Lenders Mortgage Insurance (LMI) is a significant cost for many borrowers with less than a 20% deposit, but what if you could avoid paying it altogether? For eligible buyers, LMI exemptions or waivers can save tens of thousands of dollars, making homeownership or investment far more affordable.
In this guide, we’ll explore what LMI exemptions are, who qualifies, and how to maximize your chances of benefiting from them.
What is an LMI exemption?
An LMI exemption (or waiver) allows borrowers to bypass the cost of LMI, even if they’re borrowing more than 80% of a property’s value.
These exemptions are typically offered to certain professions, specific loan types, or under government-backed programs.
Unlike LMI, which adds thousands to your upfront costs or loan balance, exemptions let you avoid these costs entirely.
Who qualifies for an LMI exemption?
There are several pathways to qualify for an LMI exemption or waiver:
1. Profession-based LMI waivers
Some lenders offer LMI waivers for professionals in low-risk, high-income fields. This is because these borrowers are perceived as more financially stable and less likely to default on their loans.
Eligible professions typically include: The following is a list of professions that often qualify for LMI exemptions based on their financial stability and low risk profile.
- Doctors and medical specialists (e.g., GPs, surgeons, dentists) are among the most common beneficiaries of profession-based waivers. If you’re in the medical field, you can explore targeted benefits through specific programs.
Learn more: LMI waiver for medical professionals
- Accountants and actuaries are also frequently eligible for LMI waivers due to their perceived financial stability.
- Lawyers and barristers
- Engineers
Key criteria for profession-based waivers:
- Borrowing up to 90% of the property value
- Proof of current employment in the profession
- Registration with a professional body (e.g., the AMA for doctors)
2. First-home buyer LMI waivers
The First Home Guarantee (part of the Home Guarantee Scheme) offers an effective LMI exemption for eligible first-home buyers.
Under this scheme, the federal government guarantees up to 15% of the loan, allowing buyers to purchase with as little as 5% deposit and no LMI.
Eligibility criteria include:
- Must be a first-home buyer
- Property must meet regional price caps
- Income limits apply: $125,000 for singles and $200,000 for couples
Example: On a $600,000 property, a 5% deposit ($30,000) under the First Home Guarantee eliminates the need for LMI, saving up to $15,000.
Also Read: Understanding the first-home buyers grant for WA
3. High-income borrowers
Some lenders offer LMI waivers to borrowers with exceptionally high incomes, even if they don’t work in an eligible profession. This is usually available for loans up to 85% LVR.
Income thresholds vary by lender but often require annual earnings above $150,000 or more.
4. Shared equity and government-backed schemes
Government programs like shared equity schemes or state-specific initiatives such as WA’s Keystart loans provide pathways to homeownership without requiring LMI.
How it works: In a shared equity arrangement, the government or a private entity co-owns a portion of the property, reducing the loan size and avoiding LMI.
Example: In WA, Keystart loans require as little as a 2% deposit without LMI.
How to maximize your chances of qualifying for an LMI exemption
To improve your chances of securing an LMI waiver, follow these tips:
- Work with a mortgage broker: Brokers can identify lenders offering profession-based waivers or other LMI exemption programs tailored to your situation.
- Provide accurate documentation: Ensure your employment records, income statements, and professional registrations are up to date.
- Understand lender policies: Each lender has unique eligibility criteria for LMI exemptions. Working with a broker ensures you’re matched with the right lender.
- Explore government schemes: If you’re a first-home buyer, research options like the First Home Guarantee to reduce your upfront costs.
The benefits of LMI exemptions
By qualifying for an LMI waiver, you can enjoy:
- Significant cost savings: Avoid paying thousands in LMI premiums.
- Lower loan balances: Keeping LMI out of your loan reduces the total amount you repay.
- Faster entry to the market: With exemptions, you can buy with less than a 20% deposit without incurring additional costs.
How a mortgage broker can help you secure an LMI exemption
Navigating LMI exemptions can be complex, but a mortgage broker can simplify the process. Here’s how:
- Tailored advice: Brokers assess your eligibility for profession-based waivers, first-home buyer schemes, and other exemptions.
- Streamlined process: Brokers handle the paperwork, ensuring you meet all criteria for LMI waivers and cost-saving programs.
Take the first step today. Reach out to us for personalized advice on how you can leverage LMI exemptions to your benefit and save more!
