No LMI Loans: Income Requirements You Need to Know

Most lenders set a minimum salary threshold to qualify for no LMI loans.

If you earn below that threshold, you either pay the insurance premium upfront or you wait until you have a 20% deposit. For high school teachers, the income requirement sits within reach for many permanent staff, but casual or part-time teachers often miss the cut.

What Lenders Actually Look For

Lenders assess your income based on your base salary plus consistent allowances. A high school teacher earning $85,000 in base salary with an additional $3,000 in coordination allowances would be assessed at $88,000. If the lender's threshold is $90,000, you fall short unless you can demonstrate other verifiable income such as a partner's salary or rental income from an existing property.

In our experience, lenders exclude casual relief teaching income unless you can show 12 to 24 months of consistent pay at similar hours. One casual teacher working four days a week across three schools might earn $75,000 annually, but without a permanent contract, most lenders will not count that income toward the no LMI threshold. This is where a mortgage broker for teachers can clarify which lenders will accept your specific employment structure.

The Thresholds That Apply Across Major Lenders

Minimum income requirements vary by lender. Some major banks set the bar at $90,000, others at $100,000, and a handful at $125,000. The threshold also depends on whether you are borrowing solo or with a partner. If you are applying jointly and your combined income meets the threshold, you can access the waiver even if one applicant earns below the individual minimum.

Consider a couple where one partner is a high school teacher earning $92,000 and the other works in administration earning $68,000. Their combined income of $160,000 comfortably exceeds most lender thresholds for a no LMI home loan at 90% LVR. Without combining incomes, only the teacher would qualify, and only if the lender's threshold sits below $92,000.

How Your Employment Type Changes the Calculation

Permanent full-time teachers have the clearest path to meeting income requirements. Your base salary is straightforward to verify, and lenders accept your employment letter and recent payslips without hesitation. Part-time permanent staff are assessed on their contracted hours, so a 0.8 load is counted as 80% of the full-time equivalent salary. That distinction matters when you are close to the threshold.

Casual and contract teachers face additional scrutiny. Lenders want to see at least 12 months of continuous casual work, often across the same employer or within the same education department. If you have been teaching casually for two years but switched between private schools and public relief work, some lenders will exclude portions of that income. Others will average your earnings over 24 months and apply a loading factor to account for leave entitlements you do not receive. The result is that your assessed income may be lower than your actual take-home pay.

Allowances and Additional Income That Count

Lenders include most permanent allowances when calculating your income. Coordination allowances, first aid allowances, and regional loading all count if they appear consistently on your payslips. Performance bonuses and one-off payments are typically excluded unless you can demonstrate a pattern over two years or more.

If you tutor privately or run educational workshops outside school hours, that income can be included if you declare it on your tax return and can provide evidence of consistent earnings. A high school teacher earning $88,000 in base salary who tutors for an additional $8,000 per year might reach the $96,000 threshold required by a particular lender, but only if the tutoring income has been declared and verifiable for at least two financial years. This is one area where understanding home loans for teachers and how lenders treat supplementary income makes a tangible difference.

What Happens When You Fall Just Below the Threshold

If you earn $87,000 and the lender requires $90,000, you have three options. You can wait until your next pay increment, apply with a partner or guarantor whose income lifts the total above the threshold, or choose a lender with a lower requirement. Some lenders will also consider rental income from an investment property or a boarder if you can show a tenancy agreement and consistent payments.

Another scenario involves teachers who have recently moved from casual to permanent roles. If you were casual for three years and have just secured a permanent position, some lenders will assess you on your new permanent salary immediately, while others will blend your casual history with your new contract and reduce the assessed figure. Knowing which lender takes which approach determines whether you qualify now or in six months.

How Loan Amount and Deposit Size Interact With Income Requirements

The income threshold is not the only factor. Lenders also assess your borrowing capacity, which is influenced by your income, existing debts, living expenses, and the size of the deposit. A high school teacher earning $95,000 with no debts and a 10% deposit might be approved for a loan amount of $650,000 under a no LMI policy, but the same teacher with a car loan and a credit card limit of $15,000 might only be approved for $580,000.

Deposit size also plays a role. Some lenders offer LMI waivers for teachers at 90% LVR but require a higher income threshold at 95% LVR. If you are borrowing with a 5% deposit, expect to meet a stricter income requirement than someone borrowing at 10% or 15%. This is why it is worth checking whether increasing your deposit slightly changes the lender's assessment of your application.

Using a Guarantor to Meet the Requirement

If your income sits below the threshold, a family guarantor can help. The guarantor does not need to meet the income requirement themselves, but their equity allows you to borrow at a higher LVR without paying for insurance. A parent who owns their home outright can guarantee a portion of your loan, reducing your effective LVR to a level where the income threshold no longer applies.

In a scenario like this, a teacher earning $82,000 borrows $550,000 to purchase a property. Without a guarantor, the loan sits at 92% LVR and requires the teacher to meet a $90,000 income threshold or pay LMI. With a parent guaranteeing $100,000 of the loan using their home as security, the effective LVR on the teacher's portion drops below 80%, and the income requirement is no longer relevant. The guarantor's obligation is limited to the guaranteed portion, and once the teacher builds enough equity, the guarantee can be removed.

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