How Much Deposit Do I Need for an Investment Property in WA?
You don't need a 20% deposit to buy an investment property in WA, or most of Australia. That figure just avoids Lenders Mortgage Insurance, it doesn't make it the right amount to put in. The real question is what that money is worth to your overall strategy.
Where Does the 20% Figure Come From?
It's one of those numbers that gets repeated so often it starts to feel like a rule. And to be fair, it isn't completely without logic. Put in 20% and you generally sidestep Lenders Mortgage Insurance, which is a cost that protects the lender, not you, if you default. So avoiding it sounds appealing on the surface.
But here's the thing. Avoiding LMI and choosing the best use of your cash are two different questions, and investors sometimes confuse them.
I see this with people who've been saving hard, hit that 20% figure, and assumed that's when they're ready. Sometimes they are. Sometimes they've actually been ready for a while, and the obsession with the magic number has cost them time in the market. Market moves at 7% on average over a 30 year period.
Based on that data and an asset price of $700,000 - the first year that asset is increasing by $49,000, then year 2 ~ $52,000. If your household income is on $150k per annum and your savings rate is $4,000 per month. That is still not keeping up with house prices.
Lets face it, Most people don't have a savings rate of $4,000 per month.
If you're purchasing in a market that is going up in value much quicker than that then you're even further behind, as an investor you should only be investing in a rapidly growing market for the capital growth properties.
12% vs 20% - Difference in Dollars
Let's put some numbers around this, because abstract percentages are easy to dismiss.
Take a $700,000 investment property in WA. The difference between a 12% deposit and a 20% deposit is $56,000.
That's a real, significant amount of money. And the question worth sitting with is: what is the best use of that $56,000?
Put it into the property and you have a smaller loan, which may give you access to sharper pricing with some lenders.
Keep some of it available and you could have a larger cash buffer, funds for improvements, money sitting against debt in an offset, or part of the funds for a second property down the track.
Neither option automatically wins. It genuinely depends on your situation, your goals, and what comes next in your plan.
This is a simplified example only, and your own numbers will vary. If you're working through the maths on a specific purchase, it's worth talking to both a broker and a registered tax accountant before you decide how to structure things.
How Should an Investor Actually Think About Deposit Size?
For an owner-occupier, the deposit conversation is relatively straightforward. You want to buy a home, you need enough to get in, and the goal is usually to own it outright eventually.
For an investor, it's different. The deposit isn't just about getting the loan approved. It's a strategic decision about capital allocation. Getting that smaller amount to move further, with renovations or another purchase or even just a security buffer that you can access. Or maybe it makes sense to put all into that one purchase for you.
Tying up an extra $56,000 in one property isn't free. That money has an opportunity cost. It could be sitting in an offset account reducing interest. It could be retained as a buffer for vacancies, rates, or maintenance. It could be part of what gets you into a second property sooner. Or it could genuinely be better deployed into this property if the numbers stack up that way for you.
The point is that the deposit decision should follow the strategy, not precede it. Working out your borrowing capacity first gives you a much clearer picture of what the loan actually looks like at different deposit levels, and from there you can have a proper conversation about what makes sense.
What About Using Equity Instead of Cash?
A lot of investors in WA who already own property don't use fresh cash at all. They use equity from an existing property to cover the deposit requirement on the next one.
If that's your situation, the 20% question shifts slightly. You're not asking how much savings to use. You're asking how much equity to release, and how that affects the overall position across your properties. That's a structuring question as much as a deposit question, and it's worth getting right from the start.
I've worked with clients who had plenty of equity but structured it poorly and ended up with properties cross-collateralised in ways that limited their flexibility later.
That's a situation you generally want to avoid if you're thinking about building a portfolio over time.
Can You Buy an Investment Property With Less Than 20% in WA?
Yes, in many cases. Lenders do have varying policies, and not every lender will approve an investment loan at the same deposit level, so it depends on your overall financial position, location and which lender you're working with. But the idea that you must have 20% before you can even start the conversation is not accurate.
What matters is whether the deal makes sense with the structure you're proposing, whether the loan is serviceable, and whether you've accounted for the costs of buying, including stamp duty, which in WA applies to investment purchases and is worth factoring into your upfront budget from the start.
So What's the Right Deposit for You?
There isn't a single answer I can give you without knowing your situation. What I can say is that the deposit amount is a lever, not a fixed requirement, and treating it as part of your broader strategy is almost always more useful than fixating on a specific percentage.
If you're trying to work out what makes sense for your next investment property in WA, I'm happy to have a straightforward conversation about the numbers.
No pressure, just an honest look at what's actually available and what the options look like from where you're standing.
Feel free to get in touch and we can go from there.
This article is general information only and doesn't take into account your personal financial or tax situation. Speak with a mortgage broker about how your loan is structured, and a qualified tax adviser about what applies to your specific circumstances.