and financial advice before going ahead.
Which Professions May Qualify for an LMI Waiver in Perth?
All four major banks and Macquarie offer LMI waiver programs for eligible professionals. Eligibility, maximum LVR and income requirements differ between lenders.
| Lender | Eligible Professions | Max LVR | Notes |
|---|---|---|---|
| ANZ | Doctors, specialists, dentists; chiropractors, physiotherapists, vets, optometrists, lawyers, accountants | Up to 95% for doctors; up to 90% for others | No minimum income requirement |
| CBA | Doctors, dentists, specialists (Medico Plus Policy); lawyers, solicitors, barristers, judges, magistrates; accountants, actuaries, auditors; finance and banking professionals; pharmacists | Up to 95% for doctors/dentists; up to 90% for all others | Min. $100,000 income required for most professions |
| NAB | AHPRA-registered medical professionals (including chiropractors, pharmacists, vets); qualified accountants (CA, CPA, IPA); actuaries; financial analysts; barristers and solicitors registered with relevant WA bodies | Up to 90% | See NAB’s LMI waiver page for the full list |
| Westpac | Medical professionals; registered nurses and midwives earning over $90,000 per year; lawyers, accountants | Up to 90% | Min. $90,000 income applies for nursing and midwifery |
| Macquarie | Medical professionals | Confirm with lender | Confirm current eligibility directly |
AHPRA stands for the Australian Health Practitioner Regulation Agency, the national body that registers most healthcare professionals in Australia.
Across most lenders, you’ll need to be currently practising in your profession and hold current registration or membership with the relevant professional body. Some lenders also have a minimum income threshold.
Waiver policies are updated regularly. A Perth mortgage broker can confirm current eligibility across multiple lenders for your profession and help you find the right fit.
Is It Worth Paying LMI?
LMI is a cost that protects the lender, not you. But that doesn’t mean paying it is always the wrong decision.
For many Perth buyers, it means entering the market years earlier than waiting to save a full 20% deposit. In a rising market, the growth captured during those extra years can exceed the LMI premium you paid. There’s no universal answer. It comes down to your savings rate, income, timeline and where Perth’s property market is headed when you’re buying.
If you’re weighing LMI against waiting, talking with a Perth home loan broker who knows the local market can give you a clearer picture of whether the timing works in your favour.
Frequently Asked Questions
Does LMI protect me as the buyer?
No. Lenders mortgage insurance protects the lender, not you. If you default on your loan and the property sells for less than the outstanding balance, LMI covers the lender’s loss. You pay the premium, but the policy provides you with no benefit.
Can I add LMI to my loan instead of paying upfront?
In most cases, yes. This is called capitalising LMI. It reduces the cash you need at settlement, but you pay interest on the premium for the life of the loan, which means the total cost ends up higher than paying upfront.
Is LMI refundable?
A partial refund may apply if you repay your loan in full within the first two years. Based on Helia’s published policy, a refund of approximately 40% may apply if repaid within the first year, and approximately 20% in year two. Refunds don’t apply if repayments have been missed or the loan is in default.
At what point does LMI apply?
LMI is generally required when your LVR is above 80%, meaning your deposit is less than 20% of the purchase price. Some lenders apply different thresholds, so it’s worth checking your situation with a broker.
Can I avoid LMI using the 5% Deposit Scheme?
Yes, if you’re eligible. Under the Australian Government 5% Deposit Scheme, qualifying first home buyers can purchase with a 5% deposit and no LMI because the government provides a guarantee to the lender. The Perth property price cap is currently $850,000. Read our full guide to the 5% Deposit Scheme in Perth for more detail.
Does every profession qualify for an LMI waiver?
No. Waivers are available for specific professions, typically in medicine, law, accounting and some allied health fields. Eligibility also depends on the lender, your registration status, loan amount and sometimes your income. Speaking with a broker is the quickest way to confirm whether you qualify and with which lender.
Ready to Talk Through Your Options?
Whether you’re looking at the 5% Deposit Scheme, a profession waiver or a guarantor arrangement, knowing which path suits your situation before you start can save you thousands. Our team works with Perth first home buyers every day and can help you work out the most cost-effective route for your circumstances.
Book an obligation-free chat with Strategic Mortgages Perth
Disclaimer: The information provided in this article is general in nature and does not constitute financial, tax, or legal advice. Individual circumstances vary. Lenders mortgage insurance protects the lender, not the borrower. The Australian Government 5% Deposit Scheme eligibility criteria, property price caps, and lender LMI waiver policies are subject to change. Confirm current details with your participating lender or mortgage broker before making any decisions. We recommend consulting with qualified professionals before making financial decisions.
