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Buying a home is not exactly cheap, and the added expense of Lenders Mortgage Insurance does not help. In this article, you will learn everything about LMI waivers in 2024.
You’ll learn which professionals are eligible for LMI exemptions and how to apply.
So, if you’re ready to learn how to save more than $35,000 in LMI on your next home purchase, this guide is for you!
Let’s dive right in
Quick Summary
Lenders Mortgage Insurance (LMI) is usually required when you have less than a 20% deposit. However, certain professionals and schemes can help you waive this cost, saving you thousands of dollars.
What is an LMI Waiver?
LMI is insurance required by lenders when your deposit is less than 20%. Some professions are considered low-risk by banks and can have LMI waived.
Eligibility for LMI Waiver:
Professionals: Doctors, Accountants, Lawyers, Physiotherapists, and others.
First Home Buyers: With a 5% deposit using the Home Guarantee Scheme.
Others: Home buyers with a 15% deposit.
Savings on LMI:
For an $800,000 home, waiving LMI can save up to $34,372.
LMI costs vary based on the deposit and loan amount.
How to Apply:
Ensure you meet the criteria specific to your profession or deposit amount.
Gather necessary documents like industry membership and proof of income.
Contact Hunter Galloway:
Hunter Galloway can help determine your eligibility and guide you through the process of securing a home loan without paying LMI. Contact us now for a free assessment.
What Is LMI?
Lender’s Mortgage Insurance (LMI) is an insurance policy that’s there to protect the bank in case you’re unable to pay your loan back. It’s there completely to protect the bank’s interest. It doesn’t help you as the individual consumer, but it’s generally applicable in Australia if you’re buying more than 80% of the property value, and the lender’s mortgage insurance can be tens of thousands of dollars.
What Is An LMI Waiver?
When you are buying a home with less than a 20% deposit, you generally need to pay Lenders Mortgage Insurance (LMI) to the bank.
There are some specific jobs that the banks consider a lower risk, so they are willing to waive the LMI costs if you are eligible. In other words, if you’re buying a home worth $800,000, you could save $34,372 in costs by not paying LMI.
Who Is Eligible For Waived LMI?
There are some banks that provide no LMI home loans to:
- Eligible professionals such as Doctors, Accountants, Lawyers, Physiotherapists, etc.
- First home buyers with a 5% deposit using the Home Guarantee Scheme
- Home buyers who have a 15% deposit
Doctors
To be eligible for an LMI Waiver as a doctor, you must meet the following criteria:
- Must be a member of a relevant industry organisation (i.e. AHPRA membership)
- You need to be a preferred medical specialist, such as a General Practitioner, Veterinarian or Dentist.
- LMI waiver is available for both a home to live in and investment properties.
- Maximum loan of $4.5 million
- Maximum loan of 100% of the property value with LMI waived
- Call us on 1300 088 065 or complete our free assessment form to see if you are eligible.
Other Medical Professionals
If you are another medical practitioner who is not a doctor, then these are the eligibility criteria you must meet:
- Must be a member of a relevant industry organisation (i.e. AHPRA membership)
- You need to be working in a specific role as an Optometrist, Chiropractor, Pharmacist, Audiologist, Occupational therapist, Osteopath, Podiatrist, Psychologist, Radiographer or Sonographer.
- In some cases, there are minimum income requirements.
- LMI waiver is available for both a home to live in and investment properties.
- Maximum loan of $2.00 million
- Maximum loan of 90% of the property value with LMI waived
- Call us on 1300 088 065 or complete our free assessment form to see if you are eligible.
Accountants, professional athletes, entertainment professionals, lawyers
For other professionals, the eligibility criteria for LMI Waivers is:
- Accounting professionals must be an accountant, Chief Financial Officer (CFO), Finance Manager, Auditor or Actuary.
- Legal professionals must be Solicitors, Judges, Barrister, and Lawyer and have a Practicing Certificate.
- Depending on the professional athletes, they will be considered under the condition that they have an accredited manager or agent.
- In some cases, there are minimum income requirements.
- Available for both a home to live in and investment properties.
- Maximum loan size $2 million
- Maximum loan 90% of property value
What Is The Maximum LVR I Can Get With No LMI
105% LVR with no LMI
- Yes it is possible to buy a home with no deposit, but you will need to ask your parents to act as guarantors and only, in this case, could you borrow up to 100% LVR without having to pay LMI..
- There is no requirement to be working in a specific role, or profession.
95% LVR with no LMI
- The First Home Guarantee Scheme allows up to a 95% no LMI loan
- There is no requirement to be working in a specific role, or profession.
- You need to be buying a home to live in as a first home buyer— not available on investment properties.
- Your FY22 taxable income must be under $125k if you are single or $200k combined as a couple.
- Maximum loan of 95% of the property value is determined by your location — for more info, see here.
- Call us on 1300 088 065 or complete our free assessment form to see if you are eligible.
85% LVR with no LMI
- There is no requirement to be working in a specific role, or profession.
- You need to be buying a home to live in, not available on investment properties.
- You do not need to be a first home buyer, it is available for any home buyers.
- Your income has to be fairly strong, as the debt-to-income ratio needs to be under 6 times.
- Genuine savings are not required
- Maximum loan size $5,000,000
- Maximum loan 85% of property value
85% LVR with $1 LMI for first-home buyers
- There is no requirement to be working in a specific role, or profession.
- You need to be buying a home to live in, not available on investment properties.
- You need to be a first home buyer, or if you are buying with a partner, one of you needs to be a first home buyer.
- Genuine savings are not required.
- Maximum loan size is $850,000, so the maximum purchase price is $1m.
- Maximum loan 85% of property value
- LMI is not actually waived; you are required to pay $1 in LMI costs, and it’s subject to the lender’s mortgage insurance approval – in effect, the bank pays the LMI on your behalf.
Call us on 1300 088 065 or complete our free assessment form to see if you are eligible.
How First Home Buyers Can Get NO LMI?
Lenders’ Mortgage Insurance can get waived for first home buyers using the First Home Guarantee Scheme (previously called the First Home Loan Deposit Scheme, or FHLDS).
This scheme has been created to help first-time home buyers get into the market sooner. The government effectively acts as your guarantor and lets you get into the market with a deposit of 5%.
This is available on both brand-new and existing properties, but there are property price caps that will limit what you can spend depending on where you live.
There are only 35,000 spots available,so find out if you qualify for the 5% deposit scheme by calling us on 1300 088 065 or contact us.
How Much Do I Save Not Paying LMI?
Lenders Mortgage Insurance is priced on a sliding scale; the higher your deposit amount, the lower the insurance costs. So, for example, a home purchase of $600,000 with a 10% deposit ($60,000) will mean you’ll end up paying around $14,300 in LMI – but the higher the loan amount, and the lower the deposit, the more this goes up.
As you can see below, having LMI waived could save you up to $32,133 in the costs of purchasing your property.
Purchase Price | Deposit (%) | Deposit ($) | LMI |
$500,000 | 15% | $75,000 | $4,534 |
$500,000 | 10% | $50,000 | $9,504 |
$500,000 | 5% | $25,000 | $16,720 |
$750,000 | 15% | $112,500 | $8,695 |
$750,000 | 10% | $75,000 | $17,894 |
$750,000 | 5% | $37,500 | $32,133 |
*LMI amount calculated as the average of the big 4 banks on a purchase in Queensland.
These costs change significantly across different banks, so in the same $600,000 purchase scenario we mentioned above, comparing 7 different lenders, you can see there is a difference in cost from the cheapest ($10,301) to the most expensive ($16,121) of over $6,000!
How Much Does LMI Cost?
Try using our Lenders Mortgage Insurance Calculator, or select your job below to see if you qualify to have LMI Waived.
FAQ's For Waived LMI
There are some banks that can waive LMI for Nurses if you have a 15% deposit or if you are eligible for the First Home Guarantee Scheme. More info here.
Certain professions qualify for waived LMI. If you fit into these specific professions, then you will be able to save thousands on LMI.
- Doctors
- Accountants
- Pharmacists
- Lawyers
- Optometrist
- Chiropractor
- Pharmacist
- Audiologist
- Occupational therapist
- Osteopath
- Podiatrist
- Psychologist
- Radiographer
- Sonographer
- Professional athlete
Depending on the mortgage insurance company, some will offer a discount on LMI premiums for first-home buyers. It is best to speak with Hunter Galloway about how you can organise this deal, as lenders will need to deal with these specific LMI providers and negotiate this discount for the customer.
Banks and other lenders maintain a list of accepted professionals who obtain a waiver toward lenders’ mortgage insurance. This is mainly because they see these borrowers as lower risk who:
- Make regular repayments without causing any delay
- Borrow high loan value as compared to other borrowers
- Almost never default on their loan
While this might not be true in all cases, it’s the bank’s policy, and these policies change from time to time. For example, the banks previously waived LMI for mining engineers but stopped that in 2017, so their policies are constantly changing
For those with bad credit, lenders do not charge LMI, but bad credit lenders, which are considered to be non-conforming lenders, often charge a risk fee.
Speak to our team about how much a risk fee would be.
Bonus: ANZ's Secret LMI Waiver
ANZ’s Low-risk LMI waiver allows eligible borrowers to borrow up to 95% of the property’s value without paying a dollar of LMI. It can be used for purchases, refinances, or for a home to live in, or an investment property with both principal and interest and interest-only repayment options. However, it is targeting some higher-income segments, which we’re going to break down, and it’s restricted to some of Australia’s more lucrative suburbs.
Eligibility criteria
- The property has to be a standard residential property — it can’t be commercial, it can’t be self-managed super, and specific assets – it needs to be a plain old home.
- The house you buy must be in one of 145 eligible suburbs. Now, these are all high-value suburbs, places like Rose Bay in Sydney, Toorak in Melbourne and City Beach in Perth.
- You must have a very strong credit history with no missed repayments or black marks on your file,
- The bank needs to see a high level of uncommitted monthly income. In other words, you must be earning more than enough money to cover your home loan and expenses and comfortably afford these repayments.
- The minimum loan amount eligible for this waiver is $2 million, with the maximum amount, depending on the postcode, ranging from $4.75 million to $7.6 million.
Benefits
- Imagine you’re buying a $2 million home; normally, you’d need a 20% deposit or $400,000 to avoid the lender’s mortgage insurance. But with a low-risk LMI premium, you’d only need a 5% deposit or $100,000, plus you’d avoid those lenders mortgage insurance costs. For a $4 million home, you’d normally need $800,000 at 20%, but with the waiver, you only need $200,000.
- Another general example of where this could be helpful is if you’re looking at potentially refinancing, where you might have bought a home a couple of years ago, you might want to refinance and access previously, you know, debt Equity that wasn’t available to reinvest and build wealth faster.
- We’ve seen it fairly commonly in the tech space, where you might not want to liquidate shares and don’t want to use that deposit now. This scheme could be a great way of getting into the market without having to sell down your shares, paying capital gains, and getting the upside today.
- The scheme can benefit families wanting to upsize where bridging loans might not be available, and it means you can get into the market before you have to sell your current family home to move straight from one home to the other.
- It can be particularly good for cash-backed individuals who want to have a bit of a safety net of savings. You might want to put the rest of your cash in the offset account and have it available — this can be a great product for that.
- If you’re self-employed and want to leave cash on your company instead of dividing 78 loans and different things (obviously speak to your accountant around this), it can be good because it means you don’t have to pull out your larger deposit. You still have the cash there but can get into the market without paying hundreds of thousands of dollars in lenders mortgage insurance.
Drawbacks of ANZ's LMI Waiver
The key concern with this new program is the minimum loan amount. A loan of $2 million translates to a household income of about $450,000 or more. This excludes a pretty big proportion of first-home buyers, particularly those in the lower to middle-income brackets.
To meet the minimum loan amount of 95%, the purchase price needs to be over $2.1 million. So, in Sydney, for a lot of home buyers, you might be looking at buying a home for $1.5 to $1.8 million, so this policy isn’t going to be any help to you.
The other issue with this is the policy’s high credit standards. You might have a strong income — you could be on $450,000- $500,000 a year, but if your credit score isn’t high enough, you’re not going to be eligible for this policy.
Apply For A No Lenders Mortgage Insurance Home Loan.
Are you ready to buy a home without paying LMI? Our team at Hunter Galloway is here to help you buy a home in Australia. We can quickly assess if you are eligible to apply for an LMI waived home loan.
Unlike other mortgage brokers who are just one-person operations, we have an entire team of experts dedicated to helping make your home loan journey as simple as possible.
If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
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