LMI and LVR: what high-LVR buyers are actually paying for
Last updated 23 July 2026. Educational only — not credit advice and not a Revenue Office assessment.
LVR in one sentence
Loan-to-value ratio is loan ÷ property value (as the lender assesses it). A $720,000 loan on an $800,000 valuation is 90% LVR. Lenders price risk off that ratio, not off how hard you saved.
What LMI is for
Lenders mortgage insurance protects the lender if you default and the sale does not cover the debt. It does not protect you. Below roughly 80% LVR, many mainstream loans avoid LMI. Above that, LMI (or an equivalent risk premium) is common unless a government guarantee scheme applies.
Premiums rise steeply as LVR climbs. The difference between 85% and 95% is not linear — the last slices are expensive.
Capitalised vs paid upfront
Many buyers add LMI to the loan (capitalise it). That increases the starting balance and interest cost over time. Paying from cash reduces the loan but increases settlement cash. Neither option is free; they just move the cost.
DutyStack’s indicative LMI band is educational. Insurers and lenders use their own tables, product rules, and credit overlays. Always replace the band with the figure on your actual approval.
Where the 5% Deposit Scheme fits
Eligible owner-occupier first-home pathways under the 5% Deposit Scheme are designed so you can buy with a smaller deposit without the usual private LMI stack, subject to price caps, income tests, and lender participation.
If you are not eligible — investment purpose, prior ownership, price over cap — model standard high-LVR LMI instead of assuming the scheme applies.