Do First Home Buyers Pay LMI?
Your loan-to-value ratio (LVR) is your loan as a share of the lower of the price and the lender's valuation. To see what LMI would cost on your own loan, use the LMI calculator.
In short
- LMI usually applies when your LVR is above 80%.
- The 5% Deposit Scheme removes it for eligible buyers under the price cap.
- No state gives first home buyers a break on the duty charged on LMI.
- NSW and the ACT charge no duty on LMI; Queensland charges 9% even on a first home.
What LMI is, and why you pay for insurance that protects the lender, is in our lenders mortgage insurance guide.
Which first home buyers avoid LMI?
First home buyers avoid LMI with a 20% deposit, or through the 5% Deposit Scheme, Help to Buy, a profession waiver or a family guarantee.
| Route | Deposit | Who it suits | Main condition |
|---|---|---|---|
| 20% deposit | 20% of the lower of price or valuation | Anyone who can save it | Time to save |
| 5% Deposit Scheme | 5% (2% for single parents) | Citizens or permanent residents who will live in the home | Price cap by area |
| Help to Buy | 2% | Citizens with taxable income at or below $103,000 (single) or $165,000 (couples and single parents) | The government takes an equity share of up to 30%, or 40% for a new home |
| Profession waiver | 10% (5% for some medical roles) | Listed professions | A lender policy that can change |
| Family guarantee | Nil at St.George and Westpac | Buyers with a relative who has equity | The guarantor's property backs part of the loan |
Each route's catch is set out in how to avoid LMI.
The 5% Deposit Scheme
The Australian Government 5% Deposit Scheme is the route built for first home buyers: a 5% deposit, no LMI, no income cap, and a price cap for where you buy. Caps run from $400,000 to $1,500,000 depending on the location; in Queensland, for example, the cap is $1,000,000 in Brisbane, the Gold Coast and the Sunshine Coast and $700,000 elsewhere, as at 29 September 2026. You must live in the home and apply through a Participating Lender. The full rules are on the 5% Deposit Scheme page.
Help to Buy has its own income and price caps, set out on our Help to Buy scheme page. A family member can back part of your loan with a guarantor home loan, which removes LMI once your LVR is 80% or less.
When does a first home buyer still pay LMI?
A first home buyer still pays LMI above 80% LVR when the price is over the scheme's cap, the home is an investment, the buyer or the loan falls outside the scheme's rules, or the lender is not in the scheme.
| Situation | Why LMI applies | What to check |
|---|---|---|
| The price is over the cap | The scheme is not available. An $850,000 home in NSW outside Sydney and the regional centres is over the $800,000 cap there. The lender's valuation must also be under the cap. | The cap for your exact area |
| Buying to rent out | The scheme, Help to Buy and the Queensland Housing Finance Loan are for homes you live in | Whether you will live in it |
| Not a citizen or permanent resident | The scheme needs one or the other; Help to Buy needs citizenship | Your residency status |
| Buying with two or more other people | The scheme allows one co-applicant at most | Who is on the loan |
| Interest-only (outside a build) or a term over 30 years | Scheme loans are principal and interest, up to 30 years | The loan type |
| Your bank is not a Participating Lender | Macquarie, ING and BOQ were not on the list on 28 September 2026 | The official lender list |
| You move out while your LVR is above 80% | The guarantee can end, and your lender may then require LMI | Your plans for the home |
How much LMI do first home buyers pay?
First home buyers who pay LMI face the same steep climb as other buyers: the smaller the deposit, the larger the share of the loan it costs. The range below comes from LMI figures that lenders publish, and applies to first home buyers and other buyers alike.
| Home and deposit | LVR | Typical lender figure | Range |
|---|---|---|---|
| $500,000 home, 10% deposit | 90% | $9,000 | $6,700 to $11,900 |
| $500,000 home, 5% deposit | 95% | $20,000 | $14,000 to $25,000 |
| $750,000 home, 10% deposit | 90% | $13,500 | $10,100 to $17,800 |
| $750,000 home, 5% deposit | 95% | $29,900 | $21,000 to $37,500 |
Your lender, not you, decides which insurer covers your loan, and insurers price differently. That is why lenders' figures spread so widely at the same LVR.
Stamp duty on LMI for first home buyers
No state gives first home buyers a break on duty on LMI. NSW and the ACT charge none for anyone, and Queensland charges 9% even on insurance for a first home mortgage.
| State or territory | Duty on LMI | First home buyer exemption |
|---|---|---|
| New South Wales | None | Not needed: no duty on LMI for anyone |
| Victoria | 10% (general insurance rate; confirm with your lender) | None found |
| Queensland | 9% | No: the 9% rate covers insurance on a first home mortgage |
| Western Australia | 10% | None found |
| South Australia | 11% | None found |
| Tasmania | 10% | None found |
| Australian Capital Territory | None | Not needed: no insurance duty |
| Northern Territory | 10% (general insurance rate; confirm with your lender) | None found |
In Tasmania, the 2% "mortgage insurance" rate on the revenue office page is for borrower life cover, not LMI.
Common questions about LMI for first home buyers
Do first home buyers pay LMI on an investment property?
Yes, above 80% LVR, because the 5% Deposit Scheme only covers a home you live in. On a rental property, LMI is a borrowing expense you can claim over five years, or over the loan term if that is shorter.
I owned a home years ago. Do I count as a first home buyer?
For the 5% Deposit Scheme, yes, if you have not owned property or land in Australia in the last 10 years.
Do single parents pay LMI?
Not under the scheme's single parent stream. Single parents and single legal guardians can buy with a 2% deposit and no LMI, and they do not need to be first home buyers.
If you are buying an investment property, see is LMI tax deductible.
Sources
Each source was checked on 29 September 2026.
- firsthomebuyers.gov.au: 5% Deposit Scheme
- firsthomebuyers.gov.au: property price caps
- firsthomebuyers.gov.au: Participating Lenders
- 5% Deposit Scheme Information Guide, 1 July 2026 (PDF)
- firsthomebuyers.gov.au: Help to Buy
- firsthomebuyers.gov.au: Help to Buy income thresholds
- CommBank: lenders mortgage insurance
- CommBank: low deposit options
- Westpac: Family Security Guarantee
- St.George: Family Pledge
- New South Wales: duty on insurance
- Victoria: duty on insurance
- Queensland: duty on insurance
- Western Australia: duty on insurance
- South Australia: duty on insurance
- Tasmania: duty on insurance
- Australian Capital Territory: duty on insurance
- Northern Territory: duty on insurance
- Queensland Revenue Office: insurance duty exemptions
- ATO: borrowing expenses on rental properties
Researched and maintained by
PhD in Financial Studies, 5 years in finance
Every figure on this page comes from a lender, insurer, government or regulator source listed above. Read our editorial policy.