How much deposit do you need to buy an investment property?

For success in the investment property market, one must have a solid understanding of key financial components, particularly the deposit required to reserve an investment property. This deposit plays an important role in the buying process, impacting loan alternatives, interest rates, and the requirement for Lenders Mortgage Insurance (LMI). 

LMI is insurance that borrowers purchase to shield the lender in the event that they miss payments on their loans. For loans requiring less than a 20% down payment, this is usually necessary.

To avoid paying LMI, the normal deposit required in Australia is 20% of the property’s worth, though possibilities might vary according to the lender, the investor’s financial situation, and the type of property. Leveraging equity from current assets and the deposit’s impact on lending terms are two significant concerns.

The purpose of this discussion is to give investors the information they need to make wise choices by matching deposit considerations to their investment objectives and financial capacity.

The fundamentals of deposit calculation

When purchasing an investment property, the buyer’s initial payment to secure the property is referred to as a deposit. 

It’s basically the portion of the entire purchase price that you pay up front; a mortgage usually covers the remaining amount. Lenders require deposits as a safeguard against default and as an indication of good faith. It shows the buyer’s commitment and sound financial standing.

Standard deposit rate - the 20% benchmark

In Australia, a 20% down payment on the purchase price of an investment property is the standard protocol. By using this benchmark, the lender can avoid LMI, an insurance policy that guards the lender in the event that the borrower defaults on the loan. 

For instance, if the investment property is valued at $500,000, a 20% deposit would amount to $100,000. The formula to calculate the deposit is straightforward: 

$500,000 (property value) x 20% (deposit percentage) = $100,000 (deposit amount).

Alternatives for those unable to meet the 20% threshold:

For potential investors unable to meet the 20% deposit requirement, there are alternatives:

Low-deposit options

Low-deposit loans are an alternative for investors who are unable to offer the required 20% down payment. These loans may only need 10% of the property’s worth as an upfront payment. Although this can make it simpler to enter the real estate market, it frequently requires the purchase of LMI, which raises the loan’s total cost.

For instance, a $500,000 property with a 10% deposit would mean a $50,000 initial payment but incurs additional LMI fees.

Utilizing equity from existing properties

Equity, which is your property’s value less the amount owed on your mortgage, can be a useful instrument for funding additional investments. 

The equity in an investor’s $600,000 property is $300,000 if they owe $300,000 on their mortgage. That comes to $480,000 ($600,000 * 80%) if the lender allows borrowing against 80% of the property’s worth. 

This amount is reduced by the remaining mortgage ($300,000), leaving $180,000. This is the investor’s usable equity that they may use for additional investments or other uses.

By using this equity as a deposit for the purchase of a different property, one investment can be leveraged to fund another.

Strategic planning in property investment

Selecting the ideal investment property involves more than simply leveraging equity or locating low-deposit options. It involves a thorough approach that considers the investor’s long-term objectives, current market conditions, and the growth and rental return potential of the property.

This planned strategy should take into account the implications of various financing alternatives, such as how employing equity can effect your financial situation and how Loan-to-Value (LVR) can affect your investment.

Every choice you make, whether it’s to use low-deposit choices, leverage equity, or comprehend LVR, is important for developing a profitable investing strategy.

Investment Property

Beyond the deposit: other financial considerations

Significance of upfront costs

Investors need to budget for substantial upfront expenses, which can add thousands to the original investment, such as stamp duty, legal fees, and inspection costs, in addition to the deposit. For instance, depending on the city, stamp duty might vary from 1.5% to over 6% of the acquisition price of the property, which has a big impact on the total cost of the investment.

Understanding borrowing power

The amount that can be borrowed and, thus, the size of the deposit are directly influenced by one’s borrowing capacity, which is determined by lenders using information about income, debts, expenses, and credit history. 

Strong financial standing and a high salary, for example, can boost borrowing power and enable a larger loan, but they may also require a greater deposit to maintain an ideal LVR and prevent LMI.

Impact of cash flow and ongoing property expenses

The cash flow of the investment is impacted by ongoing costs including property insurance, maintenance, council rates, and property management fees. 

For the investment to remain sustainable and to have a positive cash flow, these costs must be managed effectively. 

For example, a property with a high rental yield but high recurring costs might not be as profitable as first thought.



With $65,000 in savings or equity, you can begin or grow your investment portfolio with high-growth properties in Australia's strongest property markets.

Leveraging professional advice in your investment journey

The value of expert consultations

Engaging with financial planners, mortgage brokers, and real estate experts provides invaluable insights that can significantly impact the success of your investment. We at The Investor’s Agency can help you secure a loan with terms that match your financial capabilities and investment objectives, potentially saving thousands in interest over the loan’s life.

Tailoring advice to your needs

Since every investor’s circumstances are different, they should all receive customised advice that takes into account their investment objectives, risk tolerance, and financial condition. Financial planners can design customised plans that support your long-term goals, whether they involve earning rental income or increasing capital through appreciation. This customised method guarantees the sustainability and strategicity of your investment choices.

Refining your investment plan

Expert advice can improve your entire investing planning and deposit strategy. For example, knowing how various loan-to-value ratios (LVRs) affect your borrowing expenses can have an impact on the amount of your deposit. In order to maximise tax advantages and raise your return on investment, the Investor’s Agency can also offer advice on how to structure your investment.

Closing Thoughts

Buying an investment property involves more than just acquiring a home; it also involves incorporating this important financial choice into a larger financial strategy. 

The knowledge and experience of tax experts, financial consultants, and real estate brokers guarantees that every facet of your investment—from the first deposit to continued management and the final sale—is tactically coordinated with your overall financial objectives.

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Gemma Kim
Gemma Kim
We worked with TIA to purchase our first investment property. We were a bit nervous to take the leap initially. However, the team were so helpful and supportive throughout the whole process. The process was clear and informative at every step. The team were readily available to answer questions. Thanks to the team and their expertise we have walked away with an incredible investment property which is already showing signs of return and growth after a very short period of time. We have full confidence in TIA and we look forward to working with them again for the next investment opportunity.
Yechan Kim
Yechan Kim
Amazing service and attention to detail from the entire team. We managed to secure a fantastic investment property as a great price. The research, information, communication is levels above other buyer's agents. Will be coming back for 2nd and 3rd properties.
Noah Chen
Noah Chen
Absolutely elated to choose The Investors Agency as my buyers agent. I have bought 2 properties with The Investors Agency, first one with Bobby in 2020 and second time with Mitch & Mike in 2024. I came back because of the strong results with my first property and also the service the team provided. TIA always made me feel comfortable with decisions and always informed and work hard to get the best deal which suit our investment needs. Their process and technology is top-notch and makes the investment property purchasing journey very stress free all the way to post-settlement. I found the value of TIA as my buyers agent through off market deals, time-savings, a deep understanding of growing markets and the detail of property inspections/information for an interstate property. I will definitely recommend building your investment property portfolio with TIA as it’s been a great journey for me.
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Eric Marchant
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Noa Lamm
Noa Lamm
We're thrilled to share our positive experience with The Investors Agency. When we were searching for an investment property in Perth, they proved to be the perfect partner for us. From the outset, The Investors Agency demonstrated professionalism, attentiveness, and a deep understanding of the real estate market. They listened carefully to our investment goals and worked tirelessly to find us a property that aligned perfectly with our objectives. Throughout the process, The Investors Agency was incredibly responsive and organized, making the entire purchasing experience smooth and efficient. Their attention to detail and commitment to excellence were evident every step of the way, making us feel confident and supported throughout the journey. Thanks to The Investors Agency's expertise and dedication, we were able to secure a beautiful property that has already shown promising signs of appreciation in value. Their insight into market trends and investment opportunities was invaluable, and we couldn't be happier with the outcome. We highly recommend The Investors Agency to anyone looking to invest in real estate. Their professionalism, integrity, and exceptional service make them a standout choice in the industry. Thank you, The Investors Agency, for helping us achieve our investment goals in Perth.
Tiyanah Doyle
Tiyanah Doyle
I had such a great experience working with the investors agency, Mitch made my first investment property purchase so easy. Mitch had really great communication and was always available via text/call/email. As it was my first property purchase I felt supported and guided by their expertise and everything is presented in a user friendly way. I would definitely recommend the investors agency and would use them again. They also mortgage broker who is excellent.
Natasa Igrac
Natasa Igrac
We had a great experience working with the TIA team in helping us secure our 1st investment property. It was a very smooth process! The team was always there to answer all questions that we had along the way. We are definitely looking forward for our next investment property with them and we can't recommend them highly enough to anyone looking for a knowledgeable and supportive buyers agency.
Greg Kite
Greg Kite
We have just settled our first property with the guidance of The Investors Agency. The process was smooth and transparent from our initial enquiry to final handover. The Investors Agency made recommendations when required and everyone involved was professional and valuable. A big thanks to James and the whole TIA team..... Where are buying the next one guys?
Eva den Haan
Eva den Haan
The Investors Agency has been super helpful with the purchase of my first investment property. They did all the hard work and communicated with all relevant parties on my behalf, while still making sure I was constantly up to date with the latest developments. The whole process felt very personal and I would highly recommend the team to anyone looking to buy an investment property.
Vicki Milekovic
Vicki Milekovic
We’ve had such a great experience! From start to finish the investors agency has been so helpful and responsive. They have gotten us exactly where we want to be and made the process so easy. We look forward to our ongoing investing journey with them!


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