9 June 2026 * 5-minute read

In common with many ambitious Aussies, you may be looking to buy an investment property. It’s a popular way to potentially generate income while seeking capital growth.

For many aspiring investors, one of the first questions asked is ‘how much deposit do I need for an investment property?’

This article explains the typical deposit requirements – which are generally 20% of the property value – and how lenders assess your borrowing position before offering you a loan. It also breaks down some of the upfront costs you’ll need to consider, touches on Lenders Mortgage Insurance – which may be a way to reduce the size of your deposit – and covers pathways you may wish to consider for both raising the deposit and choosing the type of loan that matches your financial situation and investment goals.

Whether you’re a first-time investor or expanding your property portfolio, understanding all the options and strategies could help you move forward with confidence and secure the right property sooner.

Key take-outs

• Lenders generally expect you to have a deposit amount of at least 20% of the investment property value
• You may be able to reduce the investment property deposit requirement by paying for Lenders Mortgage Insurance
• Other upfront costs need to be considered when calculating how much deposit you can afford.

What deposit do I need when buying an investment property?

The first thing you’ll need for any property purchase is a lump sum to cover the deposit required by the vendor and lender.

While you may only have to pay 10% or less on the spot when making a successful bid or offer, lenders generally require you to have a minimum deposit of 20% of the property purchase price. However, you may be able to reduce this percentage requirement by paying for Lenders Mortgage Insurance – which we’ll cover later.

You’ll also need to demonstrate to the lender that you have the means to cover the mortgage payments on the outstanding 80% of the purchase price.

EXAMPLES OF 20% DEPOSITS:

$500,000 property: $100,000 deposit ($400,000 loan)

$750,000 property: $150,000 deposit ($600,000 loan)

$1,000,000 property: $200,000 deposit ($800,000 loan)

$1,500,000 property: $300,000 deposit ($1,200,000 loan)

You can, of course, pay more than a 20% deposit if you have the funds. If you do, the lower risk to the lender means you may be able to reduce your home loan repayments by receiving an interest rate discount.

How can I reduce the amount of deposit I have to pay?

At Westpac, we’re keen for our customers to enjoy the satisfaction and stability of owning their own homes. Equally, we’re ready to support those who wish to venture further into the property market by buying an investment property.

If you apply for a loan with us, we may agree to a lower percentage of deposit if you pay for Lenders Mortgage Insurance (LMI). That’s because it reduces our risk should problems occur paying back the outstanding loan balance.

Say, for example, you want to buy a $1 million investment property, but you’ve only saved $100,000 for a deposit – which is just 10%. If you can demonstrate you can afford to pay off a loan of $900,000, LMI may enable us to lend you what you need.

How can I raise the funds for my investment property deposit?

Perhaps the most traditional way to raise funds for a deposit is disciplined saving. This may involve setting a clear target, reducing discretionary spending, and using high-interest savings accounts or offset accounts to potentially accelerate progress. Saving may take time, but it has the advantage of showing lenders that you have a good attitude to financial management.

Or, you may have received a financial boost through an inheritance. The funds received may cover part or all of the required deposit, though it’s important to consider tax implications and seek professional advice before committing these funds.

Three other options for some or all of your deposit are:

1. Access your home equity

If your home has increased in value, you may be able to tap into the equity you’ve accrued to help pay for your deposit. The equity in your home is its current value minus the amount left on your home loan. Most lenders will generally allow you to access and borrow against what’s called your usable equity, which is typically 80% of the equity.

Read How to use your home equity to buy an investment property; and get an estimate of your usable home equity using our home equity calculator.

2. Have a guarantor

If members of your immediate family are willing and can demonstrate a strong financial position, they may consider acting as a guarantor for your deposit and loan. That would require them to put up a part of their home as security for your loan, so it does carry a risk for them.

As guarantor loans are risky for the lender too, some will only offer them on a limited basis. Learn about the Westpac Family Security Guarantee.

3. Buy an investment property through your self-managed super fund

If you have a self-managed super fund or SMSF, you may be able to use it to buy an investment property, though strict rules apply – as set out by the Australian Taxation Office (ATO). Read about ATO SMSF rules here.

A key requirement is that the property is purchased solely to provide you with retirement benefits, or to pay death benefits if a member dies before retirement. It must have been bought at market value and generally cannot be lived in by you or family members. Plus, all expenses must be paid from the SMSF, and rental income must flow back into the fund.

Due to the complexity and compliance requirements of purchasing property through an SMSF, it’s essential to seek professional advice before doing so. It’s also worth noting that not all lenders offer SMSF property loans. Lending criteria, deposit requirements and interest rates may differ significantly from standard loans.

What other upfront funds will I need to buy an investment property?

In addition to paying a deposit at the time of purchase, allow for costs such as:

• Stamp duty – which can’t be paid out of your home loan.
• Government charges – including Transfer Duty, the Mortgage Registration Fee and a Land Transfer fee, if applicable.
• Solicitor or conveyancer – including legal fees for an initial review of the Contract of Sale plus the full process to settlement.
• Building reports and pest inspections – carried out before you buy.

You’ll also need to consider the ongoing costs of insurance, maintenance costs, legal costs setting up a lease agreement, strata fees, and a property manager if you need one plus other property management fees.

Our cost calculator can help you estimate some of these expenses.

How much can I borrow to buy an investment property?

Moving on from the deposit requirements, two main factors come into consideration when a lender is assessing how much you can borrow to buy an investment property. The property’s loan to value ratio (LVR) and your ‘borrowing power’.

1. What is loan to value ratio?

LVR is the percentage of a property’s value that’s covered by the loan being applied for. It's an indication of how much risk the lender is taking in lending to you. LVR is calculated by dividing the loan amount by the bank's valuation of the property, then multiplying by 100.

So, for example, if you want to buy a $1,000,000 property with a deposit of $200,000, you'll need to borrow $800,000 and the LVR is 80%. Alternatively, if you have a $400,000 deposit, you’ll only need to borrow $600,000 and your LVR drops to 60%.

A lower LVR means your loan carries a lower risk, which may prompt your lender to offer you lower interest rates. Conversely, the higher your LVR, the higher the risk to the lender should there be a problem with loan repayments – which may require you to pay the Lenders Mortgage Insurance we explained earlier.

2. What is borrowing power?

Even if a lender is comfortable with the LVR, they’ll still need to be sure you have the ‘borrowing power’ to repay the loan you’ve requested on top of the interest payments on any existing home loan and other debts. To do this, a lender might need proof of how much you earn, what you spend, and how much debt you already have – to provide them with ‘repayment certainty’.

Here are some ways to potentially increase your borrowing power:

• Lower your credit card spending limits and cancel cards you don’t need
• Pay off money you owe, such as a personal loan
• Keep a good credit score and pay bills on time to demonstrate sound cash flow
• Split your liabilities with a partner if you’re borrowing on your own
• Save money to show a good savings history.

The same tips apply whether you're applying for a new loan or seeking to refinance your existing owner occupier loan in support of your investment.

Our helpful tools could simplify your finance planning:

• Affordability calculator
• Borrowing power calculator
• Repayment calculator

Whenever calculating how much you can afford to borrow, remember to allow for potential changes in mortgage repayments such as when a fixed rate period ends or interest rate rises occur. Interruptions to your passive income including changes to rental yield (due to periods of unoccupancy) should also be considered.

What type of mortgage can I get for my investment property?

Westpac offers property investors a choice of loans designed to satisfy a variety of financial goals. The type of loan you choose may depend on your individual investment strategy and attitude to interest repayments.

For our lowest online variable rate along with other options such as fixed rate loans and variable loans with offset, please visit our Investment property loans and rates page.

How do I apply for an investment property loan?

With Westpac, you have four ways to apply for a loan and ultimately receive pre-approval:

1. Apply online – it takes around 20 minutes to complete an online application.
2. Request a call back – use our online form and a loan specialist will call you back to help with your application.
3. Use a Westpac-affiliated mortgage broker – who will guide you through your application and answer any questions.
4. Apply in-branch – using our branch locator to find your closest.

Having sufficient funds for your deposit is just the start of the property investment journey. There are many strategies, considerations and risks to factor in when investing in property – and Westpac is here to help along the way.

You can find more useful information in our Steps to buying an investment property and Investment property strategies articles.