It is one of the first questions every prospective investor asks: how much money do I actually need to get started? The answer is not a single number — it depends on the property price, the lender, your financial position, and the strategy you choose. But understanding the mechanics behind deposit requirements will put you in a far stronger position to plan, save, and act with confidence.
This guide breaks down exactly how deposits work for investment properties in Australia, what Lenders Mortgage Insurance (LMI) means for your numbers, and the realistic paths investors take to enter the market — whether that is through savings, equity, or a combination of both.
The Standard Deposit Requirement: 20%
Most Australian lenders consider a 20% deposit the benchmark for an investment property loan. At this level, your loan-to-value ratio (LVR) sits at 80%, which is the threshold most banks use to avoid charging Lenders Mortgage Insurance.
On a $650,000 investment property, a 20% deposit equates to $130,000. This is in addition to other purchase costs such as stamp duty, legal fees, building and pest inspections, and loan establishment fees — which can add a further 4-6% of the purchase price depending on your state.
Can You Invest With a Smaller Deposit?
Yes. Many lenders will approve investment loans with a deposit as low as 10%, and in some cases lower, depending on the lender’s policies and your financial profile. The trade-off is Lenders Mortgage Insurance, a one-off premium that protects the lender — not you — in the event you default on the loan.
LMI can be a substantial cost. On a $650,000 property with a 10% deposit, LMI premiums typically range from roughly $17,000 to $21,000, depending on the lender and your loan structure. This amount can usually be added to your loan rather than paid upfront, but it does increase your overall borrowing and the interest you pay over time.
Example Deposit & LMI Comparison
Property Price 10% Deposit 20% Deposit Approx. LMI (10% dep.)
$500,000 $50,000 $100,000 ~$13,000–16,500
$650,000 $65,000 $130,000 ~$17,000–21,000
$800,000 $80,000 $160,000 ~$21,000–26,000
Figures are indicative estimates only, based on 2026 market data. Actual LMI premiums vary by lender, loan structure, and individual circumstances. This information is general in nature and does not constitute financial advice.
Weighing Up a Smaller Deposit vs Waiting to Save More
The decision between entering the market sooner with a smaller deposit, or waiting to save a full 20%, depends heavily on your circumstances and the market you are buying into.
In a rising market, the cost of LMI may be outweighed by the capital growth gained from purchasing earlier rather than waiting years to save an additional deposit. In a flatter or declining market, there is less urgency, and building a larger deposit to avoid LMI altogether may be the more conservative approach.
This is precisely the kind of decision where personalised advice matters. The right answer depends on your income, your goals, the property type, and the broader market conditions at the time of purchase.
Using Equity Instead of Cash Savings
If you already own a property, you may not need a cash deposit at all. Many investors use the equity built up in an existing home or investment property to fund the deposit on their next purchase.
Equity is the difference between your property’s current value and the amount you still owe on it. If your existing property has grown in value, or you have paid down a portion of your loan, that equity can often be accessed and redirected as a deposit — without requiring new cash savings.
This strategy is one of the most common ways experienced investors expand their portfolios, as it allows them to grow their holdings without starting the savings process from scratch each time.
What Else You Need to Budget For
Your deposit is only one part of the total capital required to purchase an investment property. Other costs to factor into your planning include:
Stamp duty (varies significantly by state and property value)
Legal and conveyancing fees
Building and pest inspections
Loan establishment and valuation fees
Lenders Mortgage Insurance, if applicable
A buffer for ongoing costs such as council rates, insurance, and property management in the early months
Getting the Numbers Right Before You Buy
Deposit requirements are just the starting point of a much bigger picture — one that includes loan structuring, entity selection, finance strategy, and choosing the right property to support your long-term goals. Getting this foundation right early can save you significant money and stress further down the track.
At Your Property People, we help investors at every stage work out exactly what they need, how to structure their finance, and how to move forward with a clear plan. You can read more about how we support clients through the entire process on our What We Do page.
Ready to plan your next step? Get in Touch with YPP