What Is the Minimum Deposit Required for an Investment Property Loan in Australia?
There's no legislated minimum deposit for an investment property loan. Here's how LVR, LMI and lender policy set the amount you need.
What is the minimum deposit required for an investment property loan?
There’s no law that sets a minimum deposit for an investment property loan in Australia. Deposit size is a lending decision each bank or lender makes on its own, inside the same national responsible-lending and prudential rules that apply to owner-occupier home loans.
In practice, most lenders work around one widely used benchmark: a deposit of 20% of the property’s value, which keeps your borrowing at 80% loan-to-value ratio (LVR) or below. Moneysmart’s general guidance is that once you borrow above 80% of a property’s value, you may need to pay Lenders Mortgage Insurance (LMI) — and nothing on that page carves out a different, lower threshold for investment loans. So 20% is less a rule and more the point past which most lenders start requiring insurance on top of the loan.
Smaller deposits do exist. Some lenders will approve an investment loan above 80% LVR with LMI in place. Exactly how far below 20% a given lender will go, and on what terms, is that lender’s own credit policy — there’s no published, market-wide figure for a “true minimum” below 20%, so treat any number smaller than that as a question for a specific lender or mortgage broker, not a fixed industry figure.
What is loan-to-value ratio (LVR), and why does 20% keep coming up?
Loan-to-value ratio (LVR) is the portion of a property’s value you’re borrowing, expressed as a percentage.
LVR = loan amount ÷ property value × 100
Your deposit is the flip side of that number: deposit percentage plus LVR always add up to 100%. A 20% deposit is an 80% LVR. A 10% deposit is a 90% LVR.
The table below is illustrative only — it uses a round, hypothetical property value purely to show the arithmetic, not a typical or average property price.
| Deposit | LVR | Loan amount (hypothetical $500,000 property) | LMI generally required? |
|---|---|---|---|
| 20% ($100,000) | 80% | $400,000 | Generally not, right at the 80% line |
| 15% ($75,000) | 85% | $425,000 | Likely, above 80% LVR |
| 10% ($50,000) | 90% | $450,000 | Likely, above 80% LVR |
The lower your deposit, the higher your LVR, and the more of the property the lender is exposed to if it ever had to sell it to recover the loan. That exposure is what LMI and lender risk policies are pricing for.
Does Lenders Mortgage Insurance work the same way for investors as for owner-occupiers?
As far as the published trigger goes, yes. Moneysmart’s wording — “if your LVR is above 80%, you may need to pay lenders mortgage insurance” — isn’t qualified by owner-occupier or investor status; it’s stated as a general rule. Lenders Mortgage Insurance protects the lender, not you, if you default and the sale proceeds don’t cover the loan.
What isn’t published anywhere authoritative is a premium figure — for investors or owner-occupiers. Moneysmart doesn’t quote LMI costs, and premiums depend on your lender, your LVR, your loan size and your insurer. If you want an indicative number for your own numbers, an insurer’s own estimator (for example, Helia’s LMI fee estimator) will give you a figure based on the inputs you enter — treat it as a tool for your specific scenario, not a published market rate.
Why do lenders want a deposit at all, beyond avoiding LMI?
Deposit size is only one part of getting an investment loan approved. Lenders also have to assess whether you can actually service the debt, and that assessment sits inside a broader framework than the deposit alone.
A few pieces of that framework are published and worth knowing:
- Responsible lending obligations apply to investment loans, not just owner-occupier ones. ASIC’s guidance (RG 209) confirms the consumer credit regime covers “residential investment property” credit alongside home loans — lenders must make reasonable inquiries and assess whether you can meet repayments without substantial hardship.
- A serviceability buffer sits on top of the actual rate. APRA’s prudential framework requires ADIs to apply an interest-rate buffer of at least 3.0 percentage points over a loan’s rate when testing whether you can afford it, applied to new and existing debt together — not just the loan you’re applying for.
- Expected rental income is discounted, not counted in full. APRA’s guidance describes a minimum 20% haircut on expected rental income as prudent practice when a lender is assessing serviceability, on the view that rental income is less certain than a salary.
None of this changes the deposit percentage itself — but it explains why a bigger deposit alone doesn’t guarantee approval, and why two lenders can reach different answers for the same borrower. Those settings are the same prudential and responsible-lending framework that applies to owner-occupier loans; there’s no separate rulebook for investors, only a different purpose-test category under the National Credit Code.
How a lender treats the rental income itself is a different question from how you’d calculate a property’s own yield for your own comparison — our guide to gross vs net rental yield covers that formula separately.
Where does deposit money actually come from — cash, or equity?
Most investors fund a deposit one of two ways: cash savings, or equity drawn from a property they already own.
Using equity means the new loan is effectively secured, in part, against your existing property as well as the one you’re buying — sometimes structured so both properties sit behind one facility, known as cross-collateralisation. That’s a lending structure where two or more properties are used together as combined security for one loan or a group of linked loans, rather than each property securing its own separate, stand-alone loan.
Linking properties this way can make it harder to sell, refinance or discharge one property in isolation later, because the lender’s security spans more than one asset. Exactly how a particular lender structures this, and what it would mean for your situation, depends on the loan and the lender — it’s worth asking a mortgage broker or lender directly how a proposed structure would work before you commit to it, rather than assuming every lender handles it the same way.
Is an investment property loan regulated any differently to a home loan?
Investment loans and owner-occupier loans sit inside the same overarching regulatory and prudential system in Australia. The National Credit Code captures them through separate legal categories rather than separate regimes: owner-occupier borrowing for “personal, domestic or household purposes,” and investment borrowing “to purchase, renovate or improve residential property for investment purposes.” Both categories are generally regulated credit, and both attract the same responsible-lending obligations under ASIC’s framework.
Individual lenders do set their own policies within that shared framework — including their own view on maximum LVR for investment loans, their own pricing, and their own serviceability rules. Those specifics vary between institutions, which is exactly why there’s no single market-wide “minimum deposit” number lower than the 20%/80% LVR benchmark that this article can state as fact.
Where to check current requirements before you apply
Deposit requirements, LVR policies and LMI thresholds can differ between lenders and can change. Before you rely on any figure for your own situation:
- Check Moneysmart’s guidance on saving for a house deposit for the general, government-run consumer explanation of LVR and LMI.
- Read the responsible-lending obligations lenders operate under in ASIC’s Regulatory Guide 209.
- Speak with a mortgage broker or your own lender for the deposit and LVR policy that actually applies to your loan — general guidance like this can only describe the framework, not any one lender’s current settings.
Quick answers
Is there a legal minimum deposit for an investment property loan? No. No legislation fixes a minimum deposit — each lender sets its own policy inside the same national responsible-lending and prudential framework that applies to owner-occupier loans.
Do investors need a bigger deposit than owner-occupiers? The published 80% LVR / LMI trigger on Moneysmart applies without an owner-occupier qualifier. Any additional investor-specific LVR limits are set by individual lenders, not published as a single market-wide rule.
Can you use equity instead of cash for an investment property deposit? Many investors do draw on equity in an existing property. Doing so can involve cross-collateralisation — linking properties as shared security — which is worth discussing with a mortgage broker before you commit to a structure.
If a full cash deposit feels like the main barrier to investing at all, it’s worth knowing that a lump-sum deposit and a mortgage aren’t the only way into residential property — our pillar guide to what property investment in Australia involves covers the different ways people build exposure to property, including fractional models that don’t require a bank loan or a traditional deposit. And once a property’s finance is sorted, how the loan repayments stack up against rental income is what determines whether it runs cash flow positive or negatively geared — a separate question from the deposit itself, but usually the next one investors ask.
Disclaimer
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