Do First Homeowners Pay LMI?
First-time homeowners can find themselves either being required to pay for Lenders Mortgage Insurance (LMI), or exempted from paying LMI depending on their independent statuses with their lenders. A first-time buyer that has applied and gotten approval for the First Home Loan Deposit Scheme (FHLDS) is exempt from paying for LMI.
A first-time homeowner that has not qualified for FHLDS and pays a deposit of 20% or more will also be exempt from paying for LMI because of the large deposit payment. In opposition, a first-time homeowner that pays a deposit of less than 20% will be required to pay for LMI because of the low deposit payment.
If a first-time homeowner is required to pay for LMI, the lender will then calculate the exact amount in LMI the owner will have to pay. First-time homeowners in Australia can apply for the First Home Owner Grant which is a government-funded, one-time payment created to assist new homeowners with incurred expenses if eligible.
A potential buyer with concerns about budgeting and applying for loans or establishing mortgages can benefit from working with our expert staff at Mortgage House, where we listen to our client’s concerns and take their independent financial needs seriously when formulating plans.
First Homeowners LMI Conclusion
First-time buyers will have to pay for LMI if a deposit is below 20% of the purchase price, but are exempt if they qualify for certain government assistance programs like FHLDS, as well as if a deposit of 20% or more of the purchase price is paid.