Commercial Property Loan Deposits: How Much Do You Need?

A commercial property loan deposit in Australia typically ranges from 20% to 35% of the purchase price, depending on the property type, your borrower profile, and the lender. Owner-occupiers with strong financials may access 80% LVR (20% deposit), while investors and specialised properties often require 30% to 50% down. Here is how deposit requirements work and what affects yours.

Why commercial property deposits are higher than residential

Commercial property carries more risk for lenders than residential real estate. Vacancy periods can be longer, rental income is less predictable, and resale markets are narrower. In 2026, commercial vacancy rates in Australian CBDs average 12% to 14%, compared to under 2% for residential in most capital cities.

Because of this higher risk profile, lenders require larger deposits to protect their position. Where a home loan might offer 90% or 95% LVR, commercial property loans typically cap at 65% to 80% LVR. That gap translates directly into the deposit you need to bring to the table.

Deposit requirements by property type

Not all commercial property is assessed equally. Standard office, retail, and industrial assets attract better terms than specialised or single-use properties. The table below shows typical deposit requirements by property category.

Industrial property often receives the most favourable treatment. With national industrial vacancy rates below 2% in 2026, lenders view warehouses and logistics facilities as lower risk than retail or office space. A well-located industrial asset may qualify for 80% LVR from some lenders.

Owner-occupier vs investor deposits

Your intended use of the property affects the deposit required. Owner-occupiers who will run their business from the premises generally access better terms than investors buying purely for rental income.

Owner-occupiers demonstrate a direct stake in the property's success. If the property houses your business, you have strong incentive to maintain it and keep up repayments. Lenders reward this alignment with higher LVRs.

Investors face stricter assessment because the property's performance depends on tenants. Lenders factor in potential vacancy periods and the risk that rental income may not cover repayments. A commercial investor typically needs 5% to 10% more deposit than an owner-occupier for the same property.

Full doc vs low doc: how documentation affects your deposit

The documentation you can provide significantly impacts your required deposit. Full documentation loans offer better LVRs but require comprehensive financials. Low doc options suit self-employed borrowers who cannot provide traditional paperwork.

Low doc commercial property loans typically require a minimum 25% deposit and carry higher interest rates. At 60% LVR, you might pay around 7.99%, rising to 8.99% at 80% LVR. That rate premium compensates the lender for reduced visibility into your financial position.

The real cost: deposit plus purchase expenses

Your deposit is just one part of the upfront cash required. Stamp duty, legal fees, and lender costs add substantially to what you need on settlement day. Here is a worked example for a $1 million commercial property purchase.

For a $1 million commercial property with a 30% deposit, you need approximately $360,000 in available funds. That is 36% of the purchase price, not 30%. Buyers who budget only for the deposit often face a shortfall at settlement.

Stamp duty varies significantly between states. In Queensland, that same $1 million property attracts around $38,000 in duty. In Victoria, approximately $55,000. Always calculate state-specific costs early in your planning.

How to reduce your required deposit

Several strategies can lower the upfront cash you need for a commercial property purchase.

Cross-collateralisation

If you own other property with available equity, you can use that equity as part of your deposit. A borrower with $200,000 equity in their home might use $100,000 of it toward a commercial purchase, reducing the cash deposit required. This approach links the properties, so both are at risk if you default.

Vendor finance

Some sellers will provide part of the purchase price as a loan, reducing the bank deposit required. Vendor finance terms vary widely. You might negotiate a 10% vendor-held second mortgage, allowing you to proceed with only a 20% cash deposit while the bank provides 70% at first mortgage rates.

Mezzanine or second-tier finance

Non-bank lenders offer higher-LVR commercial loans, sometimes up to 80% or 85%. The trade-off is a higher interest rate, often 2% to 4% above major bank rates. This option suits borrowers who have strong cash flow to service higher repayments but limited deposit savings.

GST and deposit timing

Commercial property purchases may attract GST, but you can often claim this back. The 10% GST component should not be factored into your long-term deposit calculation if you are registered for GST and the property is a going concern. However, you may still need cash flow to cover it at settlement before your BAS refund arrives.

What lenders assess beyond deposit

A sufficient deposit does not guarantee approval. Lenders evaluate your overall financial position and the property's fundamentals.

Debt service coverage ratio (DSCR) measures whether rental income covers the loan repayments. Most lenders require net rental income to be at least 1.25 to 1.5 times the annual loan repayments. A property generating $80,000 net rent can typically support a loan with $53,000 to $64,000 in annual repayments.

Lease terms matter for investment properties. A property with a 5-year lease to a national tenant is assessed more favourably than one with a month-to-month tenancy. Lenders may reduce LVR or decline entirely if the lease expires within 12 months.

Your experience influences commercial lending decisions more than residential. A borrower with existing commercial property in their portfolio often accesses better terms than a first-time commercial buyer with the same financials.

Major bank vs non-bank lenders

Where you apply affects the deposit required. Major banks typically offer lower rates but stricter LVR limits and documentation requirements. Non-bank lenders provide more flexibility at a higher cost.

A broker with access to multiple lender panels can identify which lenders suit your situation. The difference between a 65% LVR offer from one lender and 75% from another is substantial. On a $1 million property, that 10% gap means $100,000 less deposit required.

This article is general information only and is not financial advice.