How Much Deposit Do You Need to Avoid LMI? Complete Deposit Guide
You need 20% deposit to avoid LMI — but not always. See deposit amounts by property price, LMI costs at every level, and how to skip LMI with less than 20%.
The standard answer to “how much deposit do I need to avoid LMI?” is 20%. And technically, that’s correct — a 20% deposit keeps your loan-to-value ratio (LVR) at 80% or below, which is the threshold where Lenders Mortgage Insurance stops applying.
But here’s what most guides won’t tell you: 20% is not the only way to avoid LMI. Depending on your profession, circumstances, and the pathway you choose, you may be able to avoid LMI with a deposit as low as 5% — or even 0%.
This guide covers the full picture: what 20% actually looks like at current property prices, how much LMI costs at each deposit level, and every pathway available to eliminate LMI without saving the full 20%.
The Standard Rule: 20% Deposit = No LMI
At its simplest, LMI is triggered when your LVR exceeds 80%. LVR is calculated as:
LVR = (Loan Amount / Property Value) × 100
If you’re buying a $800,000 property and borrowing $640,000, your LVR is 80%. No LMI applies. If you borrow $720,000 (10% deposit), your LVR is 90% — LMI applies.
A 20% deposit guarantees you avoid LMI with any lender, for any property, regardless of your profession or circumstances. It’s the universal LMI-free threshold.
What 20% Deposit Looks Like at Current Property Prices
Here’s the reality of saving a 20% deposit across different property price points:
| Property Price | 20% Deposit | 15% Deposit | 10% Deposit | 5% Deposit |
|---|---|---|---|---|
| $400,000 | $80,000 | $60,000 | $40,000 | $20,000 |
| $500,000 | $100,000 | $75,000 | $50,000 | $25,000 |
| $600,000 | $120,000 | $90,000 | $60,000 | $30,000 |
| $700,000 | $140,000 | $105,000 | $70,000 | $35,000 |
| $750,000 | $150,000 | $112,500 | $75,000 | $37,500 |
| $800,000 | $160,000 | $120,000 | $80,000 | $40,000 |
| $900,000 | $180,000 | $135,000 | $90,000 | $45,000 |
| $1,000,000 | $200,000 | $150,000 | $100,000 | $50,000 |
| $1,200,000 | $240,000 | $180,000 | $120,000 | $60,000 |
| $1,500,000 | $300,000 | $225,000 | $150,000 | $75,000 |
For a median-priced Sydney house ($1.45 million), a 20% deposit means saving approximately $290,000. In Melbourne ($1.05 million), it’s $210,000. Even in regional centres, a 20% deposit on a $600,000 property requires $120,000.
For most Australians — particularly first home buyers — saving 20% takes years. Every year you spend saving is a year of rent payments, a year of potential property price growth you’re missing, and a year of delayed wealth building through home ownership.
That’s why understanding your alternatives is so important.
How Much LMI Costs at Each Deposit Level
Before exploring how to avoid LMI, it helps to understand what’s at stake. LMI costs escalate sharply as your deposit decreases:
LMI Cost by Deposit Level — $600,000 Property
| Deposit | LVR | Loan Amount | Approximate LMI |
|---|---|---|---|
| 20% ($120,000) | 80% | $480,000 | $0 |
| 15% ($90,000) | 85% | $510,000 | ~$4,800 |
| 12% ($72,000) | 88% | $528,000 | ~$7,200 |
| 10% ($60,000) | 90% | $540,000 | ~$10,400 |
| 8% ($48,000) | 92% | $552,000 | ~$15,500 |
| 5% ($30,000) | 95% | $570,000 | ~$25,500 |
LMI Cost by Deposit Level — $800,000 Property
| Deposit | LVR | Loan Amount | Approximate LMI |
|---|---|---|---|
| 20% ($160,000) | 80% | $640,000 | $0 |
| 15% ($120,000) | 85% | $680,000 | ~$6,400 |
| 12% ($96,000) | 88% | $704,000 | ~$9,600 |
| 10% ($80,000) | 90% | $720,000 | ~$15,200 |
| 8% ($64,000) | 92% | $736,000 | ~$21,000 |
| 5% ($40,000) | 95% | $760,000 | ~$35,000 |
LMI Cost by Deposit Level — $1,000,000 Property
| Deposit | LVR | Loan Amount | Approximate LMI |
|---|---|---|---|
| 20% ($200,000) | 80% | $800,000 | $0 |
| 15% ($150,000) | 85% | $850,000 | ~$8,000 |
| 12% ($120,000) | 88% | $880,000 | ~$12,000 |
| 10% ($100,000) | 90% | $900,000 | ~$20,100 |
| 8% ($80,000) | 92% | $920,000 | ~$27,500 |
| 5% ($50,000) | 95% | $950,000 | ~$44,000 |
The jump from 90% to 95% LVR is particularly steep — LMI roughly doubles or triples. And at 95% LVR on a $1 million property, LMI can exceed $44,000. That’s a significant chunk of the deposit itself.
Use the LMI calculator to estimate the exact cost for your property price and deposit.
You Don’t Need 20% — Here’s How to Avoid LMI with Less
The real question isn’t “how much deposit to avoid LMI?” — it’s “which pathway eliminates LMI at my current deposit level?” There are four main alternatives to the 20% deposit route.
Pathway 1: Professional LMI Waivers — As Low as 5% Deposit
This is the most powerful LMI avoidance tool for eligible professionals. Certain lenders waive LMI entirely for borrowers in specific occupations, allowing you to borrow up to 85% LVR, 90% LVR, or even 95% LVR without any LMI premium.
Minimum deposit with a professional waiver:
- 5% deposit — available with select lenders for certain professions at 95% LVR
- 10% deposit — the most commonly available LMI waiver threshold at 90% LVR
- 15% deposit — widely available across lenders at 85% LVR
Eligible professions include:
- Medical professionals (doctors, dentists, optometrists, veterinarians, pharmacists)
- Legal professionals (lawyers, barristers, solicitors)
- Financial professionals (accountants — CPA/CA, actuaries, financial planners)
- Engineers (all disciplines with recognised qualifications)
- IT professionals (above income thresholds)
- Nurses and midwives (AHPRA-registered)
- And more — see the full list
The saving is substantial. On a $1 million property with a 10% deposit, a professional waiver saves approximately $20,100 in LMI. With a 5% deposit on the same property, the saving exceeds $44,000.
Check if your profession qualifies.
Pathway 2: First Home Guarantee (FHBG) — 5% Deposit
The federal government’s First Home Guarantee allows eligible first home buyers to purchase with just a 5% deposit, with the government guaranteeing the portion between 5% and 20%. This eliminates the lender’s need for LMI.
Key details:
- Minimum deposit: 5%
- Available for first home buyers (or those who haven’t owned property in 10+ years)
- Income cap: $125,000 (single) or $200,000 (couple) per financial year
- Property price caps vary by location (e.g., $1.5M in Sydney, $900K in Melbourne)
- Limited places per financial year (35,000 nationally)
- Must be owner-occupied, principal and interest
The limitation: Income caps exclude many professionals who would otherwise benefit. If you earn above $125,000 as an individual (or $200,000 as a couple), you won’t qualify for the FHBG — but you may qualify for a professional LMI waiver, which has no income cap.
Pathway 3: Guarantor Loans — 0% Deposit (in Some Cases)
A guarantor loan allows a family member to use equity in their own property to guarantee a portion of your loan. This can reduce your effective LVR to 80% or below, eliminating LMI entirely.
Minimum deposit with a guarantor:
- 0% — some lenders allow a full 100% loan with a guarantor (though costs like stamp duty still require cash or are capitalised)
- 5% — a more common guarantor arrangement where your deposit is topped up to an effective 20% by the guarantee
How it works:
- Your parent (or sometimes another family member) offers their property as additional security
- The guarantee covers the “gap” between your deposit and 20%
- The guarantee is limited to a specific amount — typically 20% of your property value
- Once your LVR drops below 80% (through repayments and/or property appreciation), the guarantee is released
Considerations:
- The guarantor’s property is at risk if you default
- Not all families can or want to provide a guarantee
- The guarantor needs sufficient equity and may need independent legal advice
- It can affect the guarantor’s borrowing capacity
Pathway 4: Select Lenders with Lower LMI Thresholds — 15% Deposit
A small number of lenders don’t charge LMI at 85% LVR for certain loan products. This means you only need a 15% deposit instead of 20%.
The saving: While the LMI at 85% LVR is lower than at 90% or 95%, it’s still meaningful. On an $800,000 property, LMI at 85% LVR is approximately $6,400. Avoiding it with a 15% deposit is a worthwhile saving.
Not all lenders offer this, and it may be limited to specific products or borrower profiles. Ask your broker about lenders with 85% LVR LMI-free thresholds.
Deposit Comparison: The Full Picture
Here’s a comprehensive comparison showing your total position at each deposit level — with and without LMI avoidance strategies:
$800,000 Property
| Deposit Level | Deposit Amount | LMI (Standard) | LMI (With Waiver/Scheme) | Total Cash Needed (Excl. Stamp Duty) |
|---|---|---|---|---|
| 5% | $40,000 | ~$35,000 | $0 | $40,000 |
| 10% | $80,000 | ~$15,200 | $0 | $80,000 |
| 15% | $120,000 | ~$6,400 | $0 | $120,000 |
| 20% | $160,000 | $0 | $0 | $160,000 |
A professional with a 10% deposit and an LMI waiver enters the market $80,000 sooner than someone saving 20% — and saves $15,200 in LMI compared to a non-eligible buyer with the same deposit.
$1,200,000 Property
| Deposit Level | Deposit Amount | LMI (Standard) | LMI (With Waiver/Scheme) | Total Cash Needed (Excl. Stamp Duty) |
|---|---|---|---|---|
| 5% | $60,000 | ~$55,000+ | $0 | $60,000 |
| 10% | $120,000 | ~$26,500 | $0 | $120,000 |
| 15% | $180,000 | ~$10,000 | $0 | $180,000 |
| 20% | $240,000 | $0 | $0 | $240,000 |
At higher property prices, the LMI saving becomes even more dramatic. A $55,000+ saving at 95% LVR on a $1.2 million property is life-changing money.
The Real Question: Which Pathway Eliminates LMI at Your Current Deposit?
Instead of fixating on the 20% target, consider where you are right now and which pathway works for you:
If You Have 5% Deposit
- Professional waiver: Available with select lenders for eligible professions — check at 95% LVR
- FHBG: If you’re a first home buyer under the income cap
- Guarantor: If a family member can provide a guarantee
- Standard path: LMI will be charged — expect it to be the highest cost tier
If You Have 10% Deposit
- Professional waiver: The most common LMI waiver threshold — check at 90% LVR
- FHBG: If you’re a first home buyer under the income cap
- Guarantor: If a family member can provide a partial guarantee
- Standard path: LMI will be charged — moderate cost tier
If You Have 15% Deposit
- Professional waiver: Widely available at 85% LVR
- Select lenders: Some waive LMI at 85% LVR for certain products
- Standard path: LMI charged but at the lowest cost tier above 80%
- You’re close to 20%: Consider whether waiting to save the final 5% makes sense vs buying now with a waiver
If You Have 20% or More
- No LMI required with any lender
- You’ll also access the most competitive interest rates
- Consider whether the time it took to save 20% cost you more in rent and missed growth than LMI would have
Should You Wait to Save 20% or Buy Sooner Without LMI?
This is the decision many buyers face, and the answer depends on your local market, savings rate, and LMI avoidance options.
Scenario: Saving for 20% vs buying now with 10% deposit and a professional LMI waiver
| Factor | Wait for 20% | Buy Now with 10% + Waiver |
|---|---|---|
| Deposit needed ($800K property) | $160,000 | $80,000 |
| Additional saving time | 2–4 years | Buy now |
| LMI cost | $0 | $0 (waived) |
| Rent paid while saving | $50,000–$100,000+ | $0 (you own the property) |
| Exposure to price growth | Yes (risk of prices rising) | Yes (you benefit from growth) |
| Interest rate | Best rates at 80% LVR | Slightly higher at 90% LVR |
For many buyers, particularly those in eligible professions, buying sooner with an LMI waiver delivers a better financial outcome than waiting to save the full 20%. The rent you don’t pay, the capital growth you capture, and the years of equity building can far outweigh the marginal interest rate difference between 80% and 90% LVR.
Don’t Forget the Other Costs
Your deposit is not the only upfront cost when buying a property. Budget for:
- Stamp duty (varies by state — NSW exempts first home buyers on properties under $800K)
- Legal/conveyancing fees ($1,500–$3,000)
- Building and pest inspections ($500–$1,000)
- Loan application fees (varies by lender — some waive this)
- Moving costs ($500–$2,000+)
- Emergency buffer (3–6 months of expenses is recommended)
If you’re stretching to reach 20% and would be left with no buffer, a smaller deposit with an LMI waiver may actually be the safer option — it leaves you with financial reserves for unexpected costs.
Explore all deposit options and pathways to find the approach that balances upfront costs, ongoing affordability, and financial security.
Frequently Asked Questions
How much deposit do I need to avoid LMI?
The standard threshold is 20% (80% LVR). However, you can avoid LMI with less than 20% through professional LMI waivers (as low as 5–10% deposit), the First Home Guarantee (5% deposit), guarantor arrangements (potentially 0%), or certain lenders that waive LMI at 85% LVR (15% deposit).
What LVR do I need to avoid LMI?
Without any special pathway, you need an LVR of 80% or below. With a professional waiver, you can avoid LMI at 85%, 90%, or 95% LVR depending on your profession and lender. With the FHBG, you can avoid LMI at up to 95% LVR.
Is 15% deposit enough to avoid LMI?
In most cases, no — standard LMI applies at 85% LVR (15% deposit). However, some lenders waive LMI at 85% LVR for certain products, and professional LMI waivers are widely available at this LVR. Check your eligibility.
How much LMI would I pay with a 10% deposit?
LMI at 90% LVR (10% deposit) typically ranges from $8,000 to $20,000+ depending on the property price. On a $750,000 property, expect approximately $14,000–$18,000. On a $1 million property, approximately $19,000–$24,000. Use the LMI calculator for a specific estimate.
Can I avoid LMI without a 20% deposit?
Yes. Professional LMI waivers, the First Home Guarantee, and guarantor arrangements all allow you to avoid LMI with less than 20% deposit. The most widely available option is a professional waiver, which can eliminate LMI at 10% or even 5% deposit for eligible professions. See all qualifying professions.
Is it better to pay LMI or save to 20%?
It depends on your market, savings rate, and whether you can access an LMI avoidance pathway. If you qualify for a professional waiver or FHBG, you can avoid LMI without 20% — making the question moot. If you’d have to pay LMI, compare the LMI cost against the rent and potential capital growth you’d forgo while saving to 20%.
Does my deposit include stamp duty and other costs?
No. Your deposit is separate from stamp duty, legal fees, and other purchase costs. When calculating how much you need, add these costs on top of your deposit. For example, if you need a $100,000 deposit (10% of $1M) and stamp duty is $40,000, you need $140,000 in total savings (plus a buffer).
What counts as a deposit for LMI purposes?
Your deposit is the portion of the purchase price you pay from your own funds (savings, gifts, government grants). It determines your LVR, which determines whether LMI applies. Genuine savings requirements vary by lender — typically 5% of the purchase price must come from demonstrable savings (not gifts or grants), though policies differ.
Your Next Step
The answer to “how much deposit to avoid LMI?” depends on which pathway you use:
- 20% deposit — universal, no eligibility requirements
- 15% deposit — with select lenders or professional waivers at 85% LVR
- 10% deposit — with professional waivers at 90% LVR (most common)
- 5% deposit — with professional waivers at 95% LVR or FHBG
- 0% deposit — with guarantor arrangements
Start by checking if your profession qualifies for an LMI waiver — it’s the fastest way to determine your minimum deposit without LMI. Take the 60-second eligibility check and see how much you could save with the LMI calculator.
The right pathway can put you in your own home years sooner — and save you $10,000 to $50,000+ in the process.