How big a deposit do I need for a commercial property?
A commercial property deposit commonly sits higher than residential, with many lenders looking for somewhere between 20 and 35 per cent depending on the property, the location and your position. Under 20 per cent, options can still exist depending on your circumstances. Here is how the numbers work and what moves them.
Short answer: a commercial property deposit commonly starts around 20 to 35 per cent of the purchase price. That is more than residential, and the number is not fixed. It moves with the property, the location, the tenant and your own position, and the same buyer can be quoted different deposits on two properties in the same street. Under 20 per cent, there may still be options available depending on your individual circumstances. Whether you are eyeing a warehouse in Perth, a shopfront in Bunbury or a workshop in Karratha, here is how the deposit maths actually works.
Why is a commercial property deposit bigger than a residential one?
Short answer: lenders read commercial property differently. Values move with business conditions, tenants can take longer to replace than a residential renter, and resale markets are narrower. So lenders commonly fund a smaller share of a commercial purchase than a residential one, and the deposit picks up the difference.
Many lenders commonly fund somewhere between 65 and 80 per cent of a standard commercial property’s value. That is where the 20 to 35 per cent deposit comes from, and it is a commercial decision, not a rule of nature. The lender is pricing how quickly the property would sell if it ever had to, and how solid the income behind it looks. A tenanted industrial unit in a metro area is an easy read. A purpose-built premises in a single-industry town is a harder one. The deposit asked of each reflects exactly that.
What deposit do lenders commonly want for different commercial purchases?
Short answer: on the strongest files, a commercial property deposit commonly lands around 20 to 25 per cent. Standard purchases commonly sit 25 to 30 per cent. Specialised properties, regional and mining-town locations, and more complex borrower positions commonly push toward 30 to 40 per cent. Every number here is a starting point for a conversation, not a rule.
Where a commercial property deposit commonly starts
| Purchase | Deposit commonly starts around | What moves it |
|---|---|---|
| Standard metro premises, strong file | Around 20 to 25 per cent is commonly achievable on standard property with a strong borrower position. | Owner-occupiers buying their own premises commonly see the sharpest end of the range. |
| Standard purchase, established business or investor | Somewhere between 25 and 30 per cent is a common starting point for standard commercial purchases. | Tenant quality and lease length on investment purchases move the number in both directions. |
| Specialised, regional or mining-town property | Specialised premises and single-industry locations commonly start around 30 to 40 per cent. | The narrower the resale market, the more skin lenders commonly want in the deal. |
The pattern behind the table is simple: the easier the property would be to sell tomorrow, the less deposit the lender needs from you today. That is why the same buyer can be quoted very different numbers on two properties in the same suburb.
Can I buy a commercial property with less than a 20 per cent deposit?
Short answer: sometimes, yes. Lending appetite varies enormously across banks, non-banks and specialist lenders, and a deposit under 20 per cent does not automatically rule you out. Depending on your individual circumstances, we may still have options available. The fastest way to find out where you stand is to ask us.
This is where who you apply through matters as much as what you apply with. The deposit ranges above describe the middle of the market, not the edges of it. With 60+ lenders on our panel, the same file can land very differently across the market. A strong trading business buying its own premises presents very differently to a first-time investor, and specialist and non-bank lenders commonly take positions the majors will not. We work across all of them, and matching your file to the right lender is precisely the job. So if your cash sits under 20 per cent, do not talk yourself out of the purchase before you have talked to us. “I only have 15 per cent” starts a conversation about your commercial property deposit. It does not end one.
The deposit is not the wall it looks like from the outside. It is a number that moves with the property, the lease and the structure behind you.
What else do I need beyond the commercial property deposit?
Short answer: budget past the deposit. Stamp duty, legal and due diligence costs, valuation and establishment fees all land before settlement. GST can also apply to a commercial purchase. Many tenanted properties, though, sell GST-free as a going concern when the ATO’s conditions are met. Your accountant and settlement agent map this before you sign.
GST is the one that surprises people. A commercial purchase can attract GST on top of the price. Whether it does turns on how the sale is structured. The ATO’s going concern rules allow a sale to be GST-free when the conditions are met. That commonly covers a tenanted property sold with its leases in place, with both parties agreeing in writing. GST-registered buyers who do pay it can commonly claim it back through their BAS. It still has to be funded at settlement though. This is accountant and settlement agent territory. It is also the reason we say budget the whole transaction, not just the commercial property deposit.
What makes lenders comfortable with a smaller deposit?
Short answer: strength they can see. A quality tenant on a solid lease. An owner-occupier with a trading history behind them. A property type with a broad resale market, clean statements, and a clear income story. The stronger those reads, the closer to the sharp end of the deposit range the deal commonly lands.
The reads will be familiar if you have followed our business lending guides. Lenders want the income that services the loan to be believable. That can be the story your bank statements tell or the rent a sitting tenant pays. A national-brand tenant on a five-year lease is a different proposition to a vacancy. An established operator buying the workshop they already rent is one of the strongest files in commercial lending. If the purchase is happening inside your super instead, that is its own lane with its own rules. We cover it in our guide to buying commercial property through an SMSF.
How do you get a commercial property loan from here?
Short answer: settle the budget before the property. Know your deposit and security position. Get your accountant across the GST and structure questions. Then have the deal placed with lenders whose appetite matches your property and your file. That order saves weeks and commonly lands a better number.
- Price your whole position. Cash, equity in other property, the costs beyond the deposit. The honest number decides your range.
- Get the income story straight. Trading financials for owner-occupiers, lease and tenant detail for investors. This is what lenders read first.
- Bring your accountant in early. GST treatment, buying entity and structure are decisions made before the contract, not after.
- Match the property to the lender. The same deal lands differently across the panel. Placement is where the deposit and the rate both move.
- Talk to us before you commit. We will tell you where your file sits, what deposit range is realistic, and which options exist if your cash is under 20 per cent.
From the broker’s desk: commercial property questions land on our desk every week. Operators buying the workshop they have rented for years, investors picking up their first tenanted shop. The deposit question is nearly always the opener. The honest answer is that the range is wide and your circumstances decide where you sit in it. That is good news, because circumstances can be worked with. Equity can be structured in, the right lender chosen, the file presented properly. We work across a panel of 60+ lenders, banks, non-banks and specialists among them, and place commercial loans WA-wide and nationally. Tell us the property and your position. We will tell you what is realistic before you spend a cent on due diligence.
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Start with a chatThis guide is general information for the Australian market, not advice about your situation. Lender credit policy changes, and what applies to you depends on your circumstances. Pilbara Finance is a credit representative (478535) of Mortgage Specialists Pty Ltd, Australian Credit Licence 387025.