How Much Do You Actually Need to Buy Your First Investment Property in Australia?

Why is the number higher than the deposit you have in your head?

Because the deposit is only one part of the cash needed to complete an investment-property purchase.

Many investors begin with a single number in mind — usually 20% — and a rough allowance for fees. On a mid-priced purchase, those additional costs can be equivalent to another 4–6% of the property price, paid in cash at or before settlement. A lender lends against the property; it does not usually lend the stamp duty.

Someone who has saved exactly 20% of the target price and nothing else may therefore need to buy at a lower price or continue building their cash position. Understanding this before searching helps prevent a purchase from failing at finance or settlement.

What is stamp duty on an investment property in each state?

Stamp duty is a state or territory tax calculated on the property’s dutiable value, generally the higher of its purchase price and market value.

The following comparison uses a $600,000 residential investment property, the published general rate schedule for each jurisdiction and no concessions. Figures are indicative and should be checked with the relevant revenue office for the contract date and buyer circumstances.

The spread matters. On these indicative figures, the same $600,000 purchase attracts roughly $15,350 more duty in Victoria than in the ACT. For an investor comparing locations across state borders, this belongs in the cash comparison.

Do investors receive a first-home-buyer stamp duty concession?

Generally no. First-home-buyer duty relief requires the property to become the buyer’s principal place of residence.

This includes rentvesting: buying an investment property while continuing to rent elsewhere does not make the investment purchase eligible for owner-occupier duty relief. Occupancy timing and duration rules vary by jurisdiction.

Owning an investment property first may also affect eligibility for a later first-home concession when buying a home to live in. Confirm the rules directly with the relevant revenue office before making a decision.

How much deposit do you actually need?

Twenty per cent is the commonly used benchmark because it generally avoids lenders mortgage insurance, but it is not a universal legal minimum.

Lenders mortgage insurance protects the lender and is paid by the borrower when the loan-to-value ratio exceeds the lender’s threshold. Published guidance places premiums at roughly 1% of the loan around 85% LVR, with materially higher premiums above 90% and published examples exceeding 3.5% at 95% LVR. Investor premiums may be higher than equivalent owner-occupier premiums.

LMI can often be capitalised into the loan instead of paid in cash, but this increases the amount borrowed and the interest paid. Any possible tax treatment is a question for a qualified tax professional.

Whether an 80% or 90% LVR structure suits an individual depends on income, commitments, timing and lender policy. A qualified mortgage broker should assess that before the property search begins.

What are the other upfront costs?

Legal work, inspections, lender charges, registration fees, settlement adjustments and a practical cash buffer all need to be included.

These costs are smaller than the deposit or duty individually, but they are commonly paid in cash and can materially change the amount needed at settlement.

• Conveyancing or solicitor’s fees: commonly around $1,500–$3,500, including professional fees and disbursements.
• Building and pest inspection: commonly around $400–$1,000 for a standard house.
• Loan application or establishment fee: commonly $0–$900 and sometimes waived.
• Title registration and transfer fees: usually several hundred dollars and set by the relevant land titles office.
• Council and water adjustments: reimbursement to the vendor for the buyer’s share of the period after settlement.
• Cash buffer: an allowance for vacancy, an early repair or a change in interest rates.

What can the upfront costs add up to?

For a $600,000 purchase with a 20% deposit, an indicative total is about $144,000 in Queensland and $155,000 in Victoria.

These examples use the midpoint of the supplied cost ranges. The roughly $11,000 difference is primarily transfer duty.

The comparison does not indicate whether buying is appropriate, what a buyer can borrow or whether a $600,000 property suits their strategy. It isolates the cash side of the purchase.

Where should a first property investor go next?

Confirm the cash position, obtain a borrowing-capacity assessment and then build the property strategy before beginning the search.

If the required amount is further away than expected, that is useful information arriving before a commitment. If it is within reach, a qualified mortgage broker can establish what lending is actually available. Kallea works alongside broker partners but does not provide credit assistance.

A sound sequence is to understand the position, learn the mechanics, build the strategy and then assess individual properties. Choosing a property first and trying to make the numbers fit later creates avoidable risk.