The headline gap: 5% versus 30%
A first home buyer can, under the federal First Home Guarantee, buy with as little as a 5% deposit and pay no lenders mortgage insurance (LMI) at all: Housing Australia guarantees the lender for the shortfall between that deposit and the usual 20% threshold. A buyer outside that scheme can still go below 20% almost anywhere, paying LMI instead of finding more cash. Commercial property doesn't offer either option. Bank and non-bank commercial lending guides published this year cluster around a 65-70% maximum loan-to-value ratio (LVR) for a standard investment purchase, meaning a 30-35% deposit, with 50-55% LVR common for higher-risk or specialised assets. An owner-occupier buying premises to run their own business typically gets more room: Macquarie Business Banking's published broker guidelines, for example, cap standard commercial owner-occupied lending at 80% of security value, rising a further 10% for medical professionals buying their own consulting rooms under the bank's medical finance policy. Even at that ceiling, a commercial buyer is still putting down more than double what a first home buyer needs.
Why there's no LMI equivalent for commercial property
Lenders mortgage insurance is what makes a below-20%-deposit home loan possible at all: it lets a bank lend above its own comfortable risk threshold because an insurer, not the bank, wears the loss if a defaulting borrower's sale proceeds don't cover the debt. NAB's own guidance to home loan customers frames it plainly, LMI is typically required whenever the deposit is below 20% of the property's value. Commercial lending has no mainstream equivalent product. Once a bank's credit policy sets an LVR ceiling, whether that's 65%, 70% or 80%, there's no insurer standing behind the increment above it, so the bank simply won't lend past that point. The deposit isn't cushioning an LMI premium the way it does for a home loan; it's filling a gap nothing else will fill.
The regulation splits the same way
The size of that gap traces back to which regime the loan sits under. A loan to buy a home to live in, or a residential investment property, is credit for personal, domestic or household purposes and is regulated by the National Credit Code, which brings with it the responsible lending obligations a lender must meet before approving it, and it's that same regulated status that lets a government guarantee scheme like the First Home Guarantee plug the deposit gap. ASIC's guidance on the scope of the Code confirms the opposite holds for credit provided wholly or predominantly for business or investment purposes, which is how virtually every commercial property purchase is financed: it falls outside the Code, so the responsible lending framework doesn't apply, and there's no government-backed low-deposit scheme sitting behind it either. Individual lenders are free to set their own deposit, serviceability and pricing rules instead. The Australian Prudential Regulation Authority requires every authorised deposit-taking institution to run a credit risk framework under Prudential Standard APS 220, but it doesn't mandate a specific commercial LVR; that calibration, and the deposit it produces, is left to each bank's own credit policy.
Rates move the ceiling, not just the deposit
Base commercial lending rates track the RBA cash rate target, which the Reserve Bank's Monetary Policy Board held at 4.35% at its 11 August 2026 meeting, with the next review due 29 September. On top of that base rate, commercial lenders add a margin that reflects the risk of a loan secured against a shop, office or warehouse rather than a family home, and pricing tends to firm further as the requested LVR climbs toward a lender's ceiling. A borrower asking for 70% on a property where the lender's comfort zone tops out at 65% should expect a higher rate, a shorter interest-only period, or additional security requirements on top of the bigger deposit, rather than a straightforward yes.
What this means when budgeting a purchase
Ask a lender for their actual LVR policy before relying on a headline "up to 80%" figure, since that ceiling is usually reserved for owner-occupiers, strong serviceability and sometimes a specific asset class such as medical or industrial premises. Budget the deposit against the lender's likely LVR, not the property's advertised price, since a valuation that comes in under the contract price still resets the maximum loan to a percentage of the lower figure. And build in the costs a home buyer doesn't face at anything like the same scale: stamp duty, possible GST exposure on the purchase price where the sale isn't structured as a GST-free going concern, and the legal and valuation costs a commercial file typically demands, on top of the deposit itself.