How Much Deposit Do You Need for Commercial Property in Australia?

Published: February 2026 By: Jorden Harris, Commercial Finance Broker

One of the most common questions from first-time commercial property buyers is simple: how much do I actually need? The answer is more nuanced than residential property — and being underprepared on deposit can kill a deal that otherwise makes perfect sense.

The Short Answer

For most commercial property purchases in Australia, expect to need 30–40% of the purchase price as a deposit, plus acquisition costs. At a $1,000,000 purchase price, that means having $300,000–$400,000 available in equity or cash before you even count stamp duty and legal fees.

This is significantly higher than residential property, where buyers can enter at 5–10% (with or without LMI).

Why Is the Commercial Deposit Higher?

Commercial property lending carries more risk for lenders:

• Vacancy risk — A vacant commercial property generates no income, making repayments difficult
  - Narrower buyer market — Selling a commercial property takes longer than a house; lenders need a larger buffer
  - Valuation sensitivity — Commercial values move more with economic conditions than residential values
  - No LMI available — For residential property, lenders mortgage insurance lets buyers enter at 5%. No equivalent product exists for commercial property

Standard LVR Benchmarks by Property Type

Lenders apply different maximum LVRs depending on the property type and location:

Property Type Typical Max LVR Deposit Required
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Metropolitan retail (AAA-grade tenant) 70% 30%
Metropolitan office or industrial 65–70% 30–35%
Owner-occupied commercial (business premises) 70–75% 25–30%
Regional commercial property 55–65% 35–45%
Specialised property (childcare, hotel, petrol station) 50–60% 40–50%
Vacant commercial land 50–60% 40–50%
Development sites 60–65% (of GRV) 35%+

These are indicative ranges — individual lender policies vary and a broker assessment is required for your specific deal.

Owner-Occupied vs Investment: Does It Make a Difference?

Yes — and it's often the deciding factor.

Owner-occupied commercial (you're buying to run your business from the property):
- LVRs can reach 75–80% with some lenders
- Serviceability is assessed on your business cash flow, which is often stronger than the property's pure rental yield
- Major banks are typically more accommodating for owner-occupiers

Investment commercial (buying to lease to a third party):
- LVRs generally cap at 65–70%
- Assessed predominantly on net yield and DSCR
- More lender policy constraints around tenant type and lease term

How Is the Deposit Sourced?

Lenders will want to verify the source of your deposit. Acceptable sources include:

• Cash savings (bank statements required)
  - Equity in existing property — commonly used via a split loan or line of credit over residential or commercial property you already own
  - Business retained earnings sitting in a company or trust
  - Proceeds from sale of another property or asset

What lenders generally won't accept as genuine savings:
- Gifts (without specific conditions)
- Borrowed funds not already declared in the application
- Super (unless the purchase is within an SMSF structure)

Don't Forget Acquisition Costs

Beyond the deposit, commercial property purchases attract a range of additional costs that are typically not financeable:

Cost Estimate
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Stamp duty (Victoria) 5.5% of purchase price (standard rate)
Conveyancing / legal fees $2,000–$5,000
Commercial valuation $2,000–$5,000+
Building and pest inspection $800–$1,500
Loan application / establishment fees $500–$2,000+
GST (if applicable) 10% — check with accountant on GST treatment

For a $1,000,000 commercial purchase in Victoria, acquisition costs including stamp duty could easily total $65,000–$80,000.

Using Equity to Fund the Deposit

Many commercial buyers don't use fresh cash — they use equity from existing property.

Example:
- You own a residential investment property worth $900,000 with $400,000 remaining on the mortgage
- Available equity at 80% LVR = ($900,000 × 0.80) − $400,000 = $320,000
- You use this equity as a deposit contribution for a commercial purchase

This is a common and effective strategy, but it does add complexity — both loans need to be structured carefully, and cross-securitisation should generally be avoided where possible.

What If You Don't Have 30%?

Options include:

1. Wait and save — Straightforward but time-consuming
2. Use equity — As above; works well if you have existing property
3. Business partner / joint venture — Split the deposit and ownership
4. SMSFs — Your self-managed super fund can be a legitimate source of funds for commercial property (with specific rules around related party transactions)
5. Mezzanine / second mortgage finance — Available through specialist lenders but at significantly higher rates; should be approached carefully

What Lenders Look at Beyond the Deposit

Even with the right deposit, you need to pass serviceability:

• DSCR (Debt Service Coverage Ratio) — Net rental income / annual debt repayments ≥ 1.25–1.50
  - Tenancy — Who is the tenant? How long is the lease? What is the rent review mechanism?
  - Business financials — For owner-occupied deals, 2 years of financial statements and tax returns
  - Your overall net position — Assets, liabilities, and existing debt

Plan Before You Search

Commercial property purchases move quickly when you find the right asset. Having your finance pre-approved — or at minimum having a clear picture of your maximum purchase capacity — before you start bidding or negotiating is critical.

A commercial finance broker can run your numbers, identify the most appropriate lender for your property type, and give you a realistic view of deposit requirements before you commit.

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This article is general in nature and does not constitute financial advice. Stamp duty rates and lender LVR policies change — confirm current rates with your broker and solicitor. All lending is subject to credit assessment and approval. Freedom Financing Pty Ltd holds Australian Credit Licence 384704.

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