Buying your first home is great, but sorting out the financial situation can be difficult. Lenders’ Mortgage Insurance is one significant expense many first-time purchasers must deal with (LMI). Generally, this insurance is necessary if your deposit is less than 20% of the property value. However, you may qualify for a Government backed LMI waiver scheme and save thousands of dollars if you work in a job that lenders deem low-risk.    

In this blog, we cover everything you need to know about LMI waivers in 2024. Moreover, you will find out who qualifies for LMI exemptions and how to apply. If you’re looking to save money on LMI for your next home, this guide is here to help. Let’s get started!!

What is an LMI Waiver? 

A policy of insurance designed to protect the lender is known as Lender’ Mortgage Insurance or LMI. It does not provide the borrower with insurance. The borrower often makes this one-time payment when they receive the loan settlement, this can be added onto the loan amount. If the lender lets you borrow over 80% of the property’s value, the LMI will protect them against some risks. If you are unable to make your mortgage payments, the LMI will allow your lender to take back your property. 

The LMI provider will be a third party between you and the lender. The lender determines the identity of the LMI supplier. Despite one’s gender, age, marital status, work, or occupation, LMI is a common topic among many borrowers. However, young homebuyers often lack the money to make their needed deposit.

Who qualifies for waived LMI?

Lenders will offer the following borrower types the choice to move forward with a home loan with an LMI.

• Guardians, parents, and siblings are typically the guarantors of borrowers.
• A commitment to waive LMI for a deposit as low as 5% has been given to first-time homebuyers by the government through the First Home Buyer Guarantee Scheme (FHBG/HGS)
• Experts and individuals that fit particular job profiles.

LMI Waiver for Professionals

Lenders consider professionals to be low-risk borrowers because they are in great demand across all sectors and geographies and are usually well compensated. According to statistics, these borrowers also rarely miss loan and payment obligations.  

They are preferred because their network likely includes LMI Waiver-qualified professionals. So, they are potential borrowers for lenders. Their connections might also extend to larger groups like associations or licensing bodies. Even with a deposit under 20%, lenders see them as reliable borrowers who can make large payments on time.

Who is Eligible for an LMI Waiver? 

LMI waivers are available to certain professions because lenders consider them lower risk. This is a thorough guide to home loans for Australian applicants who are eligible for waived LMI:  

Eligible LMI Waiver for Professions:

Doctors

AHPRA registration is required for general practitioners, veterinarians, and dentists.

Both owner-occupied and investment properties are eligible for waivers.

A maximum loan of $4.5 million is available.

You can borrow up to 95% LVR with LMI waived with lender approval.

Other Medical Professionals

• Includes optometrists, registered nurses, midwives chiropractors, and pharmacists (AHPRA membership is required).
• Minimum income criteria may apply.
• Up to 95% LVR with waived LMI (subject to lender approval).

Accountants, Lawyers & Other Professionals

• Accountants: Must be a registered with a professional accounting association
• Lawyers: Must hold a Practicing Certificate (e.g., Solicitors, Judges, Barristers).
• Other Professionals: Professional athletes with an accredited agent/manager (conditions apply).
• Minimum income requirements may apply.
• Up to 90% LVR with waived LMI (subject to lender approval).

Alternative LMI Waiver Options:

No Deposit Required Home Loans (up to 105% LVR)

• Borrow as much as 100% of the property value with the help of a guarantor.
• No specific profession or role needed.

Non-Parent Guarantor options (up to 98% LVR)

• First Home Guarantee Scheme: Get a 98% LVR loan without LMI (income limits apply).
• Eligible for first-time homebuyers purchasing a property to reside in.

Low Deposit Options (85% LVR)

• No specific profession or role requirements.
• Must have a stable income and be buying a property to live in.
• Maximum loan limit: $5 million.
• Up to 85% LVR with no LMI.

First Home Buyer Option with Minimal LMI (85% LVR)

• Pay just $1 symbolic for first home buyer LMI waiver (subject to lender approval).
• Must be a first-time homebuyer buying a property to live in.
• Maximum loan limit: $850,000.

Final Thoughts 

First-time home buyers who have already been approved for the First Home Loan Deposit Scheme may also be eligible for an LMI waiver. A nationwide program, the First Home Loan Deposit scheme, helps first-time homebuyers enter the housing market sooner. The LMI waiver scheme program allows homeowners to buy a property with as little as a 5% down payment. Also, they can skip the Lenders Mortgage Insurance. This makes homeownership more accessible.

If you’re looking to get the best home loan deal with the LMI waived, you’ll need an expert like a FHBA Coach who knows this financing process. Get in touch with FHBA today!