What Is LMI and Do You Really Need to Pay It?

LMI — three letters that can scare off a lot of first home buyers.

But before you panic, let’s talk about what Lenders Mortgage Insurance (LMI) actually is, how it works, and whether you have to pay it.

Spoiler: not always.

💡 What Is LMI?

Lenders Mortgage Insurance protects the lender (not you) if you default on your loan. It kicks in when you’re borrowing more than 80% of the property’s value.

Example:

• Property price = $600,000

• You’re borrowing $540,000 (90%)

• LMI could apply — potentially $10k–$15k, depending on lender and loan

It’s a once-off premium, usually added to your loan amount.

🤔 Do You Have to Pay It?

Not necessarily. You can avoid LMI if you:

• Have a 20% deposit

• Use a guarantor (like a parent’s property)

• Qualify for the First Home Guarantee (5% deposit, no LMI)

🧠 Should You Avoid LMI at All Costs?

Not always. Sometimes it’s worth paying LMI to get into the market sooner.

Let’s say:

• Property prices are rising fast

• You’ll spend another 2 years saving the full 20%

• LMI could cost $12k, but the property might increase by $50k

In that case, paying LMI might be the better move.

We help you weigh it up properly.

👥 Real Client Story: Tahlia in Coburg North

Tahlia had $35k saved and thought she needed more.

We:

• Got her into the First Home Guarantee

• Helped her avoid LMI completely

• Settled her loan in 21 days

“I thought LMI was a deal-breaker. Turns out I didn’t even have to pay it!”

📈 LMI Isn’t Always a Bad Thing

It can be a useful tool if:

• You’re buying in a hot market

• You’ve got stable income

• You don’t want to keep renting for 2 more years

But you need a strategy. We help you build it.

✅ Want to Know If You Can Avoid (or Minimise) LMI?

Let’s check your options today.

👉 [Book your free LMI strategy session with Nude Home Loans]