LMI is an insurance policy designed to protect the lender if the borrower defaults on their mortgage. Most lenders will include LMI as a standard requirement when the borrowers’ deposit is less than 20% of the property purchase price. The cost of LMI varies, but it can add a significant cost to your total purchase price (LMI is payable as a one-off premium that gets added to your total home loan balance). However, borrowers who have a guarantor or those who qualify for the First Home Loan Deposit Scheme may be able to obtain a home loan with just a 5% deposit, no LMI required.