Question 1: What Deposit Do I Need for an Investment Property?
Here's where investment loans differ from home loans—and it matters.
For an investment property, most lenders want at least 20% deposit. That's a hard line for most banks. Unlike first-home buyer schemes, there's no government backing your investment property purchase.
However—and this is important—some specialist lenders will go lower:
- 10% deposit: Some lenders offer this, but you'll pay Lenders Mortgage Insurance (LMI)
- 5% deposit: A few specialist lenders offer this, but it's rare and usually comes with higher rates and LMI
- 20%+ deposit: Standard for most banks, no LMI required
The golden rule: If you can get to 20%, you avoid LMI altogether. That can save you $15,000–$30,000+ depending on the property value. It's worth the extra effort to get there.
Deposit Table
$500,000 property: 10% = $50,000 | 15% = $75,000 | 20% = $100,000
$700,000 property: 10% = $70,000 | 15% = $105,000 | 20% = $140,000
$1,000,000 property: 10% = $100,000 | 15% = $150,000 | 20% = $200,000
So if you're looking at a $700,000 investment property, a 20% deposit means $140,000. That's substantial, but it saves you LMI and keeps your loan-to-value ratio (LVR) at 80%—the sweet spot for investment loans.
Question 2: How Much Can I Actually Borrow?
This is where it gets interesting, because investment loans work differently from home loans.
Lenders look at several factors when deciding how much to lend you:
Your income and ability to service the loan
Lenders will assess whether you can afford the monthly repayments. But here's the key difference: they count the rental income as part of your income.
Most lenders will add 80% of the expected rental income to your total servicing income. So if your property is expected to earn $400 a week in rent ($20,800 per year), the bank counts about $16,600 of that towards your borrowing capacity.
Your existing debts and expenses
The bank wants to know about your mortgage on your home, credit cards, car loans, personal loans—everything. They'll work out whether you can comfortably manage the investment loan repayment on top of everything else.
Your deposit and equity
The bigger your deposit, the more you can borrow. Most banks will lend up to 80% LVR with 20% deposit, 90% LVR with 10% deposit (with LMI), or 95% LVR with 5% deposit (rare, specialist lenders only).
Real example
Say you want to buy a $700,000 investment property: You save $140,000 (20% deposit), need to borrow $560,000. At current rates (around 6.2% p.a.), your monthly repayment is about $3,500. Expected weekly rent: $350 ($18,200 per year). 80% of rent counted: $14,560 per year (added to your income assessment). Lender assessment: Can you service $3,500/month on top of your existing debts?
Question 3: What Rates Can I Get in 2026?
Investment loan rates are typically higher than owner-occupied home loan rates. That makes sense—the bank is taking on more risk.
As of April 2026, here's what's typical:
Investment Variable (80% LVR): 6.0–6.5% p.a. (Standard rates from major banks)
Investment Variable (90% LVR): 6.5–7.0% p.a. (Higher risk = higher rate)
Investment Fixed (2–5 years): 5.8–6.4% p.a. (Slightly better rates if you lock in)
Specialist Lenders: 5.9–6.3% p.a. (May offer better rates for good profiles)
The difference between 6.0% and 6.5% might seem small, but on a $560,000 loan, it's about $280 a month. Over 25 years, that's nearly $85,000. So shopping around for rates absolutely matters.
Next Steps
Ready to explore your investment options? Call Corry: 0431 988 163 or email corrycincotta86@gmail.com
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