An hfinance client case study.
Lenders Mortgage Insurance is the tax nobody budgets for. On a 90% loan against an $800,000 purchase, LMI can run north of $15,000 capitalised onto the loan, gathering interest for thirty years, protecting the bank and not you. This deal is about making that number zero.
The Clients’ Situation
A young couple buying their first home together, she’s an Australian citizen, he’s a permanent resident, both employed full-time on PAYG salaries. Between them they’d saved a genuine 10% deposit plus purchase costs. No adverse credit, sensible living expenses, one HELP debt being paid down through payroll.
They’d found a home at $800,000. The maths said they needed to borrow $720,000, a 90% lend. And that’s where most first home buyers get ambushed, because above 80% LVR the default answer from every lender is LMI.
The Challenge
Saving a 20% deposit on an $800,000 property means finding $160,000 plus costs. For a couple paying Sydney rents, that’s years more saving while prices keep moving. Buying at 90% gets them in now but the standard cost of that decision is a five-figure LMI premium that buys them precisely nothing.
There was a second, smaller issue: credit cards. The couple held cards they barely used, but lenders assess capacity on the limit, not the balance. At a 90% lend, servicing has no room for dead weight, the cards had to go.
And the HELP debt needed careful handling. It’s not a dealbreaker, but the repayments come straight off assessable income, so the servicing calculation had to be built with it in, not discovered by the assessor later.
What We Did
The fix was lender selection, not financial gymnastics. A small number of lenders run first-home-buyer policies that waive LMI above 80% LVR for qualifying borrowers, this couple fit one of them.
- Placed the loan under a major lender’s first-home-buyer policy: 90% LVR with no LMI applied. That single decision saved them a five-figure premium.
- Requested and secured a pricing discount on top, first home buyers rarely realise the advertised rate is a starting point, not the answer.
- Closed the credit cards before assessment so servicing reflected their genuine position.
- Structured the file with the HELP repayments built into the numbers from day one and every dollar of the deposit evidenced from savings. No surprises, no queries, no delays.
The Numbers
| Item | Figure |
| Purchase price | $800,000 |
| Loan amount | $720,000 |
| LVR | 90% |
| Lenders Mortgage Insurance | $0 — waived under FHB policy |
| Deposit + costs | 10% from savings |
| Product | Variable, P&I, discounted pricing |
Same house, same deposit, same couple. The difference between this structure and the default path is roughly $15,000 of LMI they never paid plus a sharper rate than the one on the lender’s website.
If You’re Buying Your First Home
Don’t assume LMI is just the cost of buying with less than 20% down. A handful of lenders will waive it entirely for first home buyers, and knowing which ones and whether you qualify is worth more than months of extra saving. Ask for pricing too. The advertised rate is where the negotiation starts.
And close the credit cards you don’t use before you apply, not after the bank asks. Unused limits are pure drag on your borrowing power. It’s a ten-minute job that can be the difference between approved and declined at a 90% lend.
How We Approach These Deals
First home buyers are where lender policy knowledge pays for itself. LMI waivers, government schemes, pricing discounts, servicing quirks the gap between the default path and the right path is usually thousands of dollars, and none of it is advertised. We build the file so the strongest version of your position is the one the lender sees.
This article is general information only and does not constitute credit, financial or tax advice. It does not take into account your objectives, financial situation or needs. Lender criteria, LVR limits, government charges and interest rates are subject to change and vary case by case. Figures are illustrative and based on the assumptions stated. Jeremy Harper is a Credit Representative (CRN 463430) of Mortgage Specialists Pty Ltd, Australian Credit Licence 387025.