Glossary · Finance & Lending
LMI (Lenders Mortgage Insurance)
18 August 2026 · 1 min read
Written for Buyer's Agent, Mortgage Broker, Consumer/Investor
Lenders Mortgage Insurance (LMI) is a one-off insurance premium charged to a borrower when their home loan deposit is less than 20% of the property's value. It protects the lender, not the borrower, against loss if the loan defaults.
LMI allows buyers to purchase property with a smaller deposit than the traditional 20% benchmark, but it adds a significant upfront or capitalised cost to the loan. The premium is calculated based on the loan amount and the loan-to-value ratio, so a smaller deposit generally results in a higher LMI cost. Buyers agents often factor LMI into total purchase cost modelling when a client's deposit sits below the 20% threshold.