Lenders Mortgage Insurance (LMI) is a one-off fee that a borrower pays to protect the lender if repayments on the loan cannot be made. Whether or not there will be LMI for first home buyers depends mostly on how much they’re borrowing. As a general rule, when borrowing less than 80% of the property price, you do not need to pay LMI.
So, what about when borrowing more than 80%?
No LMI For First Home Buyers When Borrowing More Than 80%
Yes, LMI waiver for first home buyers are available even if you’re borrowing more than 80% of the property value if you fall under any of the following categories:
- Earning more than $150,000 a year or will soon be on that income
- A specific kind of professional, such as a doctor, accountant, lawyer, mining engineer, professional athlete, or entertainment professional
- Buying a Defence Housing Australia property
- Getting help from a guarantor to buy your home
All of the options above have their own eligibility criteria. Please refer to Home Loan Experts’ waived LMI page to read more. You can also call us at 1300 889 743 or fill in our free assessment form, and one of our mortgage brokers will help you.
LMI Waiver With Government Schemes
There will be no LMI for first home buyers who qualify for the First Home Loan Deposit Scheme (FHLDS) or the FHLDS New Home Guarantee. In these schemes, first home buyers can get a home loan with a deposit of as little as 5% and save thousands on LMI fees. Here are the basic requirements:
- You must be an Australian citizen over 18 years of age.
- You should have an income of less than $125,000 if you are a single applicant. For couples, the income is capped at $200,000.
- Couples may apply only if they are married or in a de facto relationship.
- You must be able to provide proof that you’ve never owned or held an interest in a property in Australia.
- The home should be to live in not use as an investment property. You must move in within six months of buying the property.
- There are price caps on properties in various states for each of the schemes. Please refer to the tables below.
Price Caps for FHLDS 2021-22
| Region | Capital Cities and Regional Centres | Rest of State |
|---|---|---|
| New South Wales (NSW) | $800,000 | $600,000 |
| Victoria | $700,000 | $500,000 |
| Queensland (QLD) | $600,000 | $450,000 |
| Western Australia (WA) | $500,000 | $400,000 |
| South Australia (SA) | $500,000 | $350,000 |
| Tasmania (TAS) | $500,000 | $400,000 |
| Australian Capital Territory (ACT) | $500,000 | $500,000 |
| Jervis Bay Territory and NorfolkIsland | $550,000 | $550,000 |
Source: NHFIC
Price Caps for FHLDS New Home Guarantee 2021-22
| State/Territory | Capital Cities and Regional Centres | Rest of State |
|---|---|---|
| New South Wales (NSW) | $950,000 | $600,000 |
| Victoria (VIC) | $850,000 | $550,000 |
| Queensland (QLD) | $650,000 | $500,000 |
| Western Australia (WA) | $550,000 | $400,000 |
| South Australia (SA) | $550,000 | $400,000 |
| Tasmania (TAS) | $550,000 | $400,000 |
| Australian Capital Territory (ACT) | $600,000 | $600,000 |
| Northern Territory (NT) | $550,000 | $550,000 |
Source: NHFIC
Thinking of applying? Sooner is better
Every year, over 100,000 first home buyers enter the market. The FHLDS allows for 20,000 new places and an additional 10,000 places(over four years) under the Family Home Guarantee for single parents. If you want to snap up one of these places, you can apply for pre-approval with one of our participating lenders and book a spot for yourself. If you qualify, you’ll be notified of your FHLDS Place ID when a place is reserved for you. Please lodge your tax returns for last year as soon as you can. This is necessary to obtain formal approval for your home loan.
To apply and reserve your place, or to see if you qualify for any other offers of no LMI for first home buyers, give us a call on 1300 889 743 or fill in our free assessment form.
First Home Buyer LMI Discounts Available
If you are a first home buyer, but not a high-earning professional, or can’t qualify for the FHLDS scheme and can’t get LMI waived completely, there are still ways to get an LMI discount.
Up To 33% Discount On LMI For First Home Buyers
Some mortgage insurance companies are offering up to a 33% discount on their LMI fees for first home buyers. These discounts are available only through certain lenders working with these mortgage insurance companies. Usually, to qualify for an LMI discount, your home loan should not exceed $1.2 million.
To see if you qualify for an LMI discount, please complete our free assessment form or call us on 1300 889 743 and discuss your situation with one of our specialist mortgage brokers.