Teacher home loans: who waives LMI for teachers, and your other ways in with less than 20%

Can a teacher get a home loan with no LMI?

Yes, at one lender among the eleven lender groups Money Brain checked. Bank First waives lenders mortgage insurance for education and healthcare workers buying their first home, up to 90% of the price, on loans up to $800,000, and not for building [1]. Every other lender we checked either has no professional waiver or writes it for other jobs [2][3][4][5].

LMI is insurance the lender takes out when you borrow more than 80% of the price, and you pay for it. Lenders talk about this as the LVR, the loan as a share of the property's price. Above an 80% LVR, LMI usually applies; the waiver, or the government's 5% Deposit Scheme, is how a teacher avoids it.

So the honest answer to "do teachers get LMI waived?" is: sometimes, at one lender, on a first home. The rest of this guide sets out who that fits, what the other ways in cost, and how lenders read a teacher's pay.

Does Teachers Mutual Bank waive LMI for teachers?

No. Teachers Mutual Bank doesn't waive LMI for teachers. Above 80% of the price, a teacher pays LMI there like anyone else [2]. Being a teacher makes you eligible to bank there; it doesn't change what you pay to borrow with a small deposit.

Teachers Mutual Bank is one bank trading as four brands, Teachers Mutual, Firefighters Mutual, Health Professionals Bank and UniBank, on one lending policy [2]. So the answer is the same at all four. At Teachers Mutual Bank, the way to buy with less than 20% and no LMI is the government's 5% Deposit Scheme [2][9].

The name leads plenty of teachers to assume a waiver exists. It's also why the lender you bank with today isn't always the right one to borrow from.

Are there special home loans or mortgage rates for teachers?

Among the lender policies Money Brain holds, the one teacher feature is Bank First's LMI waiver on a first home [1]. None of those policies sets out a separate teacher loan product or a lower interest rate for teachers.

What sets your rate is the same for a teacher as for anyone: how much you borrow against the price, your loan type and the lender. Usually, the higher the share you borrow, the higher the rate. So a bigger deposit, or a lender whose pricing suits your loan, does more for your rate than a job title.

What this means for you: a "teacher discount" is worth checking against the whole loan, not just the headline. A lender that counts more of your pay, or suits your contract type, can matter more over the life of the loan than a small rate difference.

Teacher first home buyer? Your four ways in with less than 20%

A teacher buying a first home has four ways in without a 20% deposit, and the right one depends on your price, your savings and where you're buying.

You can also pay LMI and buy sooner. Which way comes out ahead is worked out on your numbers, not picked from a list. See the First Home Guarantee, guarantor home loans and Help to Buy.

What each way costs a teacher, in dollars

Here's what LMI would cost a first home buyer at 90% and 95% of the price, from one insurer's published rate card [8]. With Bank First's waiver or the 5% Deposit Scheme, that cost is gone.

These are illustrations from one rate card, not quotes. Your premium depends on the insurer, the loan and the lender.

What this means for you: on a $600,000 home, the waiver saves about $11,200 on a 10% deposit, and the 5% Deposit Scheme about $19,200 on a 5% deposit while asking for $30,000 less up front. At $780,000 in regional Queensland, over the scheme's $700,000 cap there [9], Bank First's waiver is the only way of these two to skip the $18,500 or so of LMI.

Worth knowing: the waiver only helps if the lender suits you otherwise. A better rate or a better fit elsewhere can outweigh it over the life of the loan.

Can teachers use the 5% Deposit Scheme, and what are the price caps?

Yes. Teachers can use the 5% Deposit Scheme like any first home buyer, because it has no job test and no income cap [9]. You buy with a deposit of at least 5%, the government guarantees part of the loan in place of LMI, and you borrow through a lender that takes part in the scheme [9].

Both the price you pay and the lender's valuation must be at or under the cap for where you buy [9]. The capital-city cap also covers a short list of regional centres: Geelong in Victoria; the Gold Coast and Sunshine Coast in Queensland; and the Central Coast, Coffs Harbour-Grafton, Illawarra, Mid North Coast, Richmond-Tweed, Newcastle and Lake Macquarie in New South Wales [9]. A teacher in Ballarat, Bendigo, Townsville or Cairns is on the rest-of-state cap.

See the full First Home Guarantee guide.

Help to Buy for teachers

Help to Buy is a government shared equity scheme: the government contributes to the price and holds a share of the value, so you borrow less [10]. You need at least a 2% deposit. The government's share can be up to 30% of an existing home or up to 40% of a newly built one [10].

It has limits the 5% Deposit Scheme doesn't: 10,000 places a year, and income caps of $103,000 for a single buyer and $165,000 for joint buyers and single parents, for the current financial year [10]. Every applicant must be an Australian citizen [10]. State stamp duty concessions and grants still apply alongside it [10].

What this means for you: a single teacher earning under the cap, with a small deposit, may find Help to Buy cuts the loan more than any waiver. A teacher couple will want to check their joint income against the $165,000 cap first. See Help to Buy.

Saving your deposit through super: the First Home Super Saver Scheme

The First Home Super Saver Scheme lets you save part of your deposit inside super, through voluntary contributions, and release it to buy your first home [11]. You can put in up to $15,000 a financial year, and up to $50,000 in total [11].

Voluntary concessional contributions, such as salary sacrifice into super, are taxed at 15% in super, which is usually less than your marginal rate [11]. When you release your savings, 85% of concessional contributions and all of your non-concessional ones come out, with deemed earnings, and the taxable part gets a 30% tax offset [11]. Your employer's compulsory super doesn't count [11].

Couples are assessed one person at a time, so two teachers can each use their own contributions toward the same home [11]. See First Home Super Saver.

Are there home loan grants for teachers?

Not grants just for teachers: no scheme Money Brain has checked is written for teachers alone. Teachers get the same help as any first home buyer: their state's first home grant and stamp duty concession, and the federal 5% Deposit Scheme, Help to Buy and First Home Super Saver Scheme [9][10][11].

Check the home type before you count on a grant. In New South Wales, Victoria and South Australia, the first home owner grant is for a new home, not an established one [12]. Stamp duty help often matters more than the grant on an established home.

See the first home buyer grants in your state and how the schemes fit together.

Permanent, contract or casual: how lenders read a teacher's pay

How lenders read a teacher's pay depends first on how you're employed: permanent, on a fixed-term contract, or casual and relief. That line decides more about what you can borrow than the school you teach at.

Permanent is the simplest case. Lenders read your base salary from your payslips and an employment letter, like any salaried worker.

On a fixed-term contract, lenders look at how long the contract runs and how long you've been teaching. A contract that ends soon after settlement, with no history of renewals, is the one that gets questioned. A letter from your school or department about renewal, and your record of past contracts, helps.

A move from contract to permanent is a change a lender wants to see in writing. At Westpac, new employment or a rise in base pay is shown with the employer's letter, email or contract giving your new pay, and one payslip at the new rate [7].

The type of school matters less than how you're employed: the same rules apply whether a public, Catholic or independent school employs you. Where it can matter is a waiver tied to an employer. Bankwest's government group is for federal departments only, so a teacher employed by a state education department isn't in it [4].

Relief teaching and the school holidays

Relief teaching stops over the school holidays, so how a lender turns your pay into a yearly figure matters. Westpac Group and ING spread casual pay over 52 weeks, while AMP works on a year of up to 46 weeks [7].

Some lenders also compare this year with last. Bankwest uses the lower of this year's pay, annualised, and last year's income statement; Macquarie does the same when you're less than 6 months into this year's pay [7].

What this means for you: the same relief teacher, with the same payslips, can be assessed on a different yearly income at two lenders. That's why we look at when your relief days fell across the year before choosing where to apply.

Graduate teachers in their first year

Graduate teachers can buy in their first year at some lenders, once they've started and been paid. At Westpac, a loan without mortgage insurance needs you to have started the job and received at least one pay. A mortgage-insured loan needs 3 months in the job, or less than that with 12 months in the same occupation and no gap of more than 2 months between jobs [7].

For a new graduate, the 12 months in the same occupation usually isn't there yet, so a loan with LMI at Westpac waits for 3 months in the job. Whether a 5% Deposit Scheme loan counts as "without mortgage insurance" for this rule isn't stated in Westpac's policy, so it's a question we put to the lender for you.

Lenders generally look more at whether your first role is permanent or a long contract than at how long you've been in it.

Salary sacrifice and packaging

Salary sacrifice takes money out of your pay before tax, for example as extra super, so your payslip shows less taxable pay. Lenders differ on adding it back. Westpac Group adds a voluntary pre-tax deduction back in full, because you could cancel it and take it as pay [7]. ANZ adds non-tax packaging back, untaxed, on top of your taxable income [7]. AMP counts packaging only with an employer letter confirming it can be taken as cash [7].

Bring your salary sacrifice or packaging statement along with your payslips.

Part-time teachers, and teachers on parental leave

At Westpac, permanent part-time pay is read on base pay. It uses the lowest base rate and hours on your payslips, unless there's a reason they vary. One-off unpaid leave can be counted back in if you confirm you're back to your normal hours [7]. Relief days on top are casual pay, and the casual rules above apply to that part.

You can also buy while on parental leave at some lenders. Westpac can use your return-to-work pay, base pay only, with a letter from your employer giving your return date, your hours and your pay. Every child counts as a dependant, including one not yet born. If your first repayment falls before you return, you'll need to show savings that cover the gap, on top of the money for the purchase [7]. With a mortgage-insured loan in that case, Westpac won't lend for an investment [7].

How much can a teacher borrow?

How much a teacher can borrow comes down to three things: what a lender counts of your pay, your debts, and your living costs. Banks then check you could still make the repayments if rates were 3 percentage points higher, the buffer APRA has set [13].

Your debts include a HECS-HELP debt: lenders generally take the compulsory repayment off the income they count, even though it isn't a repayment you choose. That's why the same teacher can get quite different answers from two lenders, especially on casual, contract or allowance-heavy pay. See how much can I borrow.

Buying with a partner, or with another teacher

Buying with a partner works under every way in on this page, with one rule each to watch. On the 5% Deposit Scheme, a joint application is exactly two people, and both must pass the 10-year ownership test [9]. On Help to Buy, the $165,000 income cap is your combined income [10].

At ANZ, if the loan has LMI and you're casual, you can't be the only or main earner, so a partner's income matters there too [7]. Whether both buyers must be education or healthcare workers for Bank First's waiver isn't in our record of its policy, so we confirm it with Bank First before you rely on it.

Can a teacher buy an investment property with a small deposit?

A teacher buying an investment property can't use either of the no-LMI ways in. Bank First's waiver is for first home buyers [1], and a 5% Deposit Scheme home must be lived in and can't be rented out while it's guaranteed [9]. So an investment means a 20% deposit, or paying LMI.

Once you own one property, its equity can become the deposit for the next, and the order you buy in decides whether you can keep going. See using equity to buy an investment.

Refinancing a teacher home loan

Refinancing a 5% Deposit Scheme loan keeps the guarantee only if you move to another lender in the scheme, and you can't increase the loan or extend its term when you do [9]. Move to a lender outside the scheme, and the guarantee is lost.

The guarantee ends on its own once your scheduled repayments bring the loan to 80% of the value [9]. See refinancing your home loan.

What does a broker cost you?

How a broker is paid, and the rule Money Brain holds against it, is set out in full on its own page: what a mortgage broker costs.

Your first move

You've read the rules. Now there's one question left: which way in, with which lender, for your contract and the price you want? That depends on whether you're permanent, on contract or casual, your deposit and where you're buying, and it's what Money Brain works out before anything goes to a lender.

When you're ready, the closing section below is the simplest way to start.