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Low deposit

Buying with less deposit.

A 20% deposit isn't the only way in. With the right structure, 5-10% deposits are possible — sometimes with no LMI at all.

LMI explained

What LMI actually is, and who pays it.

Lenders Mortgage Insurance is a one-off premium the lender charges when the loan-to-value ratio goes above 80%. The insurance protects the lender, not the borrower — but the borrower pays the premium, either upfront or capitalised into the loan. The cost scales with LVR: at 85% it's modest, at 95% it can run into tens of thousands. The upside is that LMI is often the difference between buying now and waiting three years to save another 10% deposit, during which the property price may have moved further than the LMI cost.

This page is part of home loans. First-home buyers should also read the first home buyer page, which covers the Home Guarantee Scheme alternative to LMI.

Ways to reduce or avoid LMI

Four paths to lower LMI cost.

Home Guarantee Scheme
Government-backed scheme lets eligible buyers purchase with as little as 5% deposit and no LMI.
Professional waivers
Doctors, lawyers, accountants and certain other professions qualify for LMI waivers up to 85–90% LVR with specific lenders.
Guarantor structure
Family equity used as additional security pushes the effective LVR below 80% — and LMI disappears.
Capitalised LMI
Where LMI is unavoidable, capitalising it into the loan protects upfront cashflow at the cost of interest over the loan's life. Sometimes the right trade-off.
Q&A

Low deposit FAQs

Is LMI refundable if I refinance?
Partially, for a short window — usually within the first 12-24 months, with a pro-rata refund. After that, LMI is sunk cost. Refinancing from one lender to another later means paying fresh LMI if you're still above 80% LVR.
Can I transfer LMI between lenders?
No. LMI is lender-specific. This is why locking into a lender where you may want to refinance quickly is a consideration — switching too fast can double up on LMI.
How is LMI calculated?
Based on loan amount, LVR tier, and the insurer's rate table. The jump from 80% to 85% is modest; 90% to 95% is where the premium gets meaningful. Use our LMI calculator for a rough figure.
Keep exploring

Related pages

First home buyersGuarantor loansLMI calculator
General advice disclaimer. The information on this page is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether it is appropriate for you before acting on it, and seek professional advice where relevant.

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