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Lenders Mortgage Insurance (LMI) protects the lender if you default on your home loan. In these circumstances, the lender may need to sell your property to recover the cost. Should the sale of your home not cover the outstanding amount owing to your lender, this is known as a 'shortfall'. LMI is not designed to protect you as the borrower, but rather its purpose is to protect lenders in case of a shortfall, and allows the lender to lend the borrower an amount higher than the lender would otherwise be able to provide. A typical scenario is being able to borrow more than 80% for a standard metro residential property (subject to approval).