What is LMI and can I avoid it?

Lenders Mortgage Insurance (LMI) is insurance that protects the lender (not you) if you default on the loan. It is required when your deposit is less than 20% of the purchase price. To avoid LMI, you need a 20% deposit. Alternatives include a guarantor loan (where a family member guarantees part of the loan) or the Federal Government's First Home Guarantee scheme, which allows eligible FHBs to buy with as little as 5% deposit without LMI.

How is stamp duty calculated for first home buyers?

Stamp duty varies by state and is calculated on a progressive rate scale -- higher purchase prices attract higher duty. Most states offer full exemption below a price threshold (e.g. $700,000 in QLD, $800,000 in NSW) and a concessional rate above that up to a second threshold. Above the concessional threshold, full standard stamp duty applies. The calculator uses simplified 2024 thresholds -- always verify with your state revenue office.

Is there a minimum deposit I must have?

Most lenders require a minimum genuine savings deposit of 5% of the purchase price. With 5-20% deposit, LMI applies. The First Home Guarantee allows 5% deposits without LMI for eligible buyers (income caps and property price caps apply). Some lenders allow a guarantor to act as security in place of the deposit.

First Home Buyer Cost Summary — Free Real Estate Calculator

🎯

First-time buyer found a property they love at $680,000 in Queensland and they have $90,000 saved. Before they make an offer, they need to know if they actually have enough -- including everything.

First Home Buyer Cost Summary

Buying

Purchase price ($)

State

Deposit (%)

Under 20% = LMI applies

New or established?

FHOG amounts (new builds, 2024): NSW $10,000 · VIC $10,000 · QLD $30,000 · WA $10,000 · SA $15,000 · TAS $30,000 · ACT nil · NT $10,000
Most states also offer stamp duty concessions or exemptions for first home buyers below price thresholds.

Reference: First Home Owner Grant — Australia

ℹ️ Results are estimates for planning purposes. Verify with current standards and a qualified professional.

1 What this calculator does

Calculates the full upfront cost of purchasing a property for first home buyers in Australia. Includes deposit, stamp duty (with state FHB concessions and exemptions), LMI if applicable, FHOG grant, conveyancing, building inspection and pest inspection. Shows the total cash required at settlement.

2 Formula & professional reasoning

Total cash required = Deposit + Stamp duty + LMI + Conveyancing + Inspections - FHOG grant
LMI rate:
  LVR 90-95%: approx 3.8% of loan
  LVR 85-90%: approx 2.2% of loan
  LVR 80-85%: approx 1.2% of loan
FHOG (new property only): QLD $30,000 | NSW $10,000 | VIC $10,000 | WA $10,000 | SA $15,000 | TAS $30,000

Many first home buyers underestimate total upfront costs by 3-8% of the purchase price. The FHOG grant (if eligible) is only available for new properties in most states, not established homes. Stamp duty concessions for first home buyers vary significantly by state and property price -- properties above the exemption threshold still pay duty at a concessional or full rate. LMI is capitalised into the loan and increases total repayments over the loan term.

3 Worked examples

⚠️ Illustrative example only — not clinical or professional instruction.

Basic

QLD established property at $680,000 with 10% deposit

Given: Price: $680,000 | State: QLD | Deposit: 10% ($68,000) | Type: established

Working:

Stamp duty QLD FHB threshold $700,000 -- price is below so stamp duty is approximately $0 (exempt) | LVR: 90% -- LMI: $612,000 x 0.022 = $13,464 | Conveyancing: $1,500 | Building inspection: $600 | Pest inspection: $350 | FHOG: $0 (established property)

Answer: Total cash required: $68,000 + $0 + $13,464 + $2,450 = $83,914

💡 They have $90,000 saved -- they can just cover it at $83,914 but have minimal buffer. Recommend having at least $90,000-95,000 to avoid stress on settlement day.

Standard

NSW established property at $900,000 with 15% deposit

Given: Price: $900,000 | State: NSW | Deposit: 15% ($135,000) | Type: established

Working:

Stamp duty NSW FHB: $900,000 is above the $800K full-exemption threshold, between $800K-$1M concessional | NSW FHB concession at $900K: approx $9,000 (50% concession on normal duty of ~$35,000) | LMI at 85% LVR: $765,000 x 0.012 = $9,180 | Conveyancing and inspections: $2,450

Answer: Total cash required: $135,000 + $9,000 + $9,180 + $2,450 = $155,630

💡 NSW FHB concessions phase out above $800K purchase price. At $900K the saving is partial. A 20% deposit ($180,000) would eliminate LMI and reduce duty further.

Advanced

VIC new property at $580,000 with 5% deposit

Given: Price: $580,000 | State: VIC | Deposit: 5% ($29,000) | Type: new

Working:

Stamp duty VIC FHB threshold $600,000 -- exempt at $580,000 = $0 | LMI at 95% LVR: $551,000 x 0.038 = $20,938 | FHOG: $10,000 (new property) | Conveyancing and inspections: $2,450

Answer: Total cash required: $29,000 + $0 + $20,938 + $2,450 - $10,000 = $42,388

💡 5% deposit is possible with $0 stamp duty and FHOG grant offsetting LMI cost. However LMI at $20,938 is added to the loan -- they will repay this over 30 years. The true cost of a 5% deposit is much higher than it appears.

4 Sanity check

FHB stamp duty exemption thresholds (2024 approx)

Thresholds change -- check your state revenue office for current figures.

FHOG eligibility

New property only in most states | Must be Australian citizen or PR | Must intend to live in the property as primary residence for minimum 12 months

LMI adds to the loan balance

LMI is typically capitalised into the loan -- not paid upfront

This means the $13,000 LMI premium actually costs approximately $30,000+ in interest over a 30-year loan.

Allow a cash buffer

Have 3-5% of purchase price above your calculated minimum upfront costs

Settlement adjustments, rate lock fees, moving costs and emergency repairs can add $5,000-$15,000.

5 Common errors

Error	Cause	Consequence	Fix
Treating all savings as available deposit	Not separating savings from the funds needed for costs	Insufficient cash at settlement -- loan is approved but settlement fails	Calculate total upfront costs first. Available deposit = Total savings minus stamp duty, conveyancing, inspections and a cash buffer.
Expecting FHOG for an established property	Not reading the eligibility criteria	Relying on a $10,000-$30,000 grant that does not materialise	FHOG is only available for new properties (off-the-plan or new builds) in most Australian states. Established homes are typically excluded.
Not checking if the purchase price is above the FHB exemption threshold	Assuming all FHBs pay no stamp duty	Unexpected stamp duty bill of $10,000-$40,000	Check your state's current FHB exemption threshold. Above the threshold, full or concessional stamp duty applies.
Underestimating building and pest inspection costs	Treating them as optional to save money	Buying a property with structural issues or pest infestation	Building and pest inspections at $600-$1,000 total are the best money spent in a property purchase. Never waive them to strengthen an offer unless you are prepared to accept the risk.

6 Reference & regulatory links

🇦🇺 Australia

🇺🇸 United States

7 Professional workflow

Common tools used alongside this one:

🏠

Mortgage Affordability Calculator

Confirm borrowing power with Mortgage Affordability before calculating upfront costs

→

📊

Rent vs Buy Calculator

After understanding all buying costs, compare with renting to confirm buying is the right decision for this timeline

→

🔄

Refinance Break-Even Calculator

Revisit refinancing options once established in the property if rates change significantly

→

Input	Result
QLD FHB stamp duty exempt below	$700,000
NSW FHB stamp duty exempt below	$800,000
VIC FHB stamp duty exempt below	$600,000
FHOG new property only	QLD $30K \| NSW $10K \| VIC $10K