How Much Deposit Do You Need for an Investment Property in Australia?

The 20% rule (and why it isn't always the right rule)

The conventional Australian rule of thumb is to put down 20% of the property purchase price as deposit. On a $700,000 property, that's $140,000. The rationale: at 80% loan-to-value ratio (LVR) or below, you avoid Lenders Mortgage Insurance (LMI), and you have a meaningful equity buffer if prices fall.

The 20% rule is genuinely sensible for most first-time investors. But it isn't a law, and there are circumstances where paying LMI makes more financial sense than saving an extra 5–10%. Below, we walk through both paths.

Minimum deposits across lenders

Lender appetite for low-deposit investment loans varies. Typical ranges in 2026:

• 20% deposit (80% LVR): standard. All lenders compete; best pricing.
• 15% deposit (85% LVR): available at most lenders with LMI. Pricing 0.10–0.30% higher than 80%.
• 10% deposit (90% LVR): available at most lenders with significant LMI. Some postcode restrictions apply, especially for apartments.
• 5% deposit (95% LVR): rare for investors. Some non-bank lenders offer it; LMI is substantial; properties limited to metro postcodes typically.
• Less than 5%: niche only — typically requires a family guarantor (using their property equity as security) or a profession-specific scheme. Most investment loans don't qualify.

LMI: when it makes sense

Lenders Mortgage Insurance protects the lender, not you. If you default, LMI covers the lender's loss. Despite the name, you pay for it as a one-off premium added to your loan (capitalised).

For investment loans, LMI premiums in 2026 typically run:

• 85% LVR: ~0.6–1.0% of the loan amount
• 90% LVR: ~1.8–3.0%
• 95% LVR: ~3.5–5.0%

On a $560,000 loan at 90% LVR, that's $10,000–$17,000 in LMI added to the loan balance.

The case for paying LMI is straightforward: if you can buy a property today rather than 18 months from now, and the property's value rises 5–7% in that window, the capital growth often exceeds the LMI cost. Paying $15,000 in LMI to capture $40,000 of growth is a clear win — but only if the growth materialises, which is never guaranteed.

The case against LMI: the premium is real money you'll never see again. If markets stagnate or fall in your holding period, you've added cost without compensating growth. LMI also reduces your equity position from day one, which limits future borrowing against the property.

For investment property, LMI is partially tax-deductible — spread over 5 years or the loan term, whichever is shorter. This softens the cost relative to owner-occupier loans, where LMI is not deductible.

State-by-state stamp duty: the hidden second deposit

Stamp duty is the second-largest acquisition cost after deposit. For investment property in 2026, approximate duty on a $700,000 purchase:

These figures are indicative only — duty schedules change, and surcharges apply in some states for foreign buyers, certain trust structures, and (in VIC and NSW specifically) absentee owners. Always confirm with the relevant state revenue office or your conveyancer before exchanging.

For a state-by-state breakdown of stamp duty mechanics, FHB concessions, and investor implications, see your NSW guide, VIC guide, QLD guide, or other state guides.

Other purchase costs to budget

Beyond deposit and stamp duty, expect:

• Conveyancing / solicitor: $1,200–$2,500 depending on state and complexity.
• Building and pest inspection: $500–$700 combined for a typical house. Strata report (apartments): ~$300.
• Lender application/establishment fees: $0–$700 depending on lender; sometimes waived in package products.
• Mortgage registration and title transfer: $250–$500 across most states.
• LMI if applicable (above 80% LVR).
• Council and water rate adjustments at settlement: $500–$1,500 typically.
• Loan-protection insurance, depreciation schedule, building insurance: first-year cost ~$1,500–$2,500.

A useful rule: budget 5–6% of the purchase price for non-deposit costs in NSW/VIC/SA, 4–5% in QLD/WA/TAS/NT, and 2–3% in the ACT.

Total cash-in-hand by scenario

Putting it all together, here's what a typical investor needs in cash for a $700,000 NSW investment property:

• 20% deposit, no LMI: $140,000 deposit + $33,000 stamp duty & costs = $173,000.
• 15% deposit, with LMI: $105,000 deposit + $33,000 stamp duty & costs = $138,000 cash; LMI (~$5,000) capitalised onto the loan.
• 10% deposit, with LMI: $70,000 deposit + $33,000 stamp duty & costs = $103,000 cash; LMI (~$13,000) capitalised onto the loan.

Always keep a buffer beyond settlement-day cash: 3–6 months of mortgage repayments held in offset or savings is the standard professional recommendation. Vacancies, rate rises, and unexpected repairs all happen.

Saving strategies that actually work

• High-interest savings accounts. Bonus-rate savers commonly pay 4.5–5.5% in 2026 (rate-environment dependent). Consistent monthly contribution to qualify is non-negotiable; rate downgrades on missed conditions cost more than they appear.
• Term deposits for predictable timelines. If you know your purchase is 12+ months away, locking in the rate removes reinvestment risk.
• Equity from existing property. Owner-occupiers can typically access up to 80% of the equity in their home (with a separate loan or line of credit) as deposit for an investment. This is the most common mechanism for second-property buyers.
• FHSS Scheme (First Home Super Saver). Owner occupiers only — voluntary super contributions taxed at 15% instead of marginal rate, withdrawable for first home deposit. Not applicable to investment property purchases.
• Family guarantor. A parent or close family member uses their existing property as security for part of your loan, removing the LMI threshold. This is a serious commitment for the guarantor — get independent legal advice before setting up.
• Sell underperforming assets. Idle equities, crypto, or low-yield investments may be more usefully deployed as property deposit, especially if your investment thesis is stronger on property than on the alternative.
• Reduce non-essential spending temporarily. Genuine: a 12-month focus on saving 30–35% of net income is achievable for many dual-income households and shifts deposit timeline meaningfully. Expense tracking tools (Frollo, MoneyBrilliant) make the process less painful.

Common deposit mistakes

• Forgetting stamp duty in the deposit calculation. Stamp duty is paid at settlement out of cash, not from the loan.
• Confusing deposit with cash-in-hand. A 20% deposit on a $700k property is $140k, but you'll need closer to $175k cash to actually settle.
• Tapping the deposit for furnishing or repairs. Keep separate budgets. Shifting deposit money into "soft" costs disqualifies the loan structure.
• Underestimating ongoing costs. Council rates, insurance, strata, property management, maintenance, and potential vacancy add 1.5–2.5% of property value annually. Budget this before stretching the deposit.