Lenders mortgage insurance in Perth
What is LMI, and can you avoid it?
Lenders mortgage insurance (LMI) is a one-off fee most lenders charge when you borrow more than 80% of a home's value, and it protects the lender, not you. We'll show you what it could cost you and which ways around it you might qualify for.
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What is LMI, in plain language?
LMI is insurance the lender takes out to cover itself if a borrower can't repay the loan and selling the home doesn't cover what's owed, but you're the one who pays for it.
That's the part that surprises most people. The name sounds like it looks after you, yet if things go wrong it pays the lender. If you fall behind and the home sells for less than the loan, the gap is called a shortfall, and LMI covers the lender for it.
So why would anyone pay it? Because it's what lets a lender say yes to a smaller deposit. Without LMI, most lenders would want you to save a full 20% first, which can take years in the Perth market.
LMI is different to mortgage protection or income protection insurance, which are covers you choose for yourself. LMI is arranged by your lender, and you usually don't get to pick the insurer.
When do you pay LMI?
You usually pay LMI when your loan is more than 80% of the property's value, which is the same as having a deposit under 20%.
Lenders measure this as your loan to value ratio, or LVR. Say you're buying a $600,000 home in Baldivis with a $60,000 deposit. You'd borrow $540,000, which is an LVR of 90%, so LMI would normally apply.
- It applies to home loans and investment loans
- The value is the lender's valuation, which can come in lower than the price you pay
- It's usually a one-off cost at settlement, not an ongoing premium
- Borrowing more later, such as a top up, can mean paying LMI again
Not sure how much deposit you need in the first place? Our guide to how much deposit you need for a house walks through what changes at each level.
How much is LMI?
LMI typically costs between 1% and 2% of the loan amount, and the exact figure depends on your loan size, deposit, lender and insurer.
Source: Helia, one of the main LMI insurers (helia.com.au), checked 30 October 2026.
Loan size
The bigger the loan, the bigger the premium, because the fee is worked out on the amount you borrow.
Your LVR
A smaller deposit means more risk for the lender, so the rate charged climbs as your LVR rises.
Lender and insurer
Each lender has its own arrangement with an insurer, so the same loan can attract a different premium from one lender to the next.
Example only: on the $540,000 loan above, a premium in Helia's typical range would be roughly $5,400 to $10,800. Your real figure could sit outside that range, so we get an actual quote from the lender before you commit.
You'll see the premium in writing before you sign anything. That's part of keeping things glass box: no surprises on settlement day.
Can you get an LMI refund?
LMI refunds are limited, and with some insurers a partial refund is only possible if you pay out the loan within the first two years.
Refinancing is where this catches people out. If you move to a new lender while you still owe more than 80% of the home's value, that lender may charge a new LMI premium. We factor this in before suggesting any switch.
Ways to avoid or reduce LMI
You can avoid LMI with a 20% deposit, or with a smaller deposit through Keystart, a government scheme, a family guarantee or a professional waiver, depending on your situation.
Save a 20% deposit
Borrow 80% or less of the home's value and LMI generally doesn't apply. The trade-off is time spent saving while prices move.
Keystart
A WA Government home loan with a 2% deposit and no LMI, with income and price limits. Read our Keystart guide.
5% Deposit Scheme
The federal scheme lets eligible first home buyers buy with a 5% deposit and no LMI. See the 5% Deposit Scheme.
Family Home Guarantee
For eligible single parents and legal guardians, with a smaller deposit and no LMI. See the Family Home Guarantee.
Family guarantee
A parent or close family member uses equity in their own home as extra security, which can bring your loan under the LMI threshold.
LMI waiver
Some lenders waive LMI for eligible professions such as doctors, lawyers and accountants. See our LMI waiver guide.
Each option has its own rules and trade-offs, and paying LMI to buy sooner can still be the right call for some people. We lay the options side by side so you have the luxury of choice, then you decide.
How we help with LMI
We work out whether LMI applies to you, what it could cost, and which ways to avoid or reduce it you may qualify for.
Have a chat
Tell us about your deposit, income, job and the kind of home you're after. No jargon, no obligation.
We check your options
We look at Keystart, the government schemes, a family guarantee and any profession waiver that could apply to you.
See the real numbers
We get actual LMI quotes from lenders and compare them with the options that avoid it, so you see the full cost either way.
Apply and settle
We prepare the application, hold the pressure points with the lender and keep you updated through to settlement.
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Frequently asked questions
Who does lenders mortgage insurance protect?
Lenders mortgage insurance protects the lender, not the borrower, even though the borrower usually pays for it.
Can I add LMI to my home loan?
Yes, most lenders let you add the LMI premium to your loan instead of paying it upfront at settlement.
This is called capitalising. It keeps more cash in your pocket on day one, but you pay interest on the premium over the life of the loan, and it pushes your LVR a little higher.
How can I avoid LMI as a first home buyer?
First home buyers in WA can often avoid LMI through Keystart, the 5% Deposit Scheme or a family guarantee, depending on their income, deposit and the home they're buying.
High income earners in certain professions may also qualify for a lender waiver. We check which of these fit you in a first chat.
Is it worth paying LMI to buy sooner?
It depends on your situation, because paying LMI can let you buy years earlier, while waiting to save 20% avoids the fee but leaves you exposed to price changes and rent in the meantime.
We can't tell you which way prices will go. What we can do is show you the cost of LMI next to your other options so you can weigh it up with clear numbers.
Do I pay LMI again if I refinance?
You may, because if your new loan is still above 80% of the home's value, the new lender can charge a fresh LMI premium.
Once you've paid down the loan or your home has gone up in value, you may be under the threshold and able to refinance without it.
Find out how LMI affects you
A first chat with Oui Finance is complimentary, and we'll show you plainly whether LMI applies to you and the options that could help you avoid it.
Send us a few details and one of our brokers will be in touch. You can also call us on 0448 383 336.
This page is general information only and does not take your personal circumstances into account. LMI premiums, refund terms and waiver policies are set by each lender and insurer and can change, and any cost figures shown are examples only, not quotes. Keystart and government scheme rules are set by their administrators. Lender credit criteria, terms, conditions, fees and charges apply, and your full financial situation will be reviewed before any offer or product is accepted.