Buying a commercial property often starts with one practical question: how much deposit is needed for a commercial property loan?

There is no single percentage that applies across the market. The required contribution can vary significantly depending on the property, borrower profile, loan purpose, valuation, lease position, supporting security and lender policy.

Some transactions may require a substantial cash contribution. Other scenarios may support a much higher loan-to-value ratio where the borrower, asset and security position meet the lender’s criteria.

This is why commercial property buyers should avoid treating the deposit as a fixed percentage. A more useful starting point is to assess how much a suitable lender may be prepared to advance and how the overall commercial property loan structure fits the transaction.

Key Takeaways

Plan for more than the contract deposit. Your total equity contribution may be much higher once the lender’s maximum LVR and purchase costs are known.
A 20% deposit can be possible in selected scenarios. Some lenders advertise commercial lending up to 80% LVR, subject to assessment and eligibility.
30% to 40% or more may be required for other properties. Specialised assets, weaker leases, regional locations or higher-risk security can reduce lender appetite.
Deposit requirements depend on the lender and lending structure. Some lenders assess transactions using different valuation, security or policy settings, so the required contribution can vary more than borrowers may expect.
Deposit size does not decide approval by itself. Serviceability, borrower strength, security, lease income, ownership structure and lender policy remain part of the assessment.

Why Deposit Requirements Vary by Property and Borrower

Residential borrowers are often used to relatively standard LVR bands. A commercial property loan can work differently.

For commercial lending, lenders may assess the borrower, property, income profile, lease position, valuation, loan purpose and proposed security before determining how much they are prepared to lend.

That creates a wide range of possible equity requirements.

Indicative LVR	Property value	Indicative loan	Equity contribution before costs
80%	$2,000,000	$1,600,000	$400,000
70%	$2,000,000	$1,400,000	$600,000
65%	$2,000,000	$1,300,000	$700,000
60%	$2,000,000	$1,200,000	$800,000

These figures are illustrations rather than lender quotes.

They show why someone asking how much deposit for a commercial property loan should identify the likely LVR before deciding how much capital to commit.

An advertised maximum LVR does not mean every borrower or property will qualify for that level of finance. Property type, loan size, borrower history, income evidence, security quality and lender policy can all change the outcome.

A finance assessment before exchange can give commercial buyers a clearer indication of the potential equity requirement, available lender options and likely funding pathway.

What Lenders May Look for Beyond Deposit Size

Having a large deposit does not automatically make a transaction suitable for finance.

A lender may assess several elements of the transaction together.

Borrower Financial Position

For an owner-occupied property, the lender may review business earnings, cash flow, existing liabilities, trading history and the financial position of related entities or guarantors.

For an investment property, rental income and the strength of the underlying lease can carry more weight.

Investors comparing commercial assets may find the Australian Government’s guidance on property investment useful when reviewing the financial commitments and risks attached to owning investment property.

Serviceability

Serviceability asks whether the borrower has enough acceptable income or cash flow to meet the proposed repayments.

That income could come from:

business cash flow;
commercial rent;
investment income;
income from related entities; or
a combination accepted under the lender’s credit policy.

For a commercial property transaction, the lender may review existing debt commitments, proposed repayments, lease income and business cash flow before deciding what level of debt is supportable.

Borrower Structure

A property may be acquired through an individual, company, trust or SMSF structure.

Each ownership structure can change the required documents, lender selection, guarantees and assessment process. SMSF transactions can involve another layer of lending and compliance requirements.

Loan Purpose

A lender may take a different view of:

an established business purchasing its operating premises;
an investor purchasing a leased warehouse;
a vacant office acquisition;
a specialised commercial asset;
land intended for development; or
a short-term acquisition intended for later refinance.

The same borrower could receive different lending parameters across these scenarios.

For consumer credit scenarios that fall within the relevant legislation, ASIC provides information on responsible lending obligations. Commercial lending can sit under different regulatory treatment depending on loan purpose and structure, so borrowers should confirm the position relevant to their transaction.

Why LVR Has Such a Large Effect on Your Deposit

Loan-to-value ratio, or LVR, compares the proposed loan against the property value accepted by the lender.

The basic formula is:

Loan amount ÷ accepted property value × 100 = LVR

For a property valued at $3 million, a $2.1 million loan represents a 70% LVR. The remaining $900,000 must come from the borrower’s contribution or another acceptable funding source, before acquisition and finance costs.

LVR matters since higher gearing leaves less borrower equity between the outstanding debt and the property’s value.

Consider two buyers purchasing identical $3 million properties.

One borrower receives approval at 75% LVR:

Loan: $2.25 million
Equity contribution: $750,000 before costs

Another receives approval at 60% LVR:

Loan: $1.8 million
Equity contribution: $1.2 million before costs

The difference in required equity is $450,000.

This is why headline statements about a standard commercial property loan deposit can be misleading. The property, borrower and lender policy determine the useful number.

Commercial Property Type, Lease Quality and Valuation

The property itself can have a major effect on the required commercial property loan deposit.

Property Type

Standard offices, warehouses and other readily saleable commercial properties may attract a wider lender pool than specialised assets.

A lender may take a more conservative position where an asset has:

a limited resale market;
specialised fit-outs;
unusual zoning;
dependence on one business use;
higher vacancy risk; or
limited comparable sales.

An industrial warehouse in an established commercial precinct, for example, may be assessed differently from a purpose-built property with a narrow range of possible occupants.

Lease Quality

For an investment property, lenders can review:

tenant strength;
remaining lease term;
rental income;
lease options;
vacancy history;
concentration on a single tenant; and
whether current rent appears sustainable.

Borrowers purchasing income-producing assets may use investment property finance structures where the proposed property forms part of a wider portfolio strategy.

A long lease can strengthen parts of a credit assessment when the tenant, rental income and property remain acceptable to the lender. It does not set the LVR by itself.

Valuation

The purchase price and lender valuation are not always identical.

Say you agree to pay $2 million and expect a 70% LVR.

At a $2 million accepted value:

Proposed loan: $1.4 million
Contribution: $600,000 before costs

If the lender’s accepted valuation is $1.9 million and the facility is limited to 70% of that value:

Maximum loan: $1.33 million
Amount needed to complete a $2 million purchase: $670,000 before costs

That creates an extra $70,000 equity requirement.

A valuation buffer can help when testing feasibility, particularly when comparable sales are limited or the asset has specialised characteristics.

Your Deposit Is Not Your Total Cash Requirement

A common mistake is budgeting for the equity contribution and treating it as the full amount required at settlement.

A purchase can involve other costs, including:

transfer duty where applicable;
legal and conveyancing costs;
valuation charges;
lender application or establishment fees;
searches and due diligence;
building, environmental or specialist reports;
settlement adjustments; and
tax or GST amounts relevant to the transaction.

The contract deposit paid to the vendor needs to be distinguished from the lender’s required equity contribution.

Paying a 10% contract deposit, for example, does not mean the lender will fund the remaining 90%. If the lender approves the purchase at 65% LVR, the buyer still needs to meet the remaining equity requirement and associated transaction costs.

Tax and duty treatment varies by transaction and jurisdiction. Your solicitor, accountant or tax adviser can confirm those figures before you commit to a purchase.

Using Equity From Another Property

A commercial buyer does not always need to fund the entire contribution from cash.

Usable equity in another property may form part of the funding pathway, subject to lender policy, valuation and serviceability.

One approach may involve refinancing an existing loan and releasing usable equity before the commercial acquisition.

Consider an investor who needs $700,000 for the equity component of a purchase. They may have $350,000 available in cash and enough usable equity in another property to fund part of the remaining contribution.

The transaction still creates additional borrowing. Equity release changes the source of the contribution rather than removing the debt.

Issues worth reviewing include:

the LVR on the supporting property;
repayment capacity after the equity release;
whether securities will be linked;
loan terms across each facility;
available liquidity after settlement;
future refinancing plans; and
the effect on borrowing capacity for later purchases.

This is particularly relevant for investors building a portfolio. Committing too much liquid cash to one acquisition can affect the ability to meet future expenses or pursue another transaction.

Broker Questions to Clarify Before Applying

Commercial loan structures can differ substantially between lenders.

Speaking with an experienced broker can help a borrower compare lender appetite, likely LVRs, documentation requirements and settlement timing. Moneysmart provides independent information on using a mortgage broker, including questions borrowers can ask about lender panels, commissions and recommendations.

Before making a formal application for a loan for a commercial property, consider asking:

1. What LVR Is Realistic for This Exact Property?

Ask for an assessment based on the asset type, location, lease profile and borrower position rather than relying on a headline maximum.

2. What Value Will the Lender Use?

Find out how a valuation shortfall could change the available loan amount and required equity contribution.

3. How Will Serviceability Be Assessed?

Confirm whether the lender will rely mainly on business cash flow, lease income or a wider financial assessment.

4. What Financial Documents Are Likely to Be Required?

Requirements can vary between full-document, alternative-document and lease-supported facilities.

Possible documents may include:

company financial statements;
tax returns;
business activity statements;
bank statements;
lease documents;
personal asset and liability statements; and
trust or company documents.

5. Does the Ownership Structure Narrow Lender Choice?

Companies, trusts and SMSFs can change the available funding pathway.

The structure should ideally be reviewed with the borrower’s accountant and legal adviser before signing a contract.

6. Can Another Property Support the Contribution?

Review usable equity and the effect of any extra debt on total borrowing capacity.

7. How Much Cash Should Remain After Settlement?

Using every available dollar for the purchase may leave limited liquidity for property costs, vacancies, business needs or unexpected expenses.

8. Does the Proposed Lender Fit the Settlement Deadline?

Interest rate and fees are only part of the decision when a contract has firm finance or settlement dates.

Blue Crane Capital’s target commercial clients include property developers, commercial investors and owner-occupier businesses, with deal structures spanning construction, land, bridging and term debt. We place value on broad lender access, credit preparation, LVR analysis and speed of execution.

Its brand framework places the same emphasis on plain explanations, lender choice, timing, risk points and clear next steps through the finance process.

Set Your Deposit From the Deal, Not a Generic Percentage

If you are working out how much deposit is needed for a commercial property loan, 20% to 40% plus costs can serve as a practical starting range for early feasibility. It should never be treated as a lender commitment.

Property type, valuation, lease terms, borrower structure, income position, security and lender appetite can each change the contribution required.

A well-prepared borrower will assess the likely LVR, available cash, usable equity, acquisition costs and servicing position before the transaction reaches a firm settlement deadline.

Blue Crane Capital works with commercial property purchasers, investors and owner-occupier businesses seeking structured finance across bank, non-bank and private lender markets. Our commercial finance audience values lender depth, clear credit preparation and process management where transactions involve meaningful values or tighter timelines.

Request a Finance Assessment to review your proposed purchase, likely LVR, available equity and potential funding pathway before committing capital.

FAQs

What Is a Normal LVR for a Commercial Property Loan in Australia?

There is no single LVR that applies to every commercial property loan in Australia.

For early feasibility, buyers may encounter scenarios ranging from around 60% to 80% LVR. The actual figure depends on lender policy, property type, borrower position, lease quality, loan size and purpose.

Specialised assets, weaker lease profiles or more difficult borrower circumstances can result in a lower maximum.

Can I Get a 90% Commercial Property Loan?

A 90% commercial property loan may be available in select scenarios, depending on the borrower, property, security and lender policy.

Some commercial products use different assessment criteria, which can affect the deposit required. This is where lender access and policy knowledge can make a meaningful difference.

What Security Does a Lender Normally Require?

For property-backed commercial finance, the property being purchased commonly forms the primary security.

A lender may request other property security, guarantees or supporting arrangements depending on the borrower, facility structure and risk profile.

Existing property can sometimes support a transaction through equity release.

What Does Serviceability Mean for Commercial Finance?

Serviceability is the lender’s assessment of whether the borrower has enough acceptable income or cash flow to meet the proposed debt repayments.

For commercial investors, lease income may form an important part of the assessment. For owner-occupier businesses, the lender may place greater weight on business trading performance and existing liabilities.

What Is Cash-Out or Equity Release?

Cash-out refers to borrowing against available equity in an existing asset.

The funds may support another property acquisition, business investment or another acceptable purpose.

Lenders can apply limits to the amount released, permitted purposes and evidence required.

Is a Bigger Deposit Always Better?

A lower LVR can improve the lender’s risk position, yet committing more cash does not automatically produce the right commercial structure.

Property investors and business owners may prefer to retain liquidity for working capital, property expenditure, vacancies or another acquisition.

The objective is to identify a lending structure that supports the purchase and the borrower’s broader financial position.

Disclaimer: General information only. This article does not take into account your objectives, financial situation or needs. Lending criteria, interest rates, fees, valuations and terms vary between lenders and transactions. Seek advice relevant to your circumstances before acting.

How Much Deposit Is Needed for a Commercial Property Loan?