The short version: most first-time investors plan for a deposit of around 10–20%. Weighing the cost of LMI against buying sooner is the real question, and the right guidance makes that call clearer.
You don't need a big deposit to buy an investment property. Many first-time investors buy with around 10% plus costs, or use their own or their parents' equity instead of cash savings. The exact amount depends on your situation and the lender, but a few rules of thumb tell you what to expect.
The 20% deposit (and why it matters)
Lenders measure your loan against the property value using the loan-to-value ratio (LVR). A 20% deposit means an 80% LVR, and 80% is the line where lenders stop charging lenders mortgage insurance (LMI).
- 20% deposit (80% LVR): the classic benchmark, and it avoids LMI
- 10–15% deposit (85–90% LVR): possible with many lenders, though LMI usually applies. For a lot of first-time investors this is a practical middle ground, but whether it suits you depends on your cashflow and goals.
- Less than 10%: harder, and where equity or a guarantor (someone who puts up their own property as extra security) can help. It's a more aggressive play that only works if your budget can absorb the gap when the rent doesn't cover the repayments.
What is LMI, and is it a bad thing?
LMI protects the lender (not you) if you can't repay. It's a one-off cost that kicks in above 80% LVR, and it can run into the thousands. But it's not automatically bad: paying LMI to buy now, while prices and rents keep moving, sometimes beats spending another two years saving for a full 20%. It's a trade-off worth running the numbers on.
Don't forget the costs on top
The deposit isn't the whole story. Budget for the upfront costs too. The full breakdown is in how much it costs to buy an investment property, and the property purchase costs calculator adds them up for your state and price:
- Stamp duty: varies by state and price, often the biggest extra cost
- Legal / conveyancing: usually $1,000–$2,500
- Building & pest inspection: around $400–$800
- Loan and lender fees: application, valuation, settlement
These ranges are a general guide only and vary by state, lender and property. As a rough rule of thumb, budget around 5% of the purchase price for these costs on top of your deposit. We'll map your exact numbers in a free discovery call.
Using equity instead of cash
If you already own a home, you may not need to save a cash deposit at all. As your property's value increases and your loan balance reduces, you build equity. Many lenders allow you to use some of that equity as the deposit for an investment property, meaning you could keep your savings intact while still entering the market.
Equity strategies aren't suitable for everyone, but they're one of the most common ways existing homeowners buy their first investment property. We explain exactly how it works in using your home's equity to invest.
Work out your number
Want a quick, realistic estimate of the deposit and budget for your first property? Try our borrowing-power & deposit calculator, or read up on how much you can borrow next. When you're ready, book a free discovery call and turn the estimates into real figures.
Frequently asked questions
Should I wait until I have a 20% deposit?
Not necessarily. Waiting avoids lenders mortgage insurance (LMI), but it can also mean delaying your purchase while property prices and rents continue to rise. In some situations, buying sooner with a smaller deposit can leave you better off. The right approach depends on your finances, borrowing capacity and long-term goals.
What if I don't have enough saved yet?
Don't assume you're years away from investing. Depending on your circumstances, there may be ways to improve your borrowing position, use existing equity, a guarantor or develop a savings plan that gets you there sooner. Just start the process and speak to an investment-savvy mortgage broker.
Last updated: July 2026
This article is general information only. It doesn't take into account your objectives, financial situation or needs, and it isn't credit, financial or tax advice. Figures are indicative estimates that vary by lender, state and property and can change, so we confirm your real numbers before you act. For tax questions, speak to a registered tax agent or accountant. Scott Lung, credit representative 567904 of Purple Circle Financial Services Pty Ltd (Australian Credit Licence 486112).
5 finance decisions to get right before buying your first investment property
- Build your first investment with a long-term property strategy.
- Understand the finance decisions that shape your borrowing power and future options.
- Make smarter decisions around your deposit, cash flow and loan structure before you sign a contract.
Ready to talk to Scott?
Free discovery call, no obligation. We'll look at your numbers and tell you honestly what your next move should be.
Book a free discovery call