Unlock the secrets to No LMI Loan Income Rules

Teachers can borrow up to 90% of a property's value without paying Lenders Mortgage Insurance if they meet a lender's income requirements.

The income threshold sits higher than you might expect. Most lenders offering no LMI loans for teachers require a minimum annual income between $90,000 and $100,000 before tax. Some set the bar at $120,000 for larger loan amounts or properties above a certain value. The loan amount itself also plays a role, with some lenders capping waived LMI at borrowing amounts below $1 million or $1.5 million depending on the policy.

You need to prove this income through standard payslips and employment contracts. The income must be base salary, not total package value. Lenders exclude allowances, bonuses, and salary sacrifice contributions from the calculation in most cases. If you salary sacrifice super or other benefits, the amount you receive in your bank account each pay cycle is what counts, not the value of your total remuneration package.

How Lenders Verify Teaching Income for LMI Waivers

Lenders assess your income using the same documents they would for any home loan, but they apply stricter thresholds for professional LMI waivers.

You'll need recent payslips covering at least one month, a current employment contract showing your base salary, and in some cases a letter from your employer confirming ongoing employment. If you've been in the role less than 12 months, some lenders will still approve the waiver as long as your contract is permanent and you've passed probation. Others require a minimum of six months in the position before they'll consider the application.

Consider a high school teacher earning $95,000 in base salary who salary sacrifices $10,000 annually into super and novated lease payments. Their payslips show $85,000 in net taxable income. Some lenders will assess them on the $95,000 base salary for waiver eligibility, while others assess only the $85,000 that hits their account. This variance makes it worth checking multiple lender policies before applying.

Casual or contract teaching income is harder to use for LMI waivers. Most lenders require permanent employment, though a small number will consider fixed-term contracts if they extend beyond 12 months and include a clear salary figure. Relief teaching or casual block work rarely meets the criteria, even if the income is consistent.

Income Requirements When Borrowing With a Partner

If you're applying with a partner who isn't a teacher, the income rules shift.

Most lenders require that at least one applicant meet the professional criteria and income threshold independently. Your partner's income is added for serviceability purposes, meaning it helps you qualify for a larger loan amount, but it doesn't usually help you meet the waiver eligibility itself. A few lenders allow combined household income to meet the threshold as long as one applicant works in an eligible profession, but this is less common.

In a scenario where a high school teacher earns $92,000 and their partner earns $70,000 working in retail, most lenders will assess whether the teacher alone meets the $90,000 or $100,000 threshold before granting the LMI waiver. If the teacher's income falls short by $8,000, adding the partner's $70,000 won't change the waiver outcome, though the combined $162,000 income will increase the amount they can borrow.

This structure matters when one partner earns significantly more but doesn't work in an eligible profession. If the non-teacher earns $150,000 and the teacher earns $85,000, the household income is strong but the waiver may not apply because the teacher doesn't meet the individual threshold. In this case, it's worth comparing the cost of paying LMI against the benefit of borrowing more or accessing lower interest rates that some lenders reserve for LMI-free loans.

Loan Amounts and LVR Limits for Waived LMI

The amount you can borrow without LMI depends on both your income and the lender's maximum loan size for waivers.

Most lenders cap waived LMI at 90% LVR, meaning you need at least a 10% deposit plus costs. A smaller group will waive LMI up to 95% LVR, though this option often requires a higher income threshold or limits the loan amount further. Borrowing above $1 million without LMI is possible with some lenders if your income exceeds $120,000, but policies vary widely.

If you're applying for low deposit loans for teachers with less than 10% saved, the waiver may not apply unless you combine it with a family guarantee or another deposit source. The waiver is typically available only on standard owner-occupier purchases, not construction loans, refinances, or investment properties unless the lender specifies otherwise.

Lenders also apply property value caps in some cases. A lender might waive LMI up to 90% LVR on properties valued below $1.5 million but require a larger deposit or charge LMI on properties above that threshold even if your income qualifies. This affects teachers looking in higher-priced markets where median property values sit above typical waiver limits.

What Happens If Your Income Falls Just Below the Threshold

If your base salary sits $5,000 or $10,000 below the lender's requirement, you have a few options.

Some lenders will include certain allowances if they're permanent and guaranteed. A deputy teacher allowance, Head of Department loading, or regional loading might be accepted if it appears on your employment contract as a fixed ongoing amount rather than a discretionary payment. This varies by lender, so it's worth checking before ruling out the waiver.

Another option is to wait until your next pay increment. Many teachers receive annual salary increases based on years of service or progression along the teaching pay scale. If you're six months away from crossing the threshold, it might make sense to delay the purchase rather than pay several thousand dollars in LMI. The alternative is to save a larger deposit to reduce your LVR below 80%, which removes the need for LMI entirely regardless of your profession.

If neither option works, you can still access home loans for high school teachers with LMI included. The cost of LMI varies based on your deposit size and loan amount, but it's often capitalised into the loan rather than paid upfront, spreading the cost over the life of the mortgage. In some cases, paying LMI and borrowing sooner is more cost-effective than waiting years to save a 20% deposit, especially if property values are rising.

Part-Time Teachers and Income Assessment

Part-time teaching income is assessed proportionally, and most lenders require the equivalent of the full-time income threshold on a pro-rata basis.

If you work 0.6 FTE and earn $57,000, a lender requiring $95,000 for a full-time teacher will calculate whether your income meets the threshold relative to your hours. In this case, 0.6 FTE of $95,000 is $57,000, so you'd meet the requirement. If the lender requires $100,000 full-time, your part-time income would need to be at least $60,000 to qualify.

Some lenders don't offer waivers to part-time employees at all, while others apply the same rules as full-time staff as long as the contract is permanent and the income is proportionally sufficient. This makes it important to check individual lender policies rather than assuming all waivers operate the same way.

Call one of our team or book an appointment at a time that works for you to confirm which lenders will assess your part-time teaching income for an LMI waiver and what documentation you'll need to provide.

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