What Are No LMI Loans and How to Avoid Paying It

Lenders mortgage insurance can add tens of thousands of dollars to the cost of buying a property when you borrow above 80% of its value.

What Is Lenders Mortgage Insurance and When Do You Pay It

Lenders mortgage insurance is a one-off premium charged by lenders when your deposit is less than 20% of the property value. The cost protects the lender if you default on the loan, but you pay the premium. At a 90% loan to value ratio, the cost typically sits between $8,000 and $15,000 depending on the loan amount. At 95%, it climbs higher again. The premium can be paid upfront or added to your loan amount, but either way it increases what you owe without building any equity in the property.

How Primary Teachers Can Avoid LMI Through Professional Waivers

Many lenders offer LMI waivers to primary school teachers borrowing up to 90% of a property's value. You still need a 10% deposit, but you avoid the insurance cost that would normally apply at that loan to value ratio. The waiver recognises the job stability and income reliability of the teaching profession. Not all lenders offer the same terms. Some cap the waiver at 90% LVR, others extend it to specific loan amounts, and a few apply conditions around employment tenure or contract type. Knowing which lenders structure their waivers most favourably makes a material difference to what you can borrow and how much you keep in your offset or savings after settlement.

What You Need to Qualify for a No LMI Loan as a Teacher

Lenders require proof of your employment as a registered primary school teacher. That usually means providing recent payslips, a letter from your employer, and evidence of your teacher registration. Some lenders specify a minimum period of employment, often 12 months in the profession, though probationary contracts are sometimes accepted if you've been teaching elsewhere before that role. You still need to meet standard lending criteria around income, expenses, credit history, and borrowing capacity. The waiver removes the insurance cost, but it does not change the lender's assessment of whether you can afford the repayments. If you are working casually or on contract, some lenders will still consider the waiver but may assess your income differently or require a longer employment history.

No LMI Loans Versus Family Guarantee Options

If you have less than a 10% deposit, a family guarantee can allow you to borrow without paying LMI by using a parent's property as additional security. The guarantee works separately from profession-based waivers and can take you up to 95% or even 100% of the purchase price depending on how much security your guarantor provides. Consider a teacher buying at 95% LVR with parental support. The lender secures 20% of the property value against the parent's home, which means the teacher's portion sits at 80% and no insurance applies. The guarantee can be removed once you build enough equity through repayments or capital growth. This option suits buyers with strong income but limited savings. Professional waivers suit those with a 10% deposit who want to avoid the insurance cost without involving family. Both approaches have a place depending on where you sit with savings and whether a guarantee is available. You can read more about how these structures work in our guide on guarantor loans for teachers.

Interest Rates on No LMI Loans and What to Expect

No LMI loans typically carry the same interest rates as standard home loans. The waiver removes the insurance premium but does not change the rate you pay on the loan itself. Some lenders offer interest rate discounts to professionals including teachers, which can apply alongside the LMI waiver. These discounts usually sit between 0.10% and 0.30% below standard variable or fixed rates, depending on the lender and the loan amount. A lower rate reduces your ongoing repayments and the total interest paid over the life of the loan, which often saves more than the upfront insurance cost over time. When comparing options, look at both the presence of a waiver and the interest rate on offer. A loan with no waiver but a significantly lower rate might cost less in the long run than a waived loan at a higher rate, depending on how long you hold the loan and how much you are borrowing. Running the numbers on a case-by-case basis matters more than assuming the waiver is always the optimal choice.

Borrowing at 90% LVR Without LMI on Investment Properties

Most lenders restrict profession-based LMI waivers to owner-occupied properties. Investment loans typically require a 20% deposit to avoid insurance, regardless of your occupation. A small number of lenders extend waivers to investment purchases for teachers, but the loan to value ratio is usually capped at 90% and the interest rate may be higher than for owner-occupied lending. If you are looking to buy your first investment property while living elsewhere, expect to either pay LMI or provide a larger deposit unless you find one of the lenders who offers the waiver on investment lending. The difference in cost can be significant, so it is worth checking which lenders extend the waiver before assuming you need to save a full 20%. You can explore more about structuring investment purchases in our article on investment loans for teachers.

Refinancing with a No LMI Loan to Access Equity

If you already own a property and want to refinance to access equity without paying LMI, a professional waiver can allow you to borrow up to 90% of the current property value. This approach works when you have built some equity through price growth or paying down the loan, but not yet reached 80% LVR. In a scenario like this, a teacher who bought a property several years ago might have seen it increase in value but still owe more than 80% of what it is now worth. Refinancing with a waiver lets them pull out equity for renovations, debt consolidation, or a deposit on another property without triggering an insurance cost. The equity you can access depends on how much the property has grown in value and how much you have paid off the loan. Lenders will reassess your income and expenses at the time of refinancing, so your borrowing capacity may differ from when you first bought. If you are considering this approach, our guide on home loan refinancing for teachers covers the process in more detail.

Government Schemes That Remove LMI for Eligible Buyers

The Home Guarantee Scheme allows eligible first home buyers to purchase with a 5% deposit without paying LMI, provided they meet income caps and purchase price limits. Teachers who qualify can use this scheme instead of a profession-based waiver if they have a smaller deposit. The scheme does not require you to work in a specific profession, but it does cap your income and the price you can pay for the property. For primary teachers, the professional waiver often provides more flexibility because it does not impose a purchase price ceiling and works at a 10% deposit, which many buyers can reach more comfortably than 5%. If you have 5% saved and meet the income limits, the government scheme might suit you. If you have 10% and want access to a broader range of properties without price caps, the professional waiver is usually the stronger option. You can compare both approaches in our article on the Home Guarantee Scheme.

Call one of our team or book an appointment at a time that works for you. We will walk through which lenders offer the most favourable waiver terms for your situation, what deposit you need, and how the numbers compare across different loan structures. If you want to move quickly, getting loan pre-approval with a waiver in place gives you certainty on what you can borrow before you start looking at properties.

Frequently Asked Questions