100% finance for an investment property: how it works

The deposit is the biggest hurdle for most first-time investors. A structure that comes up in rentvesting is finance of 100% of the purchase price plus LMI. This page explains how it works, why it changes the upfront cost, how it interacts with tax, and the trade-offs, which are real.

General information as at 6 November 2026. Finance is subject to eligibility and the lender’s credit assessment.

How 100% of the purchase price plus LMI works

With a standard investment loan, the buyer puts in a deposit and the lender lends the rest. With 100% of the purchase price plus LMI:

1. The loan covers the whole purchase price.
2. Because the loan is above the level where lenders usually charge lenders mortgage insurance (LMI), LMI applies.
3. The LMI premium is capitalised, meaning it’s added to the loan rather than paid in cash.

So the buyer doesn’t put a deposit towards the price, and doesn’t pay LMI out of pocket.

What’s left to pay upfront

The main upfront cost is stamp duty. On a split land and build contract, such as many house and land packages, stamp duty is charged on the land component in many states, rather than on the full price. The rules differ by state, and each state revenue office has a calculator.

There can also be smaller costs such as legal and conveyancing fees, lender fees and building insurance. These depend on the purchase and lender.

Upfront item	Standard investment loan	100% of the purchase price plus LMI
Deposit towards price	Yes	No
LMI	Paid upfront or added to loan, if applicable	Added to loan
Stamp duty	Yes	Yes
Legal and other fees	Yes	Yes

Who offers it

Finance is arranged through licensed lending partners, including Empower Money (Australian Credit Licence 561207). It’s subject to eligibility, the lender’s credit assessment, terms and conditions, fees and charges. It’s not available to everyone, and passing a credit assessment is a requirement, not a formality. Loans are arranged through WPF Finance, part of the WPF Holdings group, or through external banks, depending on each client’s requirements. WPF Finance arranges credit under Australian Credit Licence 561207. The WPF Holdings group earns income from financing the deal when the loan is arranged through WPF Finance, and WPF GO earns commissions when a client buys a property through us.

Why it makes negative gearing work harder

This is the part people often find counterintuitive.

When the whole price is borrowed, the loan is bigger, so the interest is larger. Interest on an investment loan is generally a deductible expense. A larger deductible expense means a larger tax loss, if the property’s costs exceed its rent.

For a new residential dwelling bought after 7:30pm AEST on 12 May 2026, that loss can generally still be offset against salary, subject to the definition in the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026, which is before Parliament. For an established dwelling bought after that time, net losses are quarantined from 1 July 2027 and can’t be offset against salary (Pitcher Partners; Baker McKenzie).

Two more tax points:

• LMI is generally a borrowing expense. Borrowing expenses over $100 are generally deductible over five years, or the loan term if shorter (ATO residential rental properties).
• Depreciation on a new build is generally higher, which adds to the deductions without being a cash cost. See new build rentvesting.

The catch

A bigger deduction is not the same as being better off. Every extra dollar of interest is a real cost. The tax effect only returns part of it, at your marginal rate. At 30% plus the 2% Medicare levy, each extra $1,000 of interest costs you about $680 after tax. It never comes out free.

So 100% finance makes the investment’s cash holding cost higher, while making the tax loss bigger. Whether that trade-off works depends on the property’s long-term outcome, which isn’t guaranteed.

The trade-offs

Trade-off	What it means
Bigger loan	More debt from day one
More interest	Higher repayments every week of the loan
More exposure if values fall	With no deposit, a fall in value puts the loan above the property’s value sooner
LMI cost	An extra cost, added to the debt, that protects the lender not you
Credit assessment	Lenders assess income, expenses, existing debts and the expected rent, with a buffer for rate rises
Less flexibility	Refinancing or selling in a downturn can be harder with little or no equity

Values do fall. Cotality’s October 2026 figures showed national values 6.7% below the March 2026 peak (Cotality). With 100% finance, any fall comes straight off equity you never had.

Questions people take to a lender and tax agent

Lender or broker

• Am I eligible to be assessed for 100% of the purchase price plus LMI?
• How is the expected rent counted in serviceability?
• How much would LMI add to the loan for this purchase?
• Is the loan principal and interest or interest only, and for how long?
• What happens at the end of any interest-only period?

Registered tax agent

• Would this property be treated as a new residential dwelling, once the definition is legislated?
• How would the interest, LMI and depreciation be treated for me?
• What would my after-tax holding cost look like in a best and worst case?

How it shows up in the calculator

Where the calculator above is set to finance the example property at 100% of the purchase price plus LMI, it shows the best case (tenanted all year) and worst case (vacant, with any rental guarantee from the property management company paying for its term), after estimated tax effects. Results are estimates, not a forecast or an offer of credit.

See it worked through

To see how 100% of the purchase price plus LMI works on an example property, including the trade-offs, join a free WPF GO webinar with Peter Khoury. General information only, not personal or credit advice.