The easiest way to fund your investment deposit

How much deposit do you actually need for an investment property?

You'll need at least a 10 per cent deposit plus settlement costs to buy a residential investment property through most lenders. That puts you at a loan-to-value ratio of 90 per cent, and you'll pay Lenders Mortgage Insurance on top. For a loan where the LVR exceeds 80 per cent, most lenders require LMI, which is a cost borne by the borrower and calculated on a sliding scale based on the loan amount and LVR.

Consider a paramedic buying a rental unit. If you're borrowing at 85 per cent LVR, your lender will want evidence you've held the 15 per cent deposit for at least three months, or that it came from a genuine source like the sale of another asset. You'll also need to show you can cover stamp duty, conveyancing, building and pest inspections, and any strata reports if the property is in a complex with a body corporate. Stamp duty alone in most states runs between 3 and 5 per cent of the purchase price.

Under APS 112, lenders hold unequivocal enforcement rights over the mortgaged property at all times, including a right to possession and power of sale in the event of default. That's why they want to see your deposit as genuine savings or equity, not a loan from another source that could create a competing interest.

Can you use equity from your owner-occupied home?

You can. Where multiple loans are secured over the same property in sequential ranking order with no intermediate interest from another lender, the loan amounts are aggregated and treated as a single exposure for the purpose of calculating the LVR. In other words, if you own your home and you've paid down enough of the mortgage, you can borrow against that property to fund the deposit on an investment property without selling or refinancing.

In our experience, this approach works well for paramedics who have owned for several years and have equity sitting idle. A paramedic with a home valued at current market levels and a mortgage of 60 per cent LVR could access up to 80 per cent of the home's value without triggering LMI on that property. The released equity covers the investment deposit and costs, and the investment loan itself is written at 80 per cent LVR or lower, keeping LMI off that side too.

You will need to show you can service both loans. APRA requires all ADIs to assess new borrowers' capacity to service a home loan, including a residential investment loan, at an interest rate that is at least 3.0 percentage points above the loan product rate. Lenders also apply a shading factor to expected rental income, typically 80 per cent, to account for vacancy and management costs. If you're working regular overtime or penalty rates, that income counts, but the lender will want payslips covering the last three months and a letter from your employer.

What counts as genuine savings for an investment loan?

Genuine savings are funds you've held in your own name for at least three months in a standard savings account, term deposit, or offset account linked to an existing home loan. The balance needs to show consistent growth or retention over that period. One-off deposits from a recent bonus or tax return don't count as genuine savings unless they've been sitting untouched for the full three months.

Lenders also accept funds from the sale of assets such as shares, a car, or another property. In that case, you'll need to provide settlement statements or sale contracts showing where the money came from. Gifted deposits from family members are accepted by some lenders, but you'll usually need a statutory declaration confirming the funds are a gift and not a loan that needs to be repaid.

First Home Owner Grants, where applicable, are not available for investment properties. Some state governments offer grants or concessions for new builds, but these are limited to owner-occupiers. If you've previously accessed a first home buyer benefit and you're now moving into the investment space, your deposit will need to come from savings, equity, or other verifiable sources.

How debt-to-income limits shape your borrowing power

APRA activated a DTI lending limit on 27 November 2025, effective from 1 February 2026, applying to all ADIs. Each ADI may lend, measured on a quarterly basis, up to 20 per cent of new investor loans to borrowers with a total DTI ratio of six times or greater. If your total borrowing across all loans, including your owner-occupied mortgage, investment loans, car loans, and credit cards, is more than six times your gross annual income, most lenders will either decline the application or require a larger deposit to bring the LVR down.

A paramedic earning a base salary plus penalties and overtime will have their income assessed using the lower of the last two years' tax returns or the current year's payslips, depending on consistency. If your overtime has dropped in the current year, the lender uses the lower figure. That affects both your maximum loan amount and your DTI ratio. Paying down other debts before applying, or holding a larger deposit to reduce the loan amount, can keep you under the six-times threshold.

Interest-only loans and deposit requirements

A long-term interest-only residential loan is classified as non-standard where the LVR is greater than 80 per cent and the contractual interest-only period is greater than five years or is not specified. Most lenders cap interest-only periods at five years for investment loans and require the LVR to be 80 per cent or lower to approve the structure without additional pricing or conditions.

Interest-only repayments are lower than principal-and-interest during the interest-only period, which can improve cash flow if the property has a low rental yield or high vacancy rate. The trade-off is that the loan balance doesn't reduce, so you're not building equity through repayments. If you're planning to use an interest-only structure, lenders will want to see a clear exit strategy, either through projected rental growth, capital growth, or your capacity to switch to principal-and-interest repayments when the interest-only period ends.

Deposits for your second or third investment property

Once you own one investment property, the deposit requirements for your next purchase depend on how much equity you've built across your portfolio and whether your current loans are performing. Lenders assess your entire position, including all mortgages, rental income, and living expenses, before approving a new loan.

A paramedic with one investment property returning steady rental income and an owner-occupied home with equity can often access that equity to fund the deposit on a second investment property. The same LVR and serviceability rules apply, but your rental income from the existing investment property is included in the serviceability calculation, which can offset some of the additional debt load. If you're looking at expanding your property portfolio, the lender will also review the vacancy rate in the area where your existing property is located and apply a discount to the rental income accordingly.

If your first investment property was purchased under a high LVR loan with LMI, refinancing that loan to release equity may not be viable until the property has appreciated or you've paid down the principal. In that scenario, you'll need to rely on genuine savings or equity from your owner-occupied property to fund the next deposit.

Using negative gearing to support your deposit strategy

Under the Income Tax Assessment Act 1997 (Cth), losses from residential investment properties held at 7:30pm AEST on 12 May 2026, including properties under contract awaiting settlement at that time, continue to be fully deductible against other income, including salary and wages, until the property is sold. That means if you're holding an investment property that was purchased or under contract before that date, you can claim the full shortfall between your rental income and your loan interest, rates, insurance, and other holding costs against your paramedic salary. The tax refund that generates can be redirected into savings for your next deposit.

From the 2027-28 income year, losses related to established residential investment properties acquired after 7:30pm AEST on 12 May 2026 are deductible only against other income from residential properties, including capital gains on residential properties. Excess losses can be carried forward to offset residential property income in future years. If you're buying an established investment property now, the ability to offset losses against your wage income is no longer available from the 2027-28 financial year onward. That changes the cash flow equation and means you'll need a larger deposit or higher rental yield to keep the property positively geared or neutral.

Eligible new builds include dwellings constructed on previously vacant land and dwellings replacing existing properties where the number of dwellings increases. If you're buying a new build, the property remains eligible for full negative gearing against all income, regardless of when you purchase. That can make new builds more attractive from a tax and cash flow perspective, especially if you're planning to use the tax refund to fund your next deposit or to service the loan during the early years when rental income may be lower.

Where investment loan refinancing fits in

If you've held an investment property for a few years and the loan is still at a high LVR, refinancing to a lower rate or better loan structure can free up cash flow that you can redirect into savings for your next deposit. Some lenders also offer equity release as part of a refinance, allowing you to pull out accumulated equity without selling the property.

Refinancing doesn't require a new deposit, but the lender will reassess your serviceability, including your current income, expenses, and any changes to the rental market in the area where your investment property is located. If the property has increased in value, the LVR drops, and you may be able to remove LMI or access a lower rate tier. If you're planning to buy another investment property within the next 12 months, refinancing your existing loan first can improve your borrowing capacity and give you access to funds for the next deposit without dipping into your savings.

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