Find Out If You Qualify for a LMI Waiver and Say Goodbye to Lenders Mortgage Insurance

Australian homebuyers often face the high cost of Lenders Mortgage Insurance (LMI). This happens when borrowing over 80% of a property’s value and it can be thousands or even tens of thousands of dollars. But you can save big on your home loan if you qualify for an LMI waiver. Finding out who can get LMI waived and how is key.

People in professions like medicine and law might get an LMI waiver. Buying DHA properties or having a guarantor can also make you eligible. Having a stable income, a clean credit history and solid job stability matter a lot for a no-LMI home loan.

Guarantor loans and government schemes give first home buyers extra paths to avoid LMI. This lowers the upfront cost of getting a home loan. So, it’s easier for them to buy a home without the hefty LMI payment.

What is Lenders Mortgage Insurance (LMI) and who does it protect?

There is a common misconception that LMI protects you, the borrower. LMI protects the lender if you can’t make your mortgage payments. You, as the borrower, are required to pay the LMI premium.

If a borrower defaults on a loan and the lender forecloses on the property and makes a loss on the sale the Lenders Mortgage Insurance will reimburse the loss to the lender. The mortgage insurer then pursues the borrower for that amount!

LMI kicks in when you borrow more than 80% of the property’s value. So, if your deposit is less than 20%, you’ll need to pay LMI unless you qualify for a waiver.

What is an LMI Waiver and Who Can Benefit from It?

If you’re buying a house with less than a 20% deposit but the lender sees you as a low-risk borrower they may waive the Lenders Mortgage Insurance (LMI) premium. Lenders see borrowers from certain occupations as “low-risk”.

Understanding the Concept of an LMI Waiver and how much it can save you

Getting an LMI waiver is a big win, as it can save you a lot of money. Let’s say you purchase a home for $1 million but you can only contribute a 10% deposit of $100,000 plus stamp duty. Not having to pay LMI could save you more than $20,000.

The savings become even greater the higher the purchase price of the property.

How an LMI Waiver Home Loan can also get you a lower interest rate

An LMI waiver might also help you get a better interest rate on your loan. Lenders generally charge a higher interest rate to borrowers with less than 20% deposit. If you qualify for an LMI waiver most lenders will offer you the lower rates usually only available to borrowers with a 20% deposit.

It’s smart to talk to a mortgage broker. They can guide you through options that could save you on LMI and interest.

Which Professions are Eligible for an LMI Waiver and what are the requirements?

If you work in an eligible profession you might get a LMI waived. This is especially true for careers that are well-known for being secure financially. Let’s see how various jobs can get LMI waivers:

Doctors and Medical Professionals

Doctors and other Medical Professionals can often avoid LMI. The following medical professionals may be able to borrow up to 95% of the property value without paying lenders mortgage insurance:

• Anaesthetist
• Cardiothoracic Surgeon
• Clinical Pharmacologist
• Cosmetic Surgeon
• Dental Practitioner
• Dermatologist
• Ear and Throat Surgeon
• Emergency Surgeon
• Endocrinologist
• Gastroenterologist
• Gastrointestinal Surgeon
• General Practitioner (also known as Medical Practioner)
• Gynaecologist
• Haematologist
• Hepatologist
• Hospital-employed Doctors (e.g. Intern, Resident, Registrar, Staff Specialist)
• Immunologist
• Medical Practitioner
• Medical Specialists
• Nephrologist
• Neurologist
• Neurosurgeon
• Obstetrician
• Oncologist
• Ophthalmologist
• Optometrist
• Oral and Maxillofacial Surgeon
• Orthodontist
• Orthopaedic Consultant
• Otolaryngologist
• Paediatric Surgeon (Neonatal and Perinatal)
• Paediatrician
• Pathologist
• Pharmacists
• Physician
• Plastic Surgeon
• Podiatrist
• Psychiatrist
• Radiologist (Note: This doesn’t include Radiographers)
• Reconstructive Surgeon
• Respiratory or Thoracic Surgeon
• Specialist
• Urologist
• Vascular Surgeon
• Veterinary Practitioners

The following medical professionals may be able to borrow up to 90% of the property value without paying lenders mortgage insurance:

• Audiologist
• Chiropractor
• Midwife
• Occupational therapist
• Osteopath
• Physiotherapist
• Psychologist
• Radiographer
• Registered Nurse
• Sonographer
• Speech Pathologist

If your medical occupation is not listed please contact us. This list is subject to change.

A minimum income amount is required by some lenders.

Accounting Professionals

Accountants and related occupations may be able to borrow up to 90% of the property value without paying LMI. You must be a CPA or CA and a member of an eligible accounting institute and some lenders have a minimum annual income requirement.

Borrowers in the following accounting-related occupations may be eligible for a lenders mortgage insurance waiver:

• Accountant
• Actuary
• Auditor
• CFO’s (Chief Financial Officers)
• Chief Financial Officer
• Director
• Financial Controller
• Finance Director
• Finance Manager
• Partner

If your job title doesn’t match one of those above you may still be eligible to borrow 90% of the property value without LMI. If you are a member of one of the following accounting bodies you may be eligible:

Global Accounting Alliance Members:

• Chartered Accountants Australia and New Zealand
• American Institute of Certified Public Accountants
• Institute of Chartered Accountants in England and Wales
• Chartered Professional Accountants Canada
• Institute of Chartered Accountants of Scotland
• Chartered Accountants Ireland
• Hong Kong Institute of Certified Public Accountants
• South African Institute of Chartered Accountants
• Japanese Institute of Certified Public Accountants
• Institut der Wirtschaftsprüfer in Deutschland e.V.

 CPA recognised partnering professional bodies:

• Chartered Accountants Australia and New Zealand
• American Institute of Certified Public Accountants
• Institute of Chartered Accountants in England and Wales
• Chartered Professional Accountants Canada
• Institute of Chartered Accountants of Scotland
• Chartered Accountants Ireland
• Hong Kong Institute of Certified Public Accountants
• South African Institute of Chartered Accountants
• National Association of State Boards of Accountancy
• Certified General Accountants of Canada
• Chartered Accountants Sri Lanka
• Chartered Institute of Management Accountants
• Chartered Institute of Public Finance and Accountancy
• Institute of Certified Management Accountants of Sri Lanka
• Institute of Certified Public Accountants in Ireland
• Institute of Certified Public Accountants of Kenya
• Institute of Chartered Accountants of Bangladesh
• Institute of Chartered Accountants India
• Institute of Chartered Accountants of Nepal
• Institute of Cost & Management Accountants Pakistan
• Institute of Indonesia Chartered Accountants
• Institute of Singapore Chartered Accountants
• Malaysian Institute of Accountants
• National Federation of Certified Public Accountant Associations of the Republic of China
• Philippine Institute of Certified Public Accountants

Legal Professionals

Lawyers and other Legal Professionals may be able to borrow up to 90% of the property value without paying LMI. You must hold your practising certificate in an Australian state or territory but you don’t necessarily need to be working for a law firm nor does your role need to include lawyer, barrister or solicitor.

The following are some examples of legal occupations that may be eligible for an LMI waiver:

• Barristers
• Judges
• Lawyers
• Solicitors
• Partner

A minimum income requirement applies at some lenders.

Senior Executives of ASX Top 100 Companies

Senior executives in top ASX 100 companies are eligible to borrow up to 90% of the property without incurring lenders mortgage insurance. You must be the CEO or a direct report of the CEO.

Professional Sportspersons, Athletes and Coaches

Top athletes and coaches may be about to borrow up to 90% without mortgage insurance. This also includes retired athletes will working within the sport or entertainment industry.

To be eligible you must have an accredited Manager, Agent or Accountant.

Entertainment Professionals

Entertainment stars like musicians and artists might be exempt from LMI up to 90% of the property value.

If you work in TV, Film, Theatre, Music or Fashion in one of the following roles you may be eligible:

• Actor/Actress
• Commentator
• Director
• DJ
• Journalist
• Model
• Musician/Singer/Composer
• Photographer/Film Maker
• Presenter
• Producer
• Writer/Author.

Eligible Bank Employees

Even employees of specific Australian banks might not need to pay LMI if they meet certain criteria such as being in their current job for at least 6 months or 2 years in the industry. If you work at one of the following banks you may be eligible to borrow up to 90% of the property value without LMI:

• AMP Bank Limited
• ANZ
• Bank of Melbourne
• Bank of QLD
• Bank SA
• Bankwest
• Bendigo and Adelaide Bank Limited
• CommBank
• HSBC Bank Australia Limited
• ING Bank (Australia) Limited
• Macquarie Bank
• ME Bank
• NAB
• RAMS (direct employees only)
• St George Bank
• Suncorp-Metway Limited
• UBank
• Westpac

Other conditions apply. Please contact us for further details.

Ways to get an LMI Waiver even if you don’t work in an eligible profession

While some jobs allow LMI waivers, there are other ways for everyone to avoid this cost. This is great news for many potential home buyers.

Guarantor Home Loan up to 105% of the Purchase Price

With a guarantor home loan, you can borrow more than the property purchase price to cover the purchase costs such as stamp duty. Home buyers who have family happy to act as a guarantor and offer their property as secondary security can avoid paying lenders mortgage insurance, potentially savings tens of thousands of dollars.

90% Loan with No LMI

Some lenders provide loans up to 90% without needing LMI. The interest rates on these loans are generally higher than standard loans but if it saves you tens of thousands of dollars in mortgage insurance it may

85% Loan with No LMI

An 85% loan with no LMI is another option without mortgage insurance. Similar to 90% no LMI loans, the interest rate on this loan is higher than standard rates.

Deposit Boost Home Loan

If you have less than a 20% deposit this innovative product may allow you to avoid paying lenders mortgage insurance. They do this by lending you the further funds required to make up the 20% deposit in a second mortgage that is separate from the primary 80% home loan.

Although Lenders Mortgage Insurance isn’t payable in this instance there is a Low Deposit Premium payable which is generally less than LMI.

This loan product may allow you to purchase a home with as little as a 2.2% deposit plus purchase costs such as stamp duty.

First Home Guarantee Scheme Loan

The First Home Guarantee allows for loans with a 5% deposit and no LMI needed. It’s aimed at helping first home buyers get into the market with minimal savings. The Commonwealth government acts as a guarantor allowing for LMI to be avoided.

Regional First Home Buyer Guarantee

For first home buyers purchasing in eligible regional areas, the Regional First Home Buyer Guarantee may allow you to purchase a home with as little as 5% deposit without paying Lenders Mortgage Insurance.

Family Home Guarantee

The Family Home Guarantee supports eligible single parents by allowing a 2% deposit with no LMI. It’s a big help for those wanting their own home but facing high initial costs. It could be the support they need to start.

Role of Mortgage Brokers in Getting LMI Waived

Home loans and getting Lenders Mortgage Insurance (LMI) waivers can be hard to understand. A mortgage broker helps with this. They are experts in home loans, using their market knowledge and lender relationships to help you get LMI waivers.

Although multiple lenders offer LMI waivers they each have different criteria. For example, some lenders enforce a minimum income requirement of up to $120,000 p.a. for Accountants and Lawyers for LMI to be waived. There is a lender that doesn’t have this requirement. We have helped many Accountant and Lawyer clients avoid LMI even if they don’t earn $120,000 p.a.

Brokers can also help you find other benefits, like discounts and concessions on home loans and lower interest rates. Their advice shows you how to avoid high LMI fees and get better loan conditions. In the end, they help you get a home loan that fits your money situation. This cuts down on extra costs a lot.

To find out if you qualify please call us on 1300 66 12 11 or enquire online using the form below.

Frequently Asked Questions

Q: What is LMI and how does it affect home loans?

A: LMI, or Lenders Mortgage Insurance, is a premium paid by borrowers to protect lenders in case of default on a home loan. It is typically required when the borrower has a deposit of less than 20% of the property’s value.

Q: How can I avoid paying LMI?

A: You can avoid paying LMI by either saving a deposit of at least 20% of the property’s value or by qualifying for waived LMI based on your profession. It is also possible to avoid lender’s mortgage insurance by using a specific loan product such as the First Home Guarantee Scheme (formerly known as the First Home Loan Deposit Scheme).

Q: Which banks and lenders offer LMI waivers?

A: On our lender panel it is only banks that offer LMI waivers for professionals in certain occupations, such as doctors, lawyers, and other eligible professionals. We currently don’t have any non-bank home loan providers offering no LMI home loans.

Q: Are first-home buyers eligible for waived LMI?

A: First-home buyers may be eligible for waived LMI if they work in a eligible profession or qualify for one of the specific first home buyer schemes mentioned above.

Q: What are the benefits of a home loan with no LMI?

A: A home loan with no LMI allows borrowers to potentially avoid LMI premiums in the tens of thousands of dollars as well as discounted interest rates.

Q: Can LMI be waived on an investment property loan?

A: Yes, it is possible to pay no LMI on investment property loans. Please check with us for specific eligibility criteria related to LMI waivers.