PHOTO: According to CoreLogic, the median dwelling value in Australia is $554,605, and for a first home buyer to avoid LMI, they would need to save $110,921 for a 20 per cent deposit

More than two in five potential home buyers have admitted to not understanding what lenders mortgage insurance is, according to a new survey.

New data from Mortgage Choice and Core Data’s Evolving Great Australian Dream 2018 whitepaper found that 42.1 per cent of respondents were not sure what LMI was, yet a third said they would need to pay it to get into the property market.

Mortgage Choice CEO Susan Mitchell said that too many home buyers were unsure about what the insurance is.

“Our data found that a majority of home buyers are in the dark when it comes to lenders mortgage insurance and what it entails,” the CEO said.