Most investors who ask “how much deposit do I need” expect a single number. The honest answer is somewhere between 10% and 20% of the property value, and on a $600,000 investment property that’s $60,000 to $120,000.
Pick a number, save it, buy the property. Job done.
But that framing misses what actually matters once you’re investing rather than just buying a home. The deposit you choose changes your interest rate, whether you pay LMI, how much you can borrow, your cashflow from day one, and how quickly you can fund the next purchase.
The deposit isn’t really a savings question. It’s a portfolio decision.
This guide walks through what each deposit tier actually costs, where the strategic choices sit, and why over-saving can quietly cost you more than paying LMI would have.
Deposit tiers explained: 5%, 10%, 15%, 20%
Every dollar of deposit changes multiple variables at once. Here’s what each tier looks like on a $600,000 investment property.
| Deposit % | Deposit amount | LVR | Approx. LMI cost | Rate premium vs 80% LVR | Monthly repayment (P&I, 30yr) |
|---|---|---|---|---|---|
| 5% | $30,000 | 95% | $15,000–$25,000 | +0.5–0.8% | ~$3,750* |
| 10% | $60,000 | 90% | $8,000–$12,000 | +0.2–0.4% | ~$3,480* |
| 15% | $90,000 | 85% | $3,500–$6,000 | +0.1–0.2% | ~$3,280* |
| 20% | $120,000 | 80% | $0 | Baseline | ~$3,130* |
Based on approximate rates at February 2026. Repayments include principal and interest on the loan amount only (not capitalised LMI). Your actual rate depends on the lender, your income, and your overall debt position.
5% deposit ($30,000): Very few lenders will touch this for investment property, because most reserve 95% LVR for owner-occupiers. The ones that do consider it charge a higher rate, apply full LMI ($15,000–$25,000+), and have stricter serviceability requirements. LMI at this level can be capitalised into the loan, but that means you’re borrowing $595,000+ on a $600,000 property. Limited options, higher cost.
10% deposit ($60,000): This is where the investment lending market opens up. A solid range of lenders will write at 90% LVR for investors. LMI applies (in the $8,000–$12,000 range) but it’s manageable, especially if you’re using equity from an existing property to fund the deposit. This is the common starting point for investors using equity from an existing home.
15% deposit ($90,000): Reduced LMI. Better rate options. This is a sweet spot for investors who want to get into the market while keeping some cash in reserve for the next purchase. The LMI cost drops significantly compared to 90% LVR.
20% deposit ($120,000): No LMI, competitive rates, wide lender access. If you have the cash or equity, this is the standard recommendation. But waiting an extra two years to save from 10% to 20% can cost you more than the LMI would have, depending on property price growth. More on that below.
Can you buy an investment property with 5% deposit?
Technically, yes. Practically, it’s difficult.
Most lenders cap their investment lending at 90% LVR. The 95% LVR tier exists, but the majority of lenders restrict it to owner-occupier purchases. You’re looking at a small panel of lenders willing to write investment loans at 95%, and they price accordingly.
What you’re actually dealing with at 5% deposit:
- Restricted lender choice. Maybe 5–8 lenders from a panel of 30+. Your broker’s job is knowing which ones are writing at this level right now, because it changes month to month.
- Higher interest rates. Typically 0.5–0.8% above the rate you’d get at 80% LVR. On a $570,000 loan, that’s $2,850–$4,560 per year in extra interest.
- Full LMI. At 95% LVR on a $600K investment property, LMI runs $15,000–$25,000+. Investment LMI premiums are 15–30% higher than owner-occupier at the same LVR.
- Tighter serviceability. Lenders stress-test at a higher buffer rate, so with less deposit you need stronger income to qualify.
When 5% makes sense: You have strong income, a clear investment strategy, and the property’s expected growth would outpace the LMI cost. If your target market is growing at 6–8% per year, waiting 18 months to save more deposit could mean the same property costs $50,000–$70,000 more. In that scenario, $20,000 in LMI is the cheaper option.
When it doesn’t: If the LMI plus the rate premium pushes the property so far into negative gearing that the tax deduction doesn’t cover the gap. Run the cashflow numbers before committing. If the holding cost is crushing your ability to save for the next purchase, a 5% deposit has actually slowed down your portfolio rather than accelerated it.
What about no deposit?
You can’t buy an investment property with literally no money. But you can buy one without using your savings as the deposit, and most PAYG investors who buy their second property do exactly that. Two paths.
Using equity from an existing property
This is how most PAYG investors fund their second property. If you already own a home (or another investment property), the growth in that property’s value creates equity you can access.
We’ll cover the mechanics in detail in the equity section below, but the short version is this: you release equity from your existing property to cover the deposit and purchase costs on the new one. No savings required, but you are increasing the borrowing on your existing property.
Equity release vs cross-collateralisation: Two different ways to access equity. Equity release means topping up your existing loan (or setting up a new split) and taking the funds as cash to use as a deposit. Cross-collateralisation means using both properties as security for the investment loan.
Most brokers, us included, prefer equity release. It keeps your loans separate, gives you more flexibility, and avoids a situation where the lender effectively has control over both properties.
Guarantor loans
A family member can go guarantor on an investment property loan, using their property as additional security. This can eliminate the need for a deposit and avoid LMI.
In practice, guarantor loans for investment property are rare. Most lenders restrict guarantor arrangements to owner-occupied purchases. The ones that allow it for investment have strict conditions, usually requiring the guarantor to be a parent and to provide a limited guarantee (typically capped at 20% of the property value plus costs).
It’s worth asking about, but don’t plan around it unless your broker has confirmed a lender will approve the arrangement for your situation.
How does LMI work for investment property?
Lenders Mortgage Insurance protects the lender if you default on the loan and the property sells for less than the outstanding balance. It doesn’t protect you. But you’re the one who pays for it.
LMI is triggered when your Loan-to-Value Ratio exceeds 80%. The higher the LVR, the higher the premium.
The investment property catch: LMI premiums are higher for investment property than owner-occupied at the same LVR. The LMI providers view investment lending as higher risk, so they price accordingly. Expect to pay 15–30% more than an owner-occupier at the same deposit level.
Approximate LMI costs for a $600,000 investment property
| Deposit % | LVR | Loan amount | Approx. LMI (investment) |
|---|---|---|---|
| 5% | 95% | $570,000 | $15,000–$25,000 |
| 10% | 90% | $540,000 | $8,000–$12,000 |
| 12% | 88% | $528,000 | $5,500–$8,500 |
| 15% | 85% | $510,000 | $3,500–$6,000 |
LMI varies by lender and LMI provider (Helia or QBE). These are approximate ranges for a standard investment purchase. Your broker can get an exact quote.
Upfront or capitalised? You can pay LMI as a lump sum at settlement or capitalise it into the loan. Capitalising means you borrow the LMI cost on top of the property loan, which increases your total debt and your repayments but means you don’t need extra cash at settlement. On a capitalised $10,000 LMI premium at 6.2% over 30 years, you’ll pay roughly $12,200 in interest on top of the LMI itself.
Tax treatment: LMI is a borrowing expense for investment property. You can claim it as a deduction over five years (or the loan term, whichever is shorter). On a $10,000 LMI premium, that’s a $2,000 deduction each year for five years. At a 37% marginal tax rate, that’s $740 back per year.
When paying LMI makes strategic sense: If the alternative is waiting 12–18 months to save a bigger deposit, and property prices in your target market are growing 5–8% annually, the LMI cost may be less than the price growth you’d miss. On a $600,000 property growing at 6%, that’s $36,000 in a year. Compare that to $10,000 in LMI.
The numbers usually favour moving sooner, though it’s not a given. Markets don’t always go up. Run the scenario both ways.
Using equity from your home as a deposit
If you already own property, this is the most common path to buying an investment property, and the reason so many investors say they bought with “no deposit.”
How to calculate your usable equity
Usable equity = (Current property value x 0.8) - Existing loan balance
Most lenders will lend up to 80% of your property’s value without triggering LMI. The difference between 80% of the value and what you owe is the equity you can access.
Worked example:
- Home current value: $800,000
- Existing home loan: $400,000
- 80% of value: $640,000
- Usable equity: $640,000 - $400,000 = $240,000
That $240,000 can cover the deposit on an investment property and the purchase costs (stamp duty, legals, inspections). On a $600,000 investment property with a 20% deposit, you’d need roughly $120,000 for deposit plus $25,000–$35,000 for costs. Total: $145,000–$155,000. Plenty of room within $240,000 of equity.
How you actually access the equity
Two main options:
1. Top up your existing home loan. Your lender increases your home loan limit and you draw down the additional funds. These funds go into a separate split, labelled for investment purposes, so the interest on this portion is tax-deductible.
2. Set up a separate equity release loan. A new loan facility, secured against your home, specifically for the investment deposit. This keeps the paperwork clean and avoids mixing funds.
Either way, you’re increasing the debt on your home. That’s the trade-off. You’re using your home’s growth to fund the next investment without dipping into savings.
A note on valuations: Your usable equity depends on the current value of your property, not what you paid for it. Lenders will order a valuation (desktop or full) to confirm the figure.
If you believe your property has grown, talk to your broker about getting an updated valuation before assuming you have enough equity. Bank valuations can come in conservative.
What else do you need beyond the deposit?
The deposit is the biggest number, but it’s not the only cost. Budget for these on top.
Stamp duty (transfer duty)
This is the largest additional cost. It varies by state, and there are no concessions for investors. You pay the full rate.
On a $600,000 investment property:
| State | Approximate stamp duty |
|---|---|
| NSW | ~$21,400 |
| VIC | ~$31,070 |
| QLD | ~$20,025 |
Victoria is notably more expensive due to higher general rates for non-principal-place-of-residence purchases. Check the NSW Revenue, VIC SRO, or QLD Revenue offices for exact calculations based on your purchase price.
Other purchase costs
| Cost | Typical range |
|---|---|
| Conveyancing / legal fees | $1,500–$3,000 |
| Building and pest inspection | $500–$800 |
| Loan application / establishment fees | $0–$600 |
| Title search and registration | $200–$400 |
| Strata / body corporate search (if applicable) | $200–$350 |
Total cost rule of thumb
Deposit + 5–6% of the purchase price covers deposit and all costs.
On a $600,000 investment property with 20% deposit in NSW, you’re looking at roughly $120,000 deposit plus $30,000–$36,000 in costs, which adds up to $150,000–$156,000 total outlay. In Victoria, bump that costs estimate up to $37,000–$40,000 because of the higher stamp duty.
Always confirm exact costs with your conveyancer and broker before signing a contract. A shortfall at settlement is one of the more painful problems to solve.
How deposit size affects your borrowing capacity
A common misconception: “If I save a bigger deposit, I can borrow more.” Not exactly.
Borrowing capacity is primarily driven by your income, existing debts, living expenses, and the lender’s serviceability buffer (currently 3% above the actual rate, in line with APRA’s lending standards). Your deposit size doesn’t directly increase what a lender will approve you for.
But deposit size affects capacity in indirect ways.
Interest rate effect. A lower LVR typically gets a lower rate. A lower rate means the same income services a larger loan under the lender’s stress test. The difference between a 90% LVR rate and an 80% LVR rate (say 0.3%) can shift your maximum borrowing by $15,000–$25,000.
LMI capitalisation. If you capitalise LMI into the loan, that increases your total debt. More debt means less borrowing capacity for the next purchase. A $10,000 capitalised LMI on a $600,000 property might reduce your capacity for property number two by $40,000–$50,000 depending on the lender’s assessment.
Portfolio thinking. This is where deposit strategy becomes investment strategy. If you’re planning to buy one property, the simplest path wins: save 20%, avoid LMI, get competitive rates. But if you’re thinking about building a portfolio over the next 5–10 years, holding cash back from property one to fund property two sooner can generate better total returns than over-depositing on a single purchase.
Take a worked comparison. Putting 20% ($120,000) into one property versus putting 10% ($60,000) into one property and holding $60,000 for the next deposit.
The second scenario gets you into two properties faster, but you pay LMI on the first and your cashflow is tighter. The right call depends on your income, your risk tolerance, and your timeline.
This is the kind of modelling a broker should be doing for you. Not just finding the rate, but mapping the structure across your next two or three purchases.
Frequently asked questions
How much deposit do you need for an investment property in Australia?
Most lenders require 10–20%. On a $600,000 property that’s $60,000 at 10% or $120,000 at 20%. A 20% deposit avoids LMI and gets competitive rates. Some lenders accept 5% ($30,000) for investment property, but with higher rates, full LMI, and a much smaller pool of lenders willing to write at that level.
Can you buy an investment property with 5% deposit?
Yes, but most lenders won’t do it for investment, only owner-occupied. A small number of lenders will consider 95% LVR for investors. Expect a restricted lender panel, rates 0.5–0.8% higher than standard, and LMI of $15,000–$25,000+ on a $600,000 purchase. It works for investors with strong income who want to move fast, but the premium is real.
Can you buy an investment property with no deposit?
Not with zero funds, but you can buy without using cash savings as your deposit. The most common path is using equity from an existing property. If your home is worth $800,000 with a $400,000 loan, you have roughly $240,000 in usable equity, which is enough to cover the deposit and costs without touching your savings account. Guarantor loans are another option, though most lenders restrict these to owner-occupied purchases.
What is the minimum deposit for an investment property?
The absolute minimum is 5%, accepted by a handful of lenders. The practical minimum is 10%, which opens a reasonable range of options. The recommended minimum is 20%, which avoids LMI and gives you competitive rates. Your minimum depends on your income, your equity position, and whether paying LMI makes strategic sense for your timeline.
Do you need 20% deposit for investment property?
No, you can buy with less. But 20% is the threshold that removes LMI and unlocks the lowest rates. The question is whether waiting to reach 20% costs more than the LMI would have. If property prices rise 6% in the year you spend saving, you’ve lost $36,000 on a $600,000 property. Sometimes moving at 10% with $10,000 in LMI is the better financial decision.
How does LMI work for investment property?
LMI (Lenders Mortgage Insurance) protects the lender if you default. It applies when your deposit is below 20%. For investment property, LMI premiums are 15–30% higher than owner-occupier rates at the same LVR. On a $600,000 investment with 10% deposit, expect $8,000–$12,000. You can pay it upfront or add it to the loan. For investment properties, LMI is tax-deductible as a borrowing expense over five years.
Can I use equity from my home as a deposit?
Yes. This is the most common way existing homeowners fund an investment property purchase. Calculate your usable equity as (property value x 0.8) minus your current loan balance. Example: an $800,000 home with a $400,000 loan gives you $240,000 in usable equity. Your broker can set up an equity release (a separate loan split secured against your home), and those funds become your deposit and cover your purchase costs. Refinancing your investment property can also free up equity from an existing investment for the next purchase.
Next steps
The deposit number depends on your situation. If you own property with equity, you may already have enough to move. If you’re saving from scratch, 10% gets you in the door with most lenders, and sometimes that’s the right call over waiting for 20%.
What matters more than the deposit itself is how it fits into your broader strategy. What rate will you get? How does LMI affect your total cost? Does this deposit level leave you with enough capacity for the next property?
These are the questions a broker should answer before you commit to a number. Not just “what’s the minimum” but “what’s the smartest structure for where you want to be in five years.”
Want to know exactly where you stand? Get your numbers from Approov. We’ll map your equity position, model the deposit scenarios, and show you what each option means for your borrowing capacity and cashflow, this property and the next one.