Investment 2% Deposit Loan, Key Facts
Rates current as at 8 May 2026. Comparison rate based on a $150,000 loan over 25 years. Subject to change and to approval.
How Does a 2% Deposit Investment Loan Work?
2% deposit investment property loans are available at 6.79% p.a. (comparison rate 6.82% p.a., as at 8 May 2026) with no LMI. You can own at most one existing mortgaged property (which must be owner occupied). Maximum property value $3.5M.
A 2% deposit investment property loan uses the same split loan structure as the owner occupier product. Your borrowing is divided into a primary loan (up to 80% LVR) and a secondary loan (covering the remainder up to 98% LVR). Both carry the same variable interest rate of 6.79% p.a. (comparison rate 6.82% p.a., as at 8 May 2026) and the same loan term. LMI is replaced by a capitalised upfront rate reduction fee that is set lower than the equivalent LMI premium.
Investment loans are principal and interest, variable rate only. No fixed rate, interest-only, low doc, or alt doc options are available. Loan terms of 20, 25, or 30 years are available. The primary loan includes a redraw facility and the secondary loan allows unlimited fee-free prepayments.
Investment-Specific Rules
Several additional rules apply to investment property loans compared to owner occupier loans:
Existing Property Holdings
You can own at most one existing mortgaged property at the time of application, and that property must be owner occupied. This means the 2% deposit investment loan suits borrowers who own their home and want to acquire their first investment property, or borrowers who are renting and want to invest (known as rentvesting).
Strata Plan Limits
The investment property must be in a strata plan of 30 dwellings or fewer. In high density postcodes (a defined subset), the strata plan must also be 30 units or fewer, and the purpose must generally be owner occupied at up to 98% LVR, with exceptions required for investment purposes.
Rental Yield and Expense Assessment
How rental income is assessed depends on the stage of the application:
- Pre-approval: a maximum assumed rental yield of 6% applies. Yields above 3% require justification. Assumed property expenses are 10% of gross rental income.
- Unconditional approval: income is based on the rental yield from the short form valuation. Expenses are the greater of 10% of gross rental income or actual strata fees, council rates, and other costs.
Post-Settlement Living Expenses
If borrowers are not paying rent after settlement (for example, if they own their home outright or with a partner), an additional $650 per month in living expenses is assumed in the serviceability assessment.
Income Limitations for Investors
Investment income, superannuation annuity income, and rental income from other properties cannot be used as the primary source of income for the application. Your primary income must come from employment or self-employment. Rental income from the investment property being purchased is shaded at 90% for assessment. For full income details, see income requirements.
Investment property loans may offer tax benefits including potential deductions for interest, depreciation, and property expenses. However, tax outcomes depend on your individual circumstances and the current tax laws. Seek independent tax advice from a qualified accountant before relying on any tax benefit in your investment decision. For general information on investment property tax, visit ASIC MoneySmart.
Rentvesting With a 2% Deposit
Rentvesting, where you rent where you want to live and buy an investment property where the numbers work, is a strategy well suited to the 2% deposit investment loan. Because the deposit required is just 2% of the purchase price, you preserve cash for rent and living expenses while building equity through property ownership. The split loan structure means no LMI, keeping your entry costs lower than a traditional high-LVR investment loan.
If you are currently renting, you do not need to own an existing property to apply. However, if you do own a home, it must be your only mortgaged property, and it must be owner occupied.
What Properties Qualify for Investment?
Acceptable property types for investment include houses, apartments, villas, and townhouses on covered postcodes, with the additional strata limits noted above. Apartments built after 2015 must be six floors or fewer. For buildings of seven or more floors built 2014 or earlier, the loan must be for owner occupation, not investment.
Outer metro postcodes accept freestanding homes and duplexes only. Vacant land and construction loans are not accepted. For the full list of acceptable and unacceptable property types, see what properties qualify. To check whether your target postcode is covered, contact us for a postcode check.
Fees for Investment Loans
- Settlement fee: $395
- Valuation fee: $395
- Discharge fee: $795
- No application, monthly, or annual fees
- Government charges and two mortgage registration fees (dual loan structure) payable by the borrower
- Upfront rate reduction fee capitalised into the loan (varies by price and LVR, set lower than LMI)
For the full fee schedule and rate option details, see rates and fees.
Frequently Asked Questions
Back to 2% Deposit Home Loans hub. See also: owner occupier loans, eligibility criteria, rates and fees.
Last updated: 8 May 2026.
