Lenders mortgage insurance (LMI) is a one-off cost that lenders usually charge when you borrow more than 80% of a property's value. It protects the lender, not you, if you default and the sale doesn't cover the debt. Most 5% and 10% deposit home loans come with LMI, except loans under the government's 5% Deposit Scheme (First Home Guarantee), where the government guarantees up to 15% of the loan so eligible first home buyers avoid LMI.

In this short video, McKern mortgage broker Mark Jones explains how LMI works and how the government guarantee scheme lets first home buyers get in with a 5% deposit. The scheme is available through participating lenders and, since October 2025, has no income caps or limit on places (property price caps still apply).

General information only, not personal advice.