Aaron Bell
Athena Cocoves
When taking out a home loan, you might avoid paying lenders mortgage insurance (LMI) by meeting certain eligibility criteria.
What is an LMI waiver?
Lenders mortgage insurance (LMI) is a one-off payment that provides protection to the lender in the event that you cannot repay your mortgage. LMI is typically required when the loan-to-value ratio (LVR) exceeds 80%, meaning the amount you want to borrow is more than 80% of the property’s value. Lenders consider this to be a riskier loan.
However, if you do not have a 20% deposit, you might still qualify for a waiver, allowing you to secure the loan without the added costs.
» MORE: How much can I afford to borrow for a home loan?
LMI waiver for professionals
When lenders assess a home loan application they are primarily concerned with serviceability, which is your ability to pay back what you owe. Lenders often assess your profession, and individuals in stable, high-income roles are viewed more favourably as they demonstrate a strong ability to repay the loan.
Eligible professions vary by lender and may also depend on the size of your deposit and loan amount, but even high-income earners typically still need a 5-10% deposit.
Some professions eligible for LMI waivers include medical professionals, accountants and lawyers. Here’s what to know.
Medical professionals
Medical professionals that qualify will still need to be registered with the Australian Health Practitioner Regulation Agency.
For example, ANZ Bank includes the following medical roles for LMI waivers:
- Medical practitioner
- Dental practitioner
- Physiotherapist
- Chiropractor
- Optometrist
- Veterinarian.
Legal professionals
Legal professionals must hold a current practicing certificate with the relevant state body. Those that may qualify include:
- Judges
- Solicitors
- Barristers.
Accountants and finance professionals
Accounting professionals must belong to an eligible accounting institute and hold current membership or certification to qualify.
Media and entertainment industry professionals
High-income earners working in the media, sport or entertainment sectors may also qualify for an LMI waiver. Lenders do not always list specifically what professions qualify, as this will likely be determined on a case-by-case basis.
Waivers could be applied for:
- Professional athletes
- Artists such as singers and actors
- Producers and directors.
» MORE: What percentage of your income should go to a mortgage?
Who else qualifies for an LMI waiver?
- High-income earners: Other professions (e.g., content creators, engineers, business owners) may also qualify based on income.
- First home buyers: Government schemes, such as the First Home Guarantee Scheme, allow eligible buyers to purchase with a 5% deposit and no LMI.
- DHA property investors: Defence Housing Australia (DHA) provides housing services to members of the Australian Defence Force (ADF) and their families.
Which banks offer LMI waivers to professionals?
Not all banks advertise LMI waivers. If you bank with a specific lender, you should discuss your options with them. Additionally, each lender has different policies on LVR limits and eligible professions. Even with a LMI waiver, most lenders still require a 5-10% deposit.
For example, Westpac currently offers LMI waivers for nurses earning over $90,000 a year, while other lenders may not include nursing as an eligible profession.
As with any home loan application, your serviceability will be determined by a number of factors, so you should discuss these directly with your lender.
Examples of LMI waivers for professionals
Examples of lenders that may offer LMI waivers include:
- NAB: Medical/dental practitioners, optometrists, vets, and partners of select legal and accounting firms. Maximum LVR 95%.
- Westpac: Professionals in the medical, legal, accounting, sport and entertainment, health, emergency services, and construction sectors may qualify.
- ANZ: Legal, medical, and accounting professionals may qualify. Maximum LVR 90-95% depending on your situation.
- CBA: Commonwealth Bank offers LMI waivers on a case-by-case basis.
- St George: Medical professionals may be able to secure a 90-95% LVR loan and have LMI waived.
- Bank of Melbourne: Medical professionals, accounting and legal professionals may qualify for LMI waivers on loans with 90-95% LVR.
How to apply for an LMI waiver
Much like a mortgage application, applying for an LMI waiver will require documentation such as:
- Employment and profession: Provide proof of your profession, such as registration or qualification. For example, legal professionals must hold a current practicing certificate with the relevant state body, and medical practitioners must hold a licence with the Australian Health Practitioner Regulation Agency.
- Income: Payslips, tax returns, confirmation of employment.
- Identity: Passport, drivers licence, bank accounts, or bills listed to your name and address.
- Credit check: Your credit history may also influence your eligibility.
Other ways to avoid paying LMI
- Guarantor loan
- Continue saving to reach a 20% deposit
- Purchase a cheaper property
- Use government schemes
- Combine income
- Use equity from existing property.
About the Author
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