For many Melbourne investors, a 20% deposit is the standard starting point. Some lenders will accept a smaller deposit with lender’s mortgage insurance (LMI), while others may require 30% or more depending on the property and borrower.
And if you already own a home, the deposit does not necessarily have to come entirely from cash savings. You may be able to use some of the equity you have built up in your existing property.
Here’s how the numbers actually work in 2026.
This article is general information only and does not constitute financial, legal or tax advice. We recommend seeking advice from a qualified accountant, solicitor and licensed financial adviser before making any decisions.
How much deposit do I need for an investment property in Melbourne?
Many lenders will approve an investment loan at up to 80% of the property's value, which means providing a 20% deposit. Some lenders may lend above 80% - right up to 98% even or 100% plus costs if additional equity is supplied, although lending criteria will likely become more restrictive and LMI will generally apply.
Investment lending policies vary considerably between lenders, including the maximum loan-to-value ratio (LVR) they will accept and how they assess rental income and servicing.
On Melbourne's median dwelling value of $797,354 for July 2026, a 20% deposit works out to roughly $159,000, according to Cotality.
Houses carry a higher median value at $936,528, pushing the deposit to around $187,000, while units sit lower at $632,021, bringing the amount you need saved down to around $126,000.
Is the deposit the only upfront cost?
Your deposit is only part of the cash you'll need to complete an investment property purchase. You also need to allow for land transfer duty (stamp duty), conveyancing, building and pest inspections and other purchasing costs.
Victoria applies general land transfer duty rates to investment properties. For properties valued between $130,000 and $960,000, the current rate is $2,870 plus 6% of the value above $130,000. That can add tens of thousands of dollars to the upfront cost of buying.
Having a 20% deposit therefore doesn't necessarily mean you have enough to go ahead with the purchase. You also need to cover additional costs and retain an appropriate cash buffer.
Can I use equity instead of a cash deposit?
If you already own a home in Melbourne, you may not need to save the entire investment property deposit in cash.
Equity is the difference between your property's current value and the amount you still owe on it. Depending on your circumstances, some of that equity may be accessible to help fund the deposit and purchasing costs on an investment property.
For established Melbourne homeowners whose properties have grown in value since originally bought, this can make investing possible sooner than saving another six-figure cash deposit from scratch.
How much equity you can actually access will depend on your property's valuation, existing debt, income, expenses and the lender's requirements.
Can I buy an investment property with a 10% deposit?
Some lenders may approve investment loans above 80% LVR, although LMI will generally apply.
LMI is a one-off insurance premium that protects the lender if you default and the sale of the property does not cover the outstanding debt. It does not protect you as the borrower.
The cost generally increases as the LVR rises. LMI can often be added to the loan rather than paid upfront.
So a smaller deposit may allow you to buy sooner, but you'll need to factor the LMI premium and higher loan repayments into your calculations. For an investment property, that can affect cash flow from day one.
What are the interest rates for investors in Melbourne in 2026?
The size of your deposit is only one part of the finance equation. Investment loan interest rates can also vary considerably between lenders and LVR tiers.
According to Canstar, as at mid-August 2026, advertised variable rates for investment loans range from around 5.99% at the lower end to 6.7% or higher from some larger lenders, depending on the loan and borrower.
On a $637,000 loan – an 80% LVR loan against Melbourne's July 2026 median dwelling value – that range works out to roughly $3,815 a month at 5.99%pa, compared with around $4,110 a month at 6.7%pa. That's a difference of close to $295 a month, or $3,540 a year, which is why the lender and rate can matter almost as much as the deposit itself.
Rental income can help offset the cost of servicing the loan. According to Cotality, Melbourne's gross rental yield was 3.9%pa for dwellings in July 2026, with rents up 5.1% over the past year. This is a reasonable base for a lender to assess what the property itself can contribute toward the loan. But yield alone rarely covers the full repayment, particularly at today's rates, which is why lenders look at deposit size, income and existing debts together, rather than leaning on rental income by itself.
Where does negative gearing fit into the deposit calculations?
The 2026 Federal Budget changes have added another consideration when deciding how much to borrow. From 1 July 2027, negative gearing will be limited to eligible new residential builds that genuinely add to housing supply. Investors who purchase established residential property after 12 May 2026 will no longer be able to deduct rental losses against other income such as wages from 1 July 2027. Losses can still be deducted against residential property income or carried forward.
If you are using a smaller deposit, you will generally have a larger loan and more interest, which increases the likelihood of the property running at a tax loss in the early years. For established properties purchased after May 2026, those losses are no longer able to be offset against your wage or other non-property income from July 2027. Instead, they can only be used to offset income from residential property or carried forward to future years, which changes the way investors benefit from negative gearing over time.
That doesn't necessarily mean a bigger deposit is always the better choice. But it does mean your deposit size, the loan amount and the tax treatment are now more connected than they used to be. It’s important to work through this with your accountant and broker together rather than deciding on deposit size in isolation.
Working out your own number
There is no single deposit figure that works for every Melbourne property investor. The amount you'll need depends on the property price and type, your lender, whether LMI applies, your purchasing costs and whether you have usable equity in an existing property.
For homeowners considering their first or next investment, a broker can calculate the numbers across all of these factors rather than relying on the 20% rule alone.
This article is general information only and does not constitute financial, legal or tax advice. We recommend seeking advice from a qualified accountant, solicitor and licensed financial adviser before making any decisions.
Ready to find out what deposit you'd actually need for a Melbourne investment property? Speak to the team at AXTON Finance. Call 03 9939 7576, email getabetterrate@axtonfinance.com.au or get in touch.
