Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited
How Much Deposit Do You Need for a Sydney Investment Property?
The deposit required for a Sydney investment property depends on your LVR target, whether you're willing to pay LMI, and whether you're using cash savings or equity from an existing property. This guide covers every option.
Most investors I work with use equity from their existing home rather than cash savings for the deposit. It's faster, more tax-efficient (the equity loan interest is deductible), and doesn't require years of additional saving. The equity approach works when you have sufficient equity in your home, typically 20%+ LVR headroom above your existing mortgage.
Standard Deposit Options
20% Deposit, No LMI
The standard benchmark. At 80% LVR, LMI is not required. On an $800,000 investment property: $160,000 deposit from cash or equity. Most lenders accept 80% LVR for investment properties without restrictions.
10% Deposit, LMI Payable
Most lenders will fund investment purchases at 90% LVR with LMI. LMI on investment loans is tax-deductible (spread over 5 years). On an $800,000 property at 90% LVR, LMI is approximately $17,000–$22,000. Deductible at 37%: saves ~$6,500–$8,100 in tax over 5 years, so the net LMI cost is lower than it appears.
5% Deposit: Limited Options
95% LVR for investment purposes is available from a small number of lenders with LMI. Not recommended as a standard approach, high LMI premium, limited lender selection, tight serviceability requirements. Government schemes (First Home Guarantee) do not apply to investment purchases.
Using Equity as the Deposit
If your owner-occupied home has grown in value, you can access equity (to 80% LVR) as a separate loan facility and use those funds as the investment deposit. Key benefits:
- Interest on the equity loan is deductible (funds used for investment purpose)
- No cash savings required, equity is mobilised
- Faster to access than building cash savings
- Cleanly separated from your owner-occupier loan for ATO purposes
Worked Example: Using Equity for Investment Deposit in Sydney
- Your home: $1,500,000 | Existing mortgage: $550,000
- Usable equity (to 80% LVR): $1,200,000 − $550,000 = $650,000
- Investment property target: $900,000
- 20% deposit needed: $180,000
- Equity loan drawn: $180,000 (separate account)
- Investment loan (80% LVR): $720,000
- Total deductible debt: $900,000 ($180K equity + $720K inv. loan)
- Annual deductible interest at 6.59%: ~$59,310
Costs Beyond the Deposit
- Stamp duty (NSW investment property): No first home buyer exemption, full stamp duty applies. On $800,000: ~$31,335
- Legal/conveyancing: $1,500–$3,000
- Building and pest inspection: $500–$800
- Loan establishment fees: Usually waived
- LMI (if applicable): As above
Total purchase costs beyond deposit for an $800,000 investment property in NSW: approximately $35,000–$40,000.
