If your home has grown in value, the equity in it can become the deposit for your first investment, often without touching your savings at all.
One of the most common ways first-time investors get started is the equity they've quietly built up in their own home. Here's what equity is, how to work out how much you can use, and how it turns into your deposit.
What is equity?
Equity is simply the difference between what your home is worth today and what you still owe on it. If your home is worth $800,000 and you owe $400,000, you have $400,000 of equity on paper.
Usable equity is the number that matters
You can't access all of that equity, because lenders keep a margin. As a common rule of thumb, usable equity is around 80% of your home's value minus your current loan:
- Home value: $800,000
- 80% of value: $640,000
- Less your current loan: −$400,000
- Usable equity: about $240,000
The 80% guide is a general benchmark. Your actual usable equity depends on the lender, your income and the property.
How equity becomes your deposit
That usable equity can fund the deposit and the upfront costs (like stamp duty) on your investment, so you may not need cash savings at all.
In practice it usually means a small increase to your home loan (or a separate loan split, a second portion kept apart) that releases the funds, then a second loan for the investment itself. Structured well, the two loans stay cleanly separated, which helps keep your tax position tidy (worth setting up with your broker and accountant).
The things to watch
- Your total borrowings go up, so keep a buffer for rate rises and vacancies
- Your home is used as security, so the investment needs to genuinely stack up
- Loan structure matters for tax: get it set up right from day one
- You still need to service the loan: equity covers the deposit, but your income has to cover the repayments
That last point is key: equity covers the deposit, but you still need the income to service the loan. The two work together.
See what your equity could do
Get an instant estimate of your usable equity with the accessible equity calculator, then we'll work out what it means for your repayments and whether buying now genuinely stacks up, honestly and with no pressure.
Book a free discovery call with Scott, or read about rentvesting, a popular way to put that equity to work.
Frequently asked questions
How do I use equity to buy an investment property?
Lenders let you borrow against the equity in your home, typically up to 80% of its value minus what you still owe, and use that as the deposit and costs for an investment property. It means you can often invest without using cash savings.
Is using equity risky?
It increases your total borrowings and uses your home as security, so it has to be done carefully. The investment should stack up on its own, and you want a buffer for rate rises and vacancies. That's exactly the kind of thing a broker helps you stress-test before you commit.
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.
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