How to Borrow 95% Without LMI as a Teacher

Government high school teachers can borrow up to 95% of a property's value without paying Lenders Mortgage Insurance through professional exemptions offered by several Australian lenders.

Lenders Mortgage Insurance typically costs anywhere from $8,000 to $30,000 when you borrow more than 80% of a property's value. It protects the lender if you default, but it adds nothing to your equity and can't be claimed back. A waiver removes that cost entirely, which means you can enter the property market with a smaller deposit or keep more of your savings for furniture, renovations, or other costs after settlement.

Who Qualifies for the Professional Exemption

You need to be a permanent full-time or part-time teacher employed at a government or public high school. Lenders will ask for a letter from your employer confirming your position and employment status. Casual teachers, relief teachers, and those working at independent or Catholic schools do not qualify under most professional exemption policies.

The exemption applies to both owner-occupied and investment purchases in most cases, though some lenders restrict it to owner-occupied properties only. Income thresholds vary by lender, but most require you to earn at least $90,000 per year as an individual or $120,000 combined if you're applying with a partner.

How the 95% LVR Calculation Works

You can borrow up to 95% of the property's purchase price or valuation, whichever is lower. That means you need a 5% deposit plus enough to cover stamp duty and other settlement costs. Stamp duty is not included in the loan amount under these exemptions, so you'll need to pay that separately unless you're eligible for a government concession or exemption.

Consider a teacher buying an investment property. They have $50,000 in savings. Under a standard loan, borrowing 90% would mean paying around $15,000 in LMI. With the professional exemption, they borrow 95% without the insurance cost, which leaves more of their savings intact for holding costs or future purchases. The loan amount is higher, but the upfront cost is lower, and they avoid capitalising an insurance premium into the debt.

Interest Rates on High LVR Loans Without LMI

Borrowing at 95% LVR without paying LMI does not mean you'll pay a higher interest rate. Most lenders price these loans at standard variable or fixed rates, the same as loans at 80% LVR. Some lenders apply a small rate loading of 0.10% to 0.20% for LVRs above 90%, but that's far less than the cost of paying LMI upfront or adding it to the loan.

You can choose between variable and fixed rates depending on your circumstances. Getting a lower interest rate often comes down to your deposit size, income stability, and the lender's appetite for your profession. Teachers generally qualify for rate discounts because lenders view the profession as low risk.

Lenders That Offer the Waiver

Not all lenders offer professional exemptions, and those that do have different criteria. Some cap the loan amount at $1 million, others at $1.5 million. Some restrict the waiver to properties in metropolitan areas, while others allow regional purchases. A few lenders extend the waiver to refinances, but most limit it to purchases only.

Working with a broker who understands which lenders suit your situation means you're not stuck with the first policy you find. One lender might approve your application at 95% LVR for an investment property, while another will only approve owner-occupied. The difference can be tens of thousands of dollars in upfront costs or access to the property you actually want to buy.

How This Compares to Other No LMI Options

Professional exemptions sit alongside other ways to avoid LMI, including family guarantee loans and the Home Guarantee Scheme. A family guarantee uses a parent's property as security, which allows you to borrow up to 100% of the purchase price without LMI. The government scheme allows eligible first home buyers to borrow up to 95% LVR without LMI, but it has strict price caps and income limits that exclude many teachers.

The professional exemption does not require a guarantor and does not have the same price caps as the government scheme. You're also not limited to first home buyers. If you're purchasing your second property or refinancing an existing loan to access equity, the exemption can still apply depending on the lender.

What You'll Need to Provide

Lenders will ask for proof of employment in the form of a letter from your school or education department. The letter needs to confirm your job title, employment type, and that you're employed at a government school. Payslips and tax returns are also required to verify income. If you've been in your role for less than six months, some lenders will still consider your application if you have a history of teaching in the public system.

You'll also need to show genuine savings. Most lenders require at least 5% of the purchase price to have been held in your account for at least three months. Gifts from family can sometimes be accepted, but not all lenders allow this at 95% LVR without LMI. Equity from an existing property counts as genuine savings in most cases.

When the Exemption Makes Sense

Borrowing at 95% LVR without LMI works when you have a smaller deposit but stable income and want to avoid delaying a purchase while you save. It also works when you want to preserve cash for other purposes, such as keeping an emergency fund or covering costs after settlement.

It does not make sense if you're stretching your borrowing capacity to the point where repayments become unmanageable. A higher loan amount means higher repayments, and if interest rates rise or your circumstances change, you need to be confident you can service the debt. Getting loan pre-approval before you start looking at properties will show you exactly what you can borrow and what the repayments will look like.

If you're a government high school teacher and you're looking at properties but not sure how much you can borrow or whether the exemption applies to your situation, call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions