10%, 20% or 30% Deposit? One $720,000 House, Three Weekly Costs

A 10% deposit on a $720,000 investment house is $72,000. Add NSW transfer duty and an estimated lenders mortgage insurance (LMI) premium, and the cash going in is about $114,139, before legal and other purchase costs. The same house bought with a 30% deposit needs $242,587, more than twice as much, and from 1 July 2027 it costs $187 a week less to hold. How that trade-off looks depends on two things that are easy to leave out: LMI, and which tax class the property falls into.

Every figure below comes from Plintha's deterministic finance engine, with the exact inputs published alongside this post.

The setup

One house, run through the engine at three deposit sizes.

• Purchase price: $720,000, an established house in New South Wales, bought after 7:30pm AEST on 12 May 2026
• Weekly rent: $600 ($31,200 a year, a 4.33% gross yield)
• Loan: interest-only at 6.75%, an illustrative rate we hold the same at every deposit size
• Marginal tax rate: 37%, the 2026–27 rate on taxable income from $135,001 to $190,000 (ATO, before the Medicare levy)
• Deposit: 10%, 20% or 30%, which is a 90%, 80% or 70% loan-to-value ratio

What each deposit ties up

Transfer duty is charged on the price, so it is $26,587 at every deposit size. Revenue NSW's current table charges $4.50 per $100 on the part of the price in this band, whatever the loan looks like.

Lenders mortgage insurance generally applies only above an 80% loan-to-value ratio, and that is where the engine applies it. The engine estimates it at $15,552 on the 90% loan, about 2.4% of the amount borrowed. That is an estimate, not a quote: real premiums vary by lender and insurer. The engine treats LMI as cash paid at settlement. Many lenders will add it to the loan instead, which lowers the cash needed and raises the interest bill. We haven't modelled that version.

On these estimates, the first step up takes less cash than the deposit figures suggest. Going from 10% to 20% doubles the deposit but takes $56,448 more cash, because the estimated LMI drops out. Going from 20% to 30% takes the full $72,000.

What each deposit does to the weekly cost

Each extra 10% of deposit removes $72,000 of debt, and at 6.75% that is $4,860 a year of interest, or $93 a week. Rent, rates, insurance and maintenance are the same in all three columns. What the investor actually keeps of that $93 depends on tax.

The two after-tax rows are the same house under two sets of rules. Under the legislation that followed the 2026–27 Budget, an established dwelling bought after 7:30pm AEST on 12 May 2026 keeps the salary offset for the 2026–27 year. From 1 July 2027, its rental loss can no longer be deducted against salary. It is carried forward against future residential property income or capital gains. Like every Plintha analysis, the bottom row models that steady state, because most of a multi-year hold happens after that date.

While the offset applies, a bigger deposit saves $59 a week per step. The interest saved is $93, but a smaller interest bill also means a smaller deduction, so 37% of the saving goes back to the ATO as a smaller refund. The investor keeps 63%.

From 1 July 2027 there is no refund to give up. The saving is $94 a week from 10% to 20% and $93 from 20% to 30% (the difference is rounding), and the investor keeps all of it.

The same exercise on a new build

A new-build house at the same price and rent keeps the salary offset after 1 July 2027, and the engine gives it more depreciation and lower maintenance, so its weekly cost starts lower.

Here each step saves $59 a week after tax, and under the current rules that doesn't change on 1 July 2027, because new builds keep the offset.

Interest saved per dollar of extra cash

One way to compare the two steps is to divide the first-year interest saved by the extra cash put in. This is a ratio for comparing the steps in this scenario, not an investment return: it ignores what the cash could do elsewhere, and the LMI figure inside it is an estimate.

On the 20%-to-30% step the ratio equals the loan rate when there is no refund, as it must on an interest-only loan. With the offset it is 4.25%, because $3,062 of the $4,860 is all the investor keeps.

The 10%-to-20% ratio is higher in both rows, and the whole reason is LMI. Not paying an estimated $15,552 premium means the same interest saving takes $56,448 of extra cash instead of $72,000. A different LMI premium, or LMI added to the loan, would change that ratio. The offset row also leaves out the tax deduction for LMI described below, which would narrow the gap between the two steps.

For an investor who still gets a refund, part of every dollar of interest was already being covered by the tax system, so removing it saves less.

Where the stress test lands

Plintha flags an interest-only hold as RED when the weekly cost passes $350. On the steady-state figures, the established house is RED at 10% ($478) and at 20% ($384), and AMBER at 30% ($291). The 30% version doesn't have much room: the engine's rate-plus-1% scenario puts it at $388, back in RED. A bigger deposit moves this property across the line, but only just.

What these numbers don't cover

• Opportunity cost. The extra $128,448 between the 10% and 30% columns is cash that could sit in an offset account, a buffer, or another deposit. We haven't valued any of those alternatives.
• Rate by LVR. We held 6.75% constant. Lenders often price 90% loans higher and 70% loans lower, which would widen the gaps above.
• LMI in practice. The premium is an engine estimate and is modelled as upfront cash. The ATO lists LMI on a rental loan as a borrowing expense, generally claimed over five years rather than at once (the immediate deduction applies only when total borrowing expenses are $100 or less). The engine doesn't model that deduction, or LMI added to the loan.
• Growth. The engine projects the same 10-year equity gain, excluding the deposit, at every deposit size, because growth is applied to the price and not the loan. A smaller deposit means that gain is earned on less cash, and it also means a larger debt if prices fall. This post compares holding costs only.
• Other purchase costs. Cash in covers the deposit, transfer duty and estimated LMI only. Conveyancing, registration fees, inspections and loan fees are not included.
• One scenario. These results are for one price, one rent, one state and one tax rate. Duty, LMI and the tax effect all move with those inputs.
• Loan type and land tax. All three columns are interest-only, and the engine's land-value estimate puts NSW land tax at $0 for a single property at this price.

In this scenario a bigger deposit lowers the weekly cost by a fixed amount of interest per dollar. How much of that the investor keeps depends on the tax class, and how much cash it takes depends on which side of 80% the loan sits. To see the same comparison on a specific property, with your own price, rent and deposit, you can run it through Plintha.

This article is general information, not financial, tax, credit or legal advice. It doesn't take into account your objectives, financial situation or needs. Figures use Plintha's engine with the assumptions stated above (10%, 20% and 30% deposits, interest-only at 6.75%, 37% marginal rate, NSW transfer duty, estimated LMI, standard operating-cost model) as at 23 October 2026, and will change if any of those inputs change. Check your own position with a licensed tax agent, mortgage broker or financial adviser before acting.