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

Most investors need a minimum 10–20% deposit to buy an investment property in Australia. On a $600,000 property, that means $60,000–$120,000 in cash or usable equity, plus additional funds for stamp duty and purchase costs. The exact amount depends on the lender, the property type, and whether you want to avoid Lenders Mortgage Insurance (LMI).

The Standard: 20% Deposit

A 20% deposit is the benchmark most experienced investors aim for. At this level, you borrow 80% of the property's value — known as an 80% Loan-to-Value Ratio (LVR) — and avoid paying LMI. This keeps your upfront costs lower and gives lenders more confidence in your application.

On a $600,000 investment property, a 20% deposit is $120,000. Add stamp duty (which varies by state — roughly $20,000–$30,000 in most states at this price point), legal fees, and inspection costs, and your total cash requirement is typically $145,000–$160,000.

The Minimum: 10% Deposit

Most lenders will approve investment loans with a 10% deposit, but you'll pay LMI on the difference. LMI is a one-off premium that protects the lender — not you — if you default. On a $600,000 property with a 10% deposit, LMI can add $10,000–$20,000 to your costs, depending on the lender and loan amount.

Some investors choose to pay LMI to enter the market sooner, particularly if they believe the market will grow faster than they can save. Whether this makes sense depends on your specific situation and the market you're buying in.

Using Equity Instead of Cash

If you already own a property that has grown in value, you may not need cash savings at all. Equity — the difference between your property's current value and your remaining loan balance — can be accessed and used as a deposit for an investment property.

For example: if your home is worth $900,000 and you owe $450,000, you have $450,000 in equity. Most lenders will allow you to access up to 80% of the property's value, minus what you owe. In this case: ($900,000 × 80%) − $450,000 = $270,000 in usable equity. That's enough to fund the deposit on a $600,000–$800,000 investment property without touching your savings.

This is how many experienced investors build their portfolios — using the equity growth from one property to fund the next purchase. It's a powerful compounding strategy, but it requires careful cash flow management to ensure you can service the additional debt.

What Else Do You Need to Budget For?

The deposit is only part of the upfront cost. You also need to budget for:

• Stamp duty — The biggest additional cost. Varies significantly by state and property price. In NSW, stamp duty on a $600,000 investment property is approximately $22,490. In QLD, it's approximately $17,325. Use our stamp duty calculator to estimate your state.
• Legal and conveyancing fees — Typically $1,500–$3,000 for a standard residential purchase.
• Building and pest inspection — $400–$800. Non-negotiable for any investment property.
• Loan establishment fees — Varies by lender, typically $300–$600.
• Cash buffer — Allow for 2–4 weeks of vacancy, initial maintenance, and unexpected costs. A buffer of $5,000–$10,000 is prudent.

As a rule of thumb, budget for purchase costs of 3–5% on top of the purchase price, in addition to your deposit.

How to Work Out Your Number

The right deposit amount for you depends on three things: the purchase price of your target property, the state you're buying in (which determines stamp duty), and whether you want to avoid LMI. Here's a simple framework:

• Step 1: Determine your target purchase price based on your borrowing capacity
• Step 2: Calculate 20% of that price for your deposit target
• Step 3: Add estimated stamp duty for your target state
• Step 4: Add $5,000–$10,000 for legal fees, inspections, and a cash buffer
• Step 5: Check whether you have equity in existing property that can reduce your cash requirement

Frequently Asked Questions

Can I buy an investment property with a 5% deposit?

It is possible but uncommon. Most lenders require at least 10% for investment loans, and a 5% deposit would attract very high LMI premiums. The practical minimum for most investors is 10%, with 20% being the recommended target.

Do first home buyer grants apply to investment properties?

No. First home buyer grants and stamp duty concessions are only available for owner-occupied properties — properties you intend to live in. If you're buying an investment property, standard stamp duty rates apply.

Can I use a guarantor for an investment property?

Some lenders allow guarantor loans for investment properties, where a family member uses equity in their property to guarantee part of your loan. This can help you avoid LMI or access a higher loan amount. Not all lenders offer this for investment purposes — speak to a mortgage broker to explore your options.

How long does it take to save a deposit?

It depends on your income, expenses, and savings rate. For many buyers, the more practical path is to leverage equity in an existing property rather than saving cash from scratch. If you're starting from zero, a realistic savings timeline for a 20% deposit on a $500,000 property (plus costs) is 3–7 years, depending on how aggressively you save.