Most commercial property loans need a larger deposit than a typical home loan. Commercial lenders generally allow a lower loan-to-value ratio (LVR), because commercial property can be harder to sell, more exposed to vacancy and more varied in value. That means you usually contribute a bigger share of the price yourself, or offer additional security such as equity in other property.
There is no single LVR that applies to everyone; the lender looks at the property type, the lease and tenant, your income and assets, and the location, then sets the LVR and terms deal by deal. On top of the deposit you also need money for transfer duty, possible GST, valuation and legal costs, and a buffer.
How much deposit do commercial lenders usually want?
Commercial LVRs are usually lower than residential LVRs. For a home loan, many borrowers aim for an 80% LVR to avoid Lenders Mortgage Insurance. With commercial property, lenders commonly want you to contribute more than that, and specialised or higher-risk properties can need a much larger contribution again.
Rather than relying on a headline figure, ask each lender what LVR it would offer for your specific property and borrower profile. Two similar-looking deals can get quite different answers. Our guide to commercial loan rates in Australia explains how LVR also affects pricing, fees and covenants.
What drives the LVR a lender will offer?
Property type
Lenders tend to be more comfortable with mainstream property types, such as standard offices, warehouses and shops in established areas. Specialised assets, such as properties built for one particular use, are usually seen as riskier because there are fewer potential buyers.
Lease and WALE
The weighted average lease expiry (WALE) measures how long the current leases have left to run. A longer WALE with clear rent reviews generally gives a lender more confidence in the income.
Tenant quality
A financially strong tenant with a good payment history supports the property’s income. A vacant property, or one with a short or informal lease, is often assessed more conservatively.
Borrower strength
Your income, other assets, business performance and existing debts all matter. Strong financials can sometimes support better terms.
Location
Properties in established, in-demand areas are usually easier for lenders to value and resell than those in thin or regional markets.
Is owner-occupied commercial property assessed differently from investment?
Yes. Lenders look at different income sources depending on who occupies the property.
| Factor | Owner-occupied commercial | Investment commercial |
|---|---|---|
| Who uses the property | Your own business | Third-party tenants |
| Main income assessed | Your business’s trading profit | Rent from the lease |
| Key lender focus | Business financials and stability | Lease terms, WALE and tenant quality |
| Main risk | Business performance dropping | Vacancy and re-leasing |
| Documents commonly requested | Business financial statements and tax returns | Leases, rent roll and outgoings |
The right structure depends on the property, your business and how you plan to hold the asset. Our commercial property finance guide for Sydney covers how to build a lender shortlist and stress-test the deal.
What GST and duty costs should you plan for?
This is general information, not tax advice.
GST. Commercial property sales can involve GST, depending on whether the seller is registered for GST and how the sale is structured. Some sales are structured as the sale of a going concern, which has its own conditions. The ATO’s GST guidance explains the basics (checked October 2026), and business.gov.au explains when a business needs to register for GST. Ask your accountant how GST applies before you sign, and whether you need short-term funds for any GST amount.
Transfer duty. In NSW, transfer duty generally applies to property purchases, including commercial property (Revenue NSW, checked October 2026). Use the Revenue NSW transfer duty calculator or our stamp duty calculator for an estimate.
Other costs to budget for include the lender’s valuation, legal and due diligence fees, lender establishment fees and a cash buffer.
How can you bridge a deposit gap?
If your cash falls short of the deposit and costs, these are common options to discuss:
- Release equity from residential property. Many borrowers use equity in their home or an investment property as extra security or to fund the deposit. Our cash-out refinance guide explains how usable equity is estimated.
- Offer additional security. Some lenders accept another property as extra security alongside the commercial property.
- Buy a different property type. A more mainstream asset may attract a higher LVR.
- Negotiate a longer settlement. This can give you time to arrange funds, if the seller agrees.
- Bring in a co-borrower or partner. Joint purchases can share the deposit, but need clear legal agreements.
Every option adds debt or risk somewhere, so servicing on the total debt still has to work. Interest rates matter here too: the Reserve Bank raised the cash rate target to 4.60% on 30 September 2026 (RBA, checked October 2026), which can affect how lenders assess repayments.
When should you speak to a lender or broker?
Ideally before you make an offer. A lender’s view of LVR can change the amount of cash you need, and a valuation below the price can widen the gap. business.gov.au’s guide to applying for a business loan lists the kind of information lenders typically ask for.
Steps to prepare your commercial property deposit
- Confirm the property type, lease terms and tenant details.
- Get your business or personal financials up to date.
- Estimate total funds needed, including duty, GST, fees and buffer.
- Check how much equity you have in other property.
- Ask lenders what LVR they would offer for this property.
- Get accountant advice on GST, ownership structure and tax.
- Make your offer subject to finance where possible.
Common deposit mistakes
- Assuming a residential-style LVR will be available.
- Forgetting GST and duty in the cash budget.
- Relying on a vacant property’s future rent to support the loan.
- Using all available equity and leaving no buffer.
All lending is subject to lender approval, and lending criteria, fees and charges apply. To compare structures and lenders for your deal, see our commercial loan options.