If you’re wondering how much you can borrow for an investment property in 2026, the honest answer is that it depends on the lender as much as on you. After several rate rises in 2026, borrowing power has tightened for many people, so investors in the Sutherland Shire and across Australia are asking the question earlier. This guide explains how lenders work out the figure, which parts of your situation move it most, and where a little planning can make a real difference.
How Lenders Work Out What You Can Borrow for an Investment Property
Every lender starts with serviceability. In other words, they check whether your income can cover your living costs, your existing debts and the new loan, with some room to spare. Importantly, they don’t test the new loan at the rate you’ll actually pay.
Instead, the bank adds a buffer. According to APRA, the banking regulator, banks have tested home loan applications at 3 percentage points above the loan rate since 2021, and that buffer still applies in 2026. As a result, the repayment a lender uses in its calculation is noticeably higher than the one you’ll see on your statement.
On top of that, APRA activated a debt-to-income limit from 1 February 2026. Banks can now write only up to 20 per cent of their new investor lending (and, separately, their owner-occupier lending) to borrowers whose total debt is six times their income or more. For most people this is a background rule. However, if you already hold a large loan, it can affect how far some banks will go.
Living costs matter too. Lenders generally compare the expenses you declare with a benchmark for a household like yours and use the higher figure. That’s why a clear, honest budget based on your bank statements tends to make the process smoother.
How Lenders Count Rental Income
Rent helps, but it rarely counts in full. Many lenders include only part of the expected rent in their calculation, because properties sit empty between tenants and owners pay agent fees, insurance, rates and repairs. The share they use varies from lender to lender.
For a purchase, the lender usually relies on a rental appraisal from a local agent or the valuer’s estimate. For property you already own, expect to show a lease or recent rental statements. So if two lenders count the same rent differently, the result can be a noticeably different borrowing figure.
Existing Debts and Credit Card Limits
Your current commitments reduce what you can borrow for an investment property, sometimes more than people expect. Lenders look at your home loan, car loans, personal loans, HECS-HELP and any buy now, pay later accounts.
Credit cards are the common surprise. Lenders generally assess the card limit, not the balance you owe, so an unused card with a high limit still counts. Therefore, closing cards you don’t need or lowering limits before you apply is one of the simplest ways to lift your figure.
Using Equity in Your Own Home
Many investors don’t save a fresh cash deposit. Instead, they use the equity in their own home: the gap between its value and what they owe. Typically, a lender lets you access part of that equity through a top-up or a separate loan split, which then covers the deposit and purchase costs on the investment.
Keep in mind that equity is not the same as borrowing power. Equity can help you borrow for an investment property without a cash deposit, but you still need the income to service the extra debt. If your home has risen in value, our guide on refinancing after your home goes up in value explains how a revaluation works. Keeping the investment debt in its own split also makes records simpler at tax time.
Deposit and LMI on Investment Loans
When you borrow for an investment property, you don’t always need a 20 per cent deposit. Some lenders will still lend more than 80 per cent of the value to investors, usually with lenders mortgage insurance (LMI), which protects the lender, not you. However, the sharpest interest rates tend to go to loans below 80 per cent of the value, and with some lenders below 70 per cent. So a bigger deposit or more equity can mean a lower rate, not just a smaller loan.
Likewise, stamp duty and other purchase costs come on top. Whether paying LMI to buy sooner makes sense depends on your plans, so it’s worth comparing both paths before you commit. Our investment property loans page sets out how we structure deposits and equity for investors.
Interest-Only Versus Principal and Interest
Many investors choose interest-only repayments for a set period to keep cash flow lower. Moneysmart explains the trade-off: you pay more interest over the life of the loan, and repayments rise when the interest-only period ends.
That second point matters for borrowing power. Lenders usually assess an interest-only loan over the shorter remaining term once repayments switch, so the tested repayment is higher. Consequently, choosing interest-only can sometimes reduce the amount you can borrow, rather than increase it.
Why Lenders Give Different Answers
Each lender uses its own calculator, living expense benchmarks, rental income share and treatment of existing debts. As a result, it’s common for one bank to approve noticeably more than another for the same person. We explain the reasons in more detail in why different banks give different borrowing capacities.
Because I can compare dozens of lenders, part of my job is matching your situation to a lender whose policy suits it, then getting pre-approval in place before you bid.
The 2027 Negative Gearing Changes
The negative gearing and capital gains tax changes from the May 2026 Federal Budget are now law and start on 1 July 2027. In short, established residential properties bought after 7.30pm AEST on 12 May 2026 lose the ability to offset rental losses against wages from that date, while eligible new builds keep it. Our guide to the negative gearing changes in 2027 covers the detail.
For borrowing, the main effect is on cash flow. If you can’t claim a loss against your salary, you need to be comfortable covering any shortfall yourself, which makes a realistic budget more important than ever. Speak to your accountant or tax adviser about tax.
Investing in the Sutherland Shire: Units Versus Houses
Locally, the choice between a unit and a house shapes both your deposit and the loan. Houses in the Shire generally need a bigger deposit, while units close to stations at Sutherland, Miranda, Caringbah or Cronulla tend to sit at a lower price point.
Even so, units bring their own lending rules. Some lenders limit lending on small apartments or in high-density buildings, and strata levies reduce your net rent. Our guide to buying an apartment in the Sutherland Shire covers what to check. Meanwhile, the Sutherland Shire mortgage broker page lists the suburbs I cover, although I help investors across Australia by phone and video too.
Ways to Lift What You Can Borrow
- Reduce or close credit cards you don’t use.
- Pay down small personal or car loans first.
- Track your real spending, since lenders compare it with their benchmarks.
- Have a rental appraisal ready for the property you want to buy.
- Ask a broker to compare lenders before you sign anything.
Likewise, Moneysmart has a useful overview of the costs and risks of property investing before you start.
Frequently Asked Questions
Borrowing Power and Rent
It depends on your income, debts, living costs, the expected rent and the lender’s own calculator. Lenders test your repayments with a 3 percentage point buffer, so the figure is usually lower than a simple repayment estimate. A broker can run your numbers across several lenders.
Usually not. Many lenders count only part of the expected rent to allow for vacancies and costs such as agent fees, rates and repairs. The share varies between lenders.
Often, yes. Many lenders let you access part of the equity in your home to cover the deposit and costs, as long as you can service the total debt.
Deposits and Repayments
Not always. Lenders often assess interest-only loans on the higher repayments that apply once the interest-only period ends, which can reduce your borrowing power.
No. Some lenders still lend more than 80 per cent of the value to investors, usually with lenders mortgage insurance. Even so, the best rates tend to go to loans below 80 per cent, and with some lenders below 70 per cent.
Talk Through Your Numbers
If you’d like to know how much you can borrow for an investment property, I’m happy to run your figures across dozens of lenders. Home loan broking is generally at no direct cost to you, because the lender usually pays the broker a commission when a loan settles. You’ll receive our Credit Guide, which explains how we’re paid, before we start working together. Learn more about our investment loans or book a free first chat.
The information on this page is general in nature and does not take into account your objectives, financial situation or needs. Lending criteria, fees and charges apply. Consider whether it is appropriate for you and speak to us for advice specific to your situation.
Need Some Help?
Not sure where to start? That’s exactly what we’re here for. Drop us a message and we will get back to you within one business day with clear, honest advice tailored to your situation.
