How much equity do you need to buy an investment property? The number is easy to get wrong. People either forget about stamp duty and come up short at settlement, or they wait years longer than necessary because they assumed they needed more.
The answer depends on what you buy and where you buy it. Here are three worked examples at real 2026 price points, with every cost line-itemed.
The Formula: Deposit Plus Costs
Your equity needs to cover two things: the deposit and the purchase costs.
Many investors target a 20% deposit to stay under the 80% loan-to-value ratio and avoid Lenders Mortgage Insurance. On a $500,000 investment property, that is $100,000.
But the deposit is not the full picture. On a $500,000 investment property, stamp duty ranges from $11,400 in the ACT to $25,070 in Victoria. On top of that sit conveyancing fees, title searches, building and pest inspections, and loan setup costs. The examples below allow $3,500 for those.
The formula:
Equity needed = 20% deposit + stamp duty + $3,500 other costs
That works out to about 23% to 26% of the purchase price rather than 20%, depending on the state. The gap between what people budget for an investment property and what settlement day actually requires is where problems start.
$400,000 Property: The Numbers
A $400,000 established house is now mostly limited to smaller regional towns. Charters Towers City in north Queensland had a house median of $350,000 in the year to June 2026 (CoreLogic via YIP). At that price point in Queensland, here is the full cost breakdown:
- 20% deposit: $80,000 ($400,000 x 20%)
- Transfer duty (QLD): $12,425 ($1,050 + 3.5% of the $325,000 above $75,000)
- Conveyancing, building and pest, loan fees: $3,500
Total equity needed: $95,925
To release that amount from your home, the bank will lend up to 80% of its current value. So the question becomes whether 80% of your home’s value, minus your mortgage balance, is at least $96,000. Our usable equity calculator gives you the number in ten seconds.
- Home worth $700,000 with $300,000 owing: usable equity of $260,000. Plenty.
- Home worth $600,000 with $350,000 owing: usable equity of $130,000. Enough, with a comfortable buffer.
- Home worth $500,000 with $350,000 owing: usable equity of $50,000. Short by almost half.
If usable equity is a new concept, our guide to using home equity for an investment property walks through the 80% calculation and how the release actually works. And make sure the equity release is set up as a separate loan split, not cross-collateralised with the investment loan.
$550,000 Property: The Numbers
At $550,000 you reach the house median in parts of outer-north Adelaide and some regional centres. Elizabeth North’s house median was $550,000 and Geraldton’s $540,000 in the year to June 2026 (CoreLogic via YIP). Adelaide’s median dwelling value was $937,207 at August 2026 (Cotality), so this budget means buying well below the city’s headline figure.
The Queensland breakdown at $550,000:
- 20% deposit: $110,000
- Transfer duty (QLD): $17,775 ($17,325 + 4.5% of the $10,000 above $540,000)
- Conveyancing, building and pest, loan fees: $3,500
Total equity needed: $131,275
In NSW the stamp duty on a $550,000 investment property is $18,937 ($11,602 + 4.5% of the $163,000 above $387,000). That pushes total equity needed to $132,437. SA charges more again, at $24,080. At $550,000 the duty runs from $13,560 in the ACT to $28,070 in Victoria, a gap of $14,510. Our stamp duty calculator gives you the exact figure for your state and price.
These middle-price-point markets are often where the growth and yield numbers work hardest together. The entry cost is higher than a $400,000 property. But the locations tend to be closer to employment centres and transport. That supports both rent and long-term capital growth.
$750,000 Property: The Numbers
At $750,000 you are above the median dwelling value in Darwin ($647,259) and just under Hobart’s ($752,397), per Cotality at August 2026. The other six capitals all have medians above $780,000. The Queensland breakdown:
- 20% deposit: $150,000
- Transfer duty (QLD): $26,775 ($17,325 + 4.5% of the $210,000 above $540,000)
- Conveyancing, building and pest, loan fees: $3,500
Total equity needed: $180,275
Whatever home backs this release needs serious headroom. A property worth $1,000,000 with $400,000 owing gives $400,000 of usable equity, more than enough. A property worth $800,000 with $500,000 owing gives just $140,000 of usable equity. That’s about $40,000 short.
This is one reason we steer investors toward affordable markets rather than stretching into higher price brackets. A $450,000 investment property growing at 8% per year delivers $36,000 of growth. A $750,000 property needs to grow 4.8% just to match that in dollar terms ($36,000 / $750,000). It also needs about two-thirds more equity to enter: $180,275 against $107,675 at Queensland rates. The data shows affordable markets have outperformed blue chip on both growth and yield.
The Costs People Forget
Deposit and stamp duty make up 96% to 98% of the total in these examples. But a few smaller items catch people out.
Bank valuation shortfall. Your usable equity is based on the bank’s valuation of your home, not your own estimate. If the bank values your home at $680,000 when you expected $720,000, your usable equity drops by $32,000. A $40,000 valuation gap costs you $32,000 of borrowing capacity ($40,000 x 80%) because the 80% LVR line moves with the valuation. Order an upfront valuation through your broker before you build a purchase budget around a guess.
LMI if you go above 80%. Some investors accept LMI to enter the market sooner. On a $750,000 investment property at 90% LVR, the loan is $675,000. One lender’s published table puts LMI at 2.367% of that loan, or about $15,977 (Home Loan Experts). Queensland adds 9% stamp duty on the premium, about $1,438. Other insurers and lenders price that LVR differently. Our LMI calculator prices the range at your deposit size. It scales down at lower purchase prices, but it is always an extra cost that comes straight off your position.
Cash buffer. Having zero dollars left after settlement is a bad position. The average variable rate on new investment loans was 6.4% in July 2026 (RBA table F6). At that rate, interest-only repayments on a $320,000 loan run about $1,707 per month ($320,000 x 6.4% / 12). Keep at least two to three months of repayments in reserve beyond the purchase costs. That adds about $3,400 to $5,100 to the real number you should have available.
Serviceability Cuts It Further
Having the equity is the first test. The second is income. Lenders assess your ability to repay at the actual interest rate plus APRA’s 3 percentage point serviceability buffer. With new variable investment loans averaging 6.4%, you are being tested at about 9.4%. That assessment rate shrinks your borrowing power well below what today’s actual repayments suggest you could handle.
Since February 2026, APRA also limits high-DTI lending. Banks can write only up to 20% of new investor loans at a debt of six times gross income or more. APRA said in May 2026 that the limit is not yet restricting overall lending. It still matters here, because releasing equity from your home pushes your total debt up. Loans for new dwellings are exempt, but most investors buying established houses are not.
The practical effect: some homeowners have $200,000 in usable equity but can only service enough new debt to fund a $450,000 investment property, not a $650,000 one. Run the serviceability check with a good mortgage broker before you lock in a purchase price. It is faster than the equity check, and it sets the real ceiling.
What If You’re $20,000 Short?
Three paths, roughly in order of preference.
Wait for growth. If you are close, six to twelve months of organic growth may close the gap. Australian dwelling values rose 66.5% over the ten years to August 2026, about 5.2% a year compounded (Cotality). At that pace a $700,000 home gains about $36,400 in a year. That adds about $29,000 of usable equity ($36,400 x 80%). Growth is not guaranteed in any single year. National values were 3.6% below their March 2026 peak at the end of August.
Pay down faster. Every dollar off your home loan is a dollar of new usable equity. Directing a bonus, tax refund, or salary increase toward the mortgage accelerates the timeline without waiting for the market. The maths is one-for-one: reducing your loan by $20,000 adds exactly $20,000 of usable equity. To see how released equity compounds into the next purchase and the one after, run the sequence through our equity recycling modeller.
Buy at a lower price. The difference in total equity needed between a $450,000 investment property and a $550,000 one is about $23,600 at Queensland rates. You can still buy a quality property one price bracket lower, and the entry cost below $500,000 is far more manageable.
Accepting LMI is a fourth option. It suits investors who can service the loan but do not quite have 20% equity for a deposit. The earlier entry may offset the extra upfront cost if the market is moving. Talk to your broker about whether the timing makes that trade worthwhile. Some professions can skip LMI altogether with an LMI waiver.
The Number That Matters
For most investors buying in affordable markets, the answer is roughly $96,000 to $131,000 in usable equity at Queensland duty rates. That covers a 20% deposit plus stamp duty and buying costs on a $400,000 to $550,000 investment property. That price band is where the growth-plus-yield maths works best and holding costs stay manageable.
If you are buying interstate, the purchase costs shift by state but the formula stays the same: deposit, stamp duty, legals and a buffer.
Before sourcing begins, we work out every client’s equity number, check serviceability and pick a target market that fits both.
This is general information only and not financial, tax, or credit advice. Speak to a licensed mortgage broker and a qualified professional before making investment decisions.
See how we find the properties that equity buys.
If you have equity in your home and want to know what it could fund across Australia’s best investor markets, book a free discovery call.
Sources
- Queensland transfer duty rates, Queensland Revenue Office
- NSW transfer duty rates 2026/27, Revenue NSW
- VIC land transfer duty rates, State Revenue Office
- SA rate of stamp duty, RevenueSA
- ACT conveyance duty, ACT Revenue Office
- Cotality Home Value Index, August 2026: capital city medians, ten-year and peak-to-date change
- Suburb house medians to June 2026, CoreLogic via Your Investment Property
- Housing lending rates, RBA statistical table F6
- APRA maintains macroprudential policy settings, 28 May 2026
- APRA debt-to-income limit, APRA
- LMI premium rates, Home Loan Experts
