How much equity do you need for an investment property?

Think you need to save another massive deposit to invest?

Here’s the truth most Australians don’t realise:

You might already have it.

It’s called equity, and for many investors, it’s the bridge between owning one property and building a portfolio.

What is equity (and why it matters)?

Equity is simply the difference between what your property is worth and what you still owe on it.

For example:

• Property value: $800,000
• Loan remaining: $500,000
• Equity: $300,000

As you pay down your loan and your property grows in value, your equity increases over time.

And here’s where it gets interesting…

That equity can be used as a deposit for your next investment.

So, how much equity do you actually need?

In most cases, lenders will allow you to access up to 80% of your property’s value without paying Lenders Mortgage Insurance (LMI).

This is called your usable equity.

Simple example:

• Property value: $900,000
• 80% of value: $720,000
• Loan remaining: $450,000

👉 Usable equity: $270,000

That usable equity can often be used to cover:

• Your deposit (typically 20%)
• Some purchase costs

Do you need a full 20% deposit in cash?

No — and this is where most people get stuck.

Traditionally, buying an investment property requires a 20% deposit.

But many investors don’t save this from scratch.

Instead, they:

• Use equity as their deposit
• Use rental income to help service the loan

This means you could potentially invest without touching your savings, depending on your position.

What determines how much equity you can use?

Not all equity is accessible. Lenders will assess:

1. Property value

You’ll need a bank valuation to confirm what your property is worth.

2. Existing loan balance

The less you owe, the more equity you have.

3. Borrowing capacity

Your income, expenses and liabilities still matter.

4. Risk buffer

Banks typically cap lending at 80% LVR to reduce risk.

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